Nike is re-training their eye on mass and mainstream retail
Physical retail continues to struggle on a global scale, with consumers re-evaluating the need to shop at department stores and moving online in droves.
This proves problematic for companies like Nike who – despite marketing themselves at the high-end through ad campaigns and their own retail channels – rely on department store business for the bulk of their volume.
While Nike continues to push forward with innovative and digitally oriented retail solutions such as the Nike SoHo store and the SNKRS app, we’ve also seen three interesting tweaks to how the brand is re-visiting established physical channels.
1. Making the department store space more premium
With the recent announcement of a Nike x JCPenney retail partnership, Nike plans to open ‘designated Nike shops’ in approximately 600 JCPenney locations.
This is a smart move for Nike on several levels. As stated in Forbes, “While Nike is focusing on expanding its own stores where it can earn higher margins, a partnership with a major department store gives the company higher visibility without having to invest in expensive real estate for building its own store.”
This is an easy way for Nike to echo its premium brand credibility and maintain its brand cohesion within a lower-end shopping experience. Carving out a distinct brand experience in a store like JCPenney allows it to distinguish itself from rivals adidas and Under Armour. And it benefits the overall image of JCPenney, which can borrow cues from premium department store experiences in the US and Asia, such as open-plan spaces and more distinct brand areas.
2. Reinforcing surprise discoveries at outlets
The Internet was recently ablaze with reports of rare Nike Jordan 1 x Fragment Design sneakers, which resell for $1,800, showing up at random Marshall’s stores in the Northeast for just $59.99. It was enough to drive non-Marshall’s shoppers into the store looking for the shoes, this author included.
Whether intentional or not, this is a smart strategy for Nike and taps into a larger trend playing out on social media sites such as Instagram. Many people are using Instagram to post their finds at Nike outlets and stores like Marshall’s, creating a buzz for products that don’t typically receive wide-scale attention. Not everyone can pay full price for the latest sneakers at Foot Locker or Nike.com, but this allows Nike to create a sense of excitement and exclusivity across price points.
3. Selling new shoes to the resale market
The resale sneaker market has exploded since the mid-aughts, a period in which sneaker fandom has grown exponentially. Leading this market is Nike (although adidas has starting making in-roads) with Jordans and limited edition releases constantly fetching high prices.
Until now, Nike hasn’t really dabbled in this market. Yet this year they dipped their toes in by releasing the retro Lebron 1 and Lebron 14s (complete with hardwood boxes made from the Cleveland Cavaliers’ home court and replica championship rings) on reseller website, StockX,
On one hand, Nike’s direct foray into this space is an opportunity to drive profits from a lucrative retail channel, as well as create hype for new sneaker releases. On the other hand, it risks jeopardizing credibility by commercializing a space where dedicated second hand sneaker collectors reside. But with private sellers already reselling new shoes for such high prices, it’s worth experimenting.
It’s easy for a brand like Nike to invest significantly in new and innovative digital channels in anticipation of where the market is going. But they’ve also found ways (intentional or not) that allow them to capitalize in other areas, including mainstream brick and mortar channels, to stand out to different kinds of consumers.
- Article by Joey Dembs and Minette Yao