Dependent On Retro Or Lacking Innovation? Nike's Conundrum

Nike.

"The goddess of victory."

Times have changed and it has seemed as though Nike's victorious status is slowly diminishing. Despite Nike sitting comfortably as the world's biggest sporting brand, 2017 showed some worrying signs.

Here are some figures:

Adidas doubled its market share for sneakers at 11% compared to 6.3% in 2016;

Adidas enjoyed 30% sales growth in North America, while Nike's revenues rose by just 3%; and

Nike's stock price fell to almost below $50.

What is the problem with Nike?

Looking back at 2017, silhouettes such as the Air Max 1, Air Max 97 and Flyknit Trainer seemed to have driven Nike's sale figures.

And according to Matt Powell, NPD Group’s sports industry analyst, "the fashion cycle we are in is casual and retro..."

So with that being said, this is a good thing right? Yes and no...

You would think that Nike's innovative prowess would be the backbone of the company's growth. They released the Zoom Vaporfly and VaporMax as an answer to Adidas' BOOST.

But even then these two groundbreaking silhouettes did not compare to the popularity of Nike's retro models that re-released in 2017. Rightly so, SneakerNews attributes the No.1 sports brand's stagnant growth towards their "robust retro catalog".

And to be quite frank, if it was not for Virgil Abloh's Off-White collaboration, Nike might have struggled even harder...

Look at Adidas on the other hand.

The number of innovative sneakers that helped drive their growth. Whether it was Kanye's Yeezy V2s, Calabasas, Futurecraft 4D or the Pharrell HU NMDs; Adidas were able to see their promising new innovation result in stock rising 67% over the last year.

So what now?

However, at Nike's 2017 Investor Day, Nike CEO and Chairman Mark Parker announced a new business strategy by the name of 'Triple Double' - 2X Innovation, 2X Speed and 2X Direct Connections with consumers.

The 'Triple Double Strategy' is labelled by Nike as the "new consumer direct offense" that will act as a faster pipeline to serve consumers personally at scale.

"Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever.”

“Fueled by a transformation of our business, we are attacking growth opportunities through innovation, speed and digital to accelerate long-term, sustainable and profitable growth.”

Nike essentially wants to double the speed at which it creates new products, double how fast it gets products to the market and double its interactions with consumers.

To double innovation, Nike will accelerate the impact and cadence of new innovation platforms.

As an example, over the past few months, Nike launched a cushioning revolution, featuring three new groundbreaking platforms:

ZoomX Air VaporMax Nike React

We will review these three midsoles in depth in next week's blog.

To give consumers more choices of the products they love, Nike is editing to amplify — reducing its styles by 25%, and offering a deeper selection of key franchises.

Nike Jumping the Gun Early

In just the first month of 2018, we have already seen promising signs from the $16 billion worth sports brand.

Both the Nike Air Max 270 and the Nike Epic React Flyknit have made heads turn and for good reasons.

Air Max 270 review by NiceKicks

Features the tallest air bag ever at 32mm

Offers the biggest heel volume displacement for maximum air cushion comfort.

"What got me was the dual-density foam in the forefoot. That foam is not regular! The airbag springs you into the next step, while the forefoot eases you through your stride walking. These are way more comfortable fresh out the box than the Nike VaporMax"

Epic React Flyknit review by HYPEBEAST

Comparable to the FUTURECRAFT 4D in terms of how light and breathable it feels

"As someone who has run in original and retro Air Maxes, Free Run 2s, Flyknit Racers and Trainers as well as UltraBOOST variations and the FUTURECRAFT 4D, this sneaker is possibly the best yet."

Conclusion

It is refreshing to finally see Nike do what it does best.

Innovate.

It may be still early in the year.

Nike is definitely on its way to reestablishing its reputation as being the brand that pushes technology the furthest and the fastest.

Do you think Nike is innovating enough to regain lost market share? Or will Adidas continue to rise?

Let us know what you think in the comments below.

To read more about Nike's Triple Double Strategy, check out the link below:

https://news.nike.com/news/nike-consumer-direct-offense