JUANA SUMMERS, HOST:
Between the shelves full of unsold product, last week's senior leadership shakeup and a lot of the same old models being offered again, just in different colorways, industry insiders are not so bullish these days on Nike. Have we hit peak Nike? - writes Chris Burns. He's a footwear business analyst, and he also runs a sneaker resale platform on his website, which is called ARCH. So we asked him to explain. Chris, welcome to ALL THINGS CONSIDERED.
CHRIS BURNS: Thank you guys for inviting me.
SUMMERS: All right, Chris, let's just start with the clarification here. Nike is still the big name in the sneaker market. I mean, there's a big movie that just came out about the creation of the Air Jordan. What leads you to raise this question if the company is post-peak?
BURNS: Nike is so big and so powerful in the sneaker industry that me saying peak isn't the same thing as saying a smaller company just lost a great share of the marketplace. But for Nike, who's hopefully trying to hit $50 billion a year, it seems that Nike has finally maxed out its potential. In my view, COVID was such a disruption. Nike is now in a place where demand and supply are even. Nike itself - when you walk into the stores, the Nike wall is just cluttered. Where a shelf used to have one shoe turned to the side where you can see it really well, there's three or four shoes on one shelf at a time.
SUMMERS: Wow.
BURNS: So it's just cluttered. You walk into a Foot Locker, and there are boxes inside of the store space in some instances because there's so much inventory.
SUMMERS: One of the things I'm wondering is - is this a situation in which we just saw Nike release a whole lot of retro shoes and new, different colorways that just in some ways oversaturated the market?
BURNS: So in the last six years, since 2017, there's what I call a three-to-five-year window to see what's really happening with a brand. For Nike, that 2017 changed the direction of the company. They grew. Nike was opening stores, but they introduced a program called edit to amplify. Edit to amplify made Nike focus on the product that was selling the best. And in the process of focusing on the product that was selling the best - Air Jordan 1, Nike Dunk, Nike Blazer - they began to make those shoes in a lot of different colorways, but the problem was they were no longer innovating. Nike used to be revolutionary. In the last few years, though, it's just Dunks, Jordans, Air Force 1s.
SUMMERS: Yep.
BURNS: That doesn't mean that it's not selling. They're still selling, but it doesn't have the same brand heat. It doesn't create the type of emotion that it used to.
SUMMERS: So this is not the first time in recent history that you and other analysts have seen Nike undergoing a bit of, say, a slump. Tell us about what happened the last time.
BURNS: The last time the slump took place, it's 2014, 2015, and Nike rolled out a lot of product. They produced too many Jordan brand shoes. They flooded the market. At the exact same time that Nike kind of flooded the market, Adidas started to rise. They signed Kanye West, so Adidas was on the rise. Nike was just kind of coasting. It seemed that Nike was going to pick up steam, but they didn't have any newness or research and development that was happening. In 2017, they offset the lack of newness in the scale of sport. So the scale of sport introduced Nike React, Air Max 270 and 360-degree Flyknit. So Nike was kind of flatlining from 2014 to 2016. And in 2017, they were able to kind of turn the corner, and they fixed that problem. This time it's a little bit different, and I don't think it's going to be fixed this time around.
SUMMERS: What do you expect that the response will be from Nike? What do you think the company's next move is going to be?
BURNS: I don't know if they have a move to make. At that scale of sport, there were 10 speakers on that day. Five of those people are gone. There's a talent drain at Nike. In the last year, those tech people are gone, those data people are gone. I think Nike has to focus on inventory so much that they can't innovate. I think they're operating off of legacy more than they are off of controlling everything the way they used to.
SUMMERS: Footwear analyst Chris Barnes. His website is called ARCH. Hey, thank you.
BURNS: Oh, no problem. Thank you.
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