Nike's Big Blunder

Nike is struggling in the running market.

Yes, you read that correctly—Nike, the $134B powerhouse is now facing significant competition and declining sales. Since 2022, the company’s stock has plummeted by a massive 50%. In contrast, Adidas has seen an 80% increase since 2023📈.

Nike's shift to a direct-to-consumer (D2C) model initially boosted sales.
However, it eventually led to high unsold inventory and operational challenges.

As the market rebounded post-COVID, consumers began to favor performance-driven products, allowing emerging competitors like Hoka and On to capture significant market share.

These were innovation-driven design and specialist offerings oriented to appeal directly to runners' needs. Thereby, Nike's D2C sales started to collapse, proving that the strategy didn't pay off as anticipated.

Key lessons from Nike's experience are clear:
1) Balancing D2C benefits with risks of inventory management is necessary
2) Middlemen can add value to the supply chain by helping manage these aspects effectively.

The next line of focus for Nike could be re-evaluation of the D2C strategy through developing digital platforms and focused marketing campaigns to engage with the customers more effectively.

Growth in emerging markets and capturing niches, such as trail runners, could be other drivers of sales. It can achieve brand loyalty through running clubs and cooperation with athletes.

And not every company's pivot is successful even if it's a giant like Nike.