The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Nike operates on a scale where it sometimes seems like it doesn’t have any true rivals. That’s certainly accurate in some categories, such as basketball, where it owns the two most popular brands, and lifestyle shoes that are more for fashion than the gym. The brand can easily outspend competitors when it comes to marketing, whether it’s signing athletes as ambassadors or sponsoring teams and events.
But the footwear giant is less of a force in a category that’s been driving growth in sneaker sales in recent years: running. And that’s starting to become a problem. On and Hoka seemingly came out of nowhere a few years ago and now sell billions of dollars in running shoes between them. Salomon isn’t far behind; owner, Amer Sports, is planning an initial public offering and targeting €1 billion ($1.1 billion) in sales for the trail-running brand.
Investors certainly believe the future belongs to runner-led brands: shares of Hoka-owner Deckers and On Holding are up more than 70 percent this year, while Nike’s stock has risen a scant 2 percent (other factors have weighed on Nike shares, including uneven demand in China and weakness in wholesale).
A major challenge for Nike is that where brand is the differentiating factor in its strongest categories, logo and hype can play second fiddle to performance for even casual runners. It’s no coincidence that On, Hoka and Salomon shoes feature unusual design elements that are said to provide a faster, more comfortable run, whether you’re racing competitively or out for a casual weekend jog. On’s “CloudTec” cushioning and Hoka’s odd silhouette stick in consumers’ brains just as Michael Jordan did with Air Jordans nearly 40 years ago.
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Nike knows it has its work cut out for it, telling investors in March it would renew its focus on running shoes by paring unpopular lines and building an innovation pipeline. In a September update, executives flagged strong growth in trail and performance running, while describing their pitch to the “everyday” runner, the biggest segment of this market, as a work in progress.
The company’s next chance to show progress will come when it reports its fiscal second-quarter results on Thursday.
The Week Ahead will be on hiatus for the holidays, returning on Jan. 7. In the meantime, send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.
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