Nike more closely controls the buyer experience and the prices at which products are sold when delivered direct to consumers. This is a big deal for Nike, a high-end brand that wants to ensure that merchandise is presented to customers in an attractive way and to prevent products from being over-discounted.
Nike is eliminating what it calls “undifferentiated” retail partners – stores that “put Nike items on their shelf or website and hope someone finds them,” said Sam Poser, analyst at Williams Trading that covers the business.. Nike “tells retailers that unless you do things that improve the brand, we’re not going to sell you.”
In September, Ed Shaen, the owner of Sneakin ‘In, a sneaker store in Bellmawr, New Jersey, received a letter in the mail from Nike saying his account would be closed after 37 years.
“I have the letter hanging on the wall. Right next to the trophy [Nike] gave me to be a great dealer “in 1992, he said.
Shaen said Nike accounts for more than half of its sales. The end of the partnership with Nike, coupled with the crippling impact of the pandemic, will likely lead it to close the store by the end of the year, he said.
“My loyalty to Nike meant nothing,†Shaen said. “Now everything revolves around direct-to-consumer sales. “
Nike spokesperson Sandra Carreon-John did not comment directly on Shaen’s account, but said in an email that the company “continually assesses the market to understand how we best serve consumers, adjusting our sales channels where necessary to create a cohesive, connected and modern shopping experience. “
“We took a chance on them”
Nike CFO Matthew Friend said in December that Nike had “reduced the number of undifferentiated accounts in North America by about 30%” since announcing the strategy for the first time in 2017, when Nike announced that it will focus its resources, marketing and best products on just 40. select business partners.
“You will see even more movement from undifferentiated retail to a smaller number of partners and our own stores” that provide customers with a “premium experience,” CEO John Donahue told analysts on Thursday. Such experiences include creating a specific Nike brand section of a store or training dedicated Nike employees specifically to help consumers understand the benefits of a running shoe, for example – efforts that improve customer experience but are often prohibitive for small, independent sneaker stores.
Rivals Under Armor and Adidas are following Nike’s lead and also reducing the number of retail partners they rely on to develop direct-to-consumer sales.
The loss of Nike or other popular sports brands can be a blow to shoe stores and clothing retailers. Nike is a major draw for customers, and without the brand, stores can struggle to compete. Nike also owns the Jordan and Converse brand.
But in 2019, Nike “sent us a letter in the mail stating that we were no longer in line with their distribution goals,” owner Marty Nash said. “We haven’t been able to get Nike since.”
“It hurt because there are a lot of people dedicated to this brand,†he said. “I thought it was pretty dirty because we were buying them in the back of a car†in the 1970s from Nike sellers trying to get independent stores to buy sneakers.
Nike spokesperson Carreon-John did not comment directly on Nash’s account.
Nash believes he helped Nike reach consumers when it was still an emerging brand and the company ditched small stores like his.
“We took a chance on them.”
—CNN Business’ Clare Duffy contributed to this article.
