🤘🤘 Why Nike's Not Cool Anymore

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This newsletter is about:

• Nike’s temporary setback

• Free Competitor User Sentiment Analysis - in 24 hours turnaround time

• Spicy Tech News

Nike’s Stock is Down in the Gutter

Nike lost $25 billion of market cap in a day, leading to the lowest share price since 2018.

What went wrong? The story starts in early January 2020, when John Donahue became the retail giant's CEO. A few months into his tenure, he announced three significant shifts that would change the company's trajectory.

Mistake #1 - Getting Rid of Categories

McKinsey advised Nike to get rid of categories (running, basketball, soccer) and classify everything into “Women”, “Men” and “Kids”. This watered down its brand and associated it with generic clothes brands like Zara, H&M, and GAP.

This went hand-in-hand with layoffs of category exports.

Nike thought the data would make these experts redundant and instead of paying these experts, they would just rely on objective numbers.

This proved to be a massive mistake and Nike brought categories back in 2023 but not after losing a lot of sales.

Mistake #2 - Moving to DTC

This one baffles me the most. Nike’s CEO made a decision to move the bulk of sales to DTC.

I’m not sure if this is just to assert dominance when stepping into the role but with the move, Nike ended hundreds of relationships with wholesale partners and relied on the website over retail.

Look, there’s a reason why Apple still have physical stores — it’s for people to get in, salivate over beautifully designed aluminum and let themselves be marinated in the idea of owning an expensive piece of computer hardware.

Nike should do the same - the company is beyond the product. They are a brand and brand experience has to be much more than just a URL on a website.

The consumers who were going to malls and supermarkets where they used to buy Nikes, couldn’t find them there anymore. Instead, they bought another dope shoe from competitor brands.

They shot themselves in the foot, and let the brands take over the wholesale market share. Silly Nike.

Mistake #3 - Allocating most of the budget to Digital

Of course, if you’re moving stuff to the DTC model, you’ll have to increase the digital budget.

Mistake #4 - Loss of Cool

The biggest cost of Nike’s brand is its coolness factor. Nike was known to be the innovator - a tech leader of the sports shoes.

What do you mean by high-tech shoe - it’s just a platform to lug your meat vehicle around. But think about it - Nike came out with:

• Waffle sole - the OG tech from 1972. Inspired by his wife’s waffle iron, Bill Bowerman created a sole that offered superior traction and was lighter than other track shoe outsoles of the time.

• Nike Air - used pressurized air and flexible membrane which improved comfort and performance. I still wasn’t able to dunk ☹️ 

• Flywire support system - strong lightweight cables that provide support where needed without adding additional weight

• Flyknit — reduced waste, better breathable shoe and move to sustainable practices

• Zoom Air - responsive cushioning - made for runners by reducing fatigue and increasing speed

• LunarLon cushioning - a combination of plush cushioning and springy responses

• Mercurial Soccer Cleats — better traction which allowed soccer players to cut, accelerate, and stop efficiently

All this, combined with great design placed Nike on top of the leaderboard of Shoe Legends.

The pace and excitement factor of innovation has down, according to sneakerheads.

Imagine Apple releasing the same phone year after year (lol) - they would lose cool points too.

What Would Nike Have to Do

1. Win back wholesale — while the DTC model increased they basically cut off an arm to save a finger with the move. Their expectations that customers will all move to online didn’t work - let’s reroll back to wholesale partnerships.

2. Make it techy and cool again — from its origins, Nike has been pushing the limit on shoe tech. Why stop doing it now?

3. Experiment with finding an ambassador — I have no idea who’s cool right now. When I look at music festival artists’ names I used to know 95% of the artists, but now I know 5% of them.
   But one thing that always worked for Nike was sponsoring a person of influence. Back then it was movie stars, tennis players, his royalty Michael “Air” Jordan, and other famous trendsetters/misfits that challenged the status quo.
   
   The brand play has been working for 50 years! Keep doing it.

   

   
   

4. Pricing is too damn high - look, man… I’m not paying $120 for a classic sweatshirt with a swoosh on it.
   If I was to bring in revenue for Nike, I’d segment essentials with affordable prices (sweaters) from the limited ones. Which brings me to…

5. Partnerships/Limited Campaigns. Scarcity has always been one of the main drivers for people to buy. FOMO → impulsive buys ++

6. Guerilla/Unconventional PR — Nike needs to be cool again. The times were the company paid $5,000 USD penalty fee because Michael Jordan played in ‘forbidden sneaker colors” are exactly what made Nike cool.
   Or back in the Olympics where Nike sponsored dozens of champion athletes with “yellow banana sprinters.” People still remember those moments but they are way back in the past.
   Nike’s data scientist and analyst will have to crunch some serious data points to figure out who’s setting the trends today and who’s got the highest area of influence.

Want Free User Sentiment Analysis?

Hey! Our team is offering a free and quick competitor user analysis for the next couple of weeks.

Why you should care about it:

• Your prospect will always evaluate you against 2-3 other options — you should know the pros and cons of your rival's product

• You'd want to know what market your competitor sells to - SMB, mid-market or enterprise

• You'd want to know what are the specific features users like and dislike about your competitor. Use that information to train your salespeople or adjust your product roadmap to gain that competitive edge.

Sounds interesting?

Ok, here's how you get your own report.

1. Get to this page: https://www.growandscale.com/free-user-sentiment-analysis

2. Fill in the form - name, your company, email and a competitor's G2 review URL. For example https://www.g2.com/products/workday-hcm/reviews

3. Our team will scrape the last 100 reviews, prepare an exec summary deck and send it to you in 24 hours (unless it's the weekend - those are sacred!)

4. That's it!

Join Healthy Competition

Andy’s Healthy Competition community is one of the best online places to be if you’re in product marketing and competitive enablement.

If you’re looking for a tight-knit group of tech professionals, eager to help, share, and support each other - go check it out at healthycompetition.co

Spicy Tech News Nuggets

• Google Antitrust Ruling — A federal judge ruled that Google acted illegally to maintain a monopoly in online search. Taking competition too far? 😅

• Meta's Celebrity AI Avatars Fail — Meta’s play on rolling out AI didn’t work as they hoped. They did a lookalike to Tom Brady, Snoop Dogg, and Kendall Jenner — users found them ‘odd’. Classic Meta.

• IBM layoffs cringe — 7-minute video meeting, 3,900 employees laid off due to “corporate restructuring and cost-cutting”. Sucks! IBM plans to cut even more jobs and reskill their employees in AI.

Competitive Job Opportunities This Week

#1: Saviynt
Title:  Director, Competitive Intelligence
Location: Bengaluru
Salary: ¯\_(ツ)_/¯
Deets: https://jobs.lever.co/saviynt/25ffb544-75b5-49d1-bac6-9b9ff830ea42

#2: 23andMe
Title: Competitive Intelligence Senior Analyst
Location: Sunnyvale, California, United States
Salary: $131,200 - $196,800
Deets: https://www.23andme.com/en-ca/careers/jobs/7553099002/?gh_jid=7553099002

#3 Wrike
Title: Senior PMM - Competitive Intelligence
Type: Prague or Ireland - remote
Salary: ¯\_(ツ)_/¯
Deets: https://boards.greenhouse.io/wrike/jobs/4448430005

PS: If you’d like to receive job opportunities in CI/CE industry faster, I’m sharing them in Andy’s Healthy Competition Slack channel under Open-Jobs as soon as I spot them.

Have a great week!

Dejan

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