Tuesday, 23 April 2024

Nike CEO blames oddly specific problem for brand issues

by BD Banks

Blink and you might miss an important trend when it comes to the fashion industry.

Thanks to the rapid integration of social media by virtually all fashion brands – and the breakneck pace at which fans of fashion use social media – trends or movements can come and go in the blink of an eye. 

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Whether its brands being showcased on Snapchat during New York Fashion Week, the metaverse hosting its very own fashion week, or influencers showing off their latest styles on TikTok, it can be tough to keep up. 

This is especially the case with footwear. As athletes influencers build their own brands (and social media presence), it’s important for them to stay on top of what’s considered cool to wear, and what may be a little outdated. In fact, it’s kind of a part of their jobs. 

Currently, what’s old is cool again. Vintage footwear styles like Adidas’ Sambas and Campus sneakers are everywhere from the high streets of London to college campuses in the United States. So-called dad shoes – specifically New Balance’s highly popular Unisex 530 sneakers – are almost always sold out in stores and online. 

So establishing a foothold for Nike  (NKE) , which has historically specialized in sleek silhouettes and bright colors, has been tough when neutral and chunky styles are now popular. 

As a result, Nike has been struggling to gain back the enthusiasm its brand once enjoyed so steadily during the earlier 2000s. 

A pedestrian walks past a Nike store in Hong Kong.

SOPA Images/Getty Images

Nike CEO identifies a problem

Some CEOs have called out Nike, claiming “they stopped a little bit bringing in new stuff,” per JD Sports CEO Régis Schultz earlier this month, adding “shoppers get bored very quickly.”

Aware that growth and imagination seem to be an issue at his company, Nike CEO John Donahue isolated one particular issue that may be to blame, claiming the problem “is fairly straightforward.”

Since the onset of the pandemic, Nike adopted a remote work policy that Donahue said hurt its competitive edge. 

“But even more importantly, our employees were working from home for two and a half years,” Donahoe said in an interview with CNBC. “And in hindsight, it turns out, it’s really hard to do bold, disruptive innovation, to develop a boldly disruptive shoe, on Zoom.”

Eager to right the ship, however, Donahue says the company has been working on a “bold, disruptive” plan to churn out new products and hopefully reinvigorate excitement for the brand. 

“So we realigned our company, and over the last year we have been ruthlessly focused on rebuilding our disruptive innovation pipeline along with our iterative innovation pipeline,” he said. “So the pipeline is as strong as ever.”

Nike plans a comeback

Nike stock is down 11% year-to-date, and in December the sneaker maker slashed its revenue outlook for the forthcoming fiscal year, citing weaker digital demand in the U.S. and stronger headwinds in its key Europe-Mideast-Asia region. 

It also announced a $2 billion cost-cutting plan. In February, Nike laid off 2% of its employees. It has also been working to streamline and simplify some of its lines.

But the sneaker maker is planning a comeback in 2024. 

It plans to make the upcoming 2024 Paris Summer Olympics an exhibition for some of its refreshed product lines, specifically in the track and field category. 

“We’ve done more to advance running than any brand in the world over the last 50 years and we continue to lead with elite runners,” Donahoe added. “Innovation has always been what’s marked Nike in running, as in other categories, and so we’re not just going to copy what other people do.”