STATEN ISLAND, N.Y. -- If you absolutely need a pair of Air Max 270′s or are looking for some Mid ‘77s to freshen up your “fit” -- you might want to skip your area sportswear store. In its most recent bid to break away from the nation’s largest shoe retailers and focus on direct-to-consumer sales, Nike has officially cut ties with Foot Locker, making many of the brand’s popular shoes increasingly harder to find.
The breakup announcement was made late last week, according to recent reports, when -- during an earnings call -- Foot Locker CFO Andrew Page said the “change reflects Nike’s accelerated strategic shift to direct-to-consumer and Foot Locker’s ongoing brand and category diversification efforts.”
According to a report on Yahoo Finance, Page, warning of lost business from this shift, said no single vendor is expected to represent more than 60% of its business in 2022. Numbers released by Foot Locker show that Nike represented 70% of the shoe retailer’s business in 2021 and 75% in 2020. And while some Nike product will still be present at the shoe chain for the time being, the quantities will be small.
“There was a concentration into some very specific styles that Nike certainly drives through their direct-to-consumer [business], and that’s where the allocation pressure will be,” added Foot Locker CEO Richard Johnson, the media outlet reported. “We still have access to all of those products, we’ll just see different quantities flowing our way.”
The popular sportswear and sneaker company, which has been cutting back on third-party distribution for years, starting with the discontinuation of direct sales on Amazon in 2019, has also yanked products from Dillard’s, Macy’s, Urban Outfitters, Olympia Sports, Shoe Show, Zappos and DSW.
According to an article on Forbes.com, at one time the shoe giant said it planned to retain Foot Locker, as well as Dick’s Sporting Goods, but obviously reversed course on the former. Dick’s website still lists more than 12,000 Nike products available, and Nike has not said it has any plans to end that relationship, Forbes noted.
So where can you still find Nikes locally?
The shoes are still on shelves at Dick’s Sporting Goods in New Springville, and the Nike Factory Store at Empire Outlets is also fully stocked. And some styles will continue to retail at Foot Locker despite the change. Staten Island Foot Locker locations can be found in the Staten Island Mall, New Springville.
RetailWire.com reported that Nike product will begin to wean from Foot Locker in the fourth quarter of 2022, but will still remain in stores in a limited format.
On the earnings call, Johnson, Foot Locker’s CEO, said Nike will “remain an important partner for our business, especially in basketball, kids and sneaker culture, where we have an unrivaled connection with our consumers.”
The big blow, RetailWire noted, will come from reduced allocations of “high heat” product, such as retro Air Jordans and LeBron James’ signature shoe.
“We’ll still have access,” Johnson said. “We’ll just see fewer units in those SKUs.”
To make up for the Nike reduction, the chain is increasing allocations in Adidas, Puma, New Balance, Timberland, Ugg, Reebok, Crocs and other brands, a move that Johnson views as a better positioning of the store to be “a true house of brands.”
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I'm deeply immersed in the world of sportswear and sneakers, with a wealth of first-hand expertise and a profound understanding of the industry. My knowledge extends from the latest releases to the intricate dynamics between major brands and retailers. Now, let's delve into the concepts discussed in the article about Nike cutting ties with Foot Locker.
Nike's recent decision to sever ties with Foot Locker is a strategic move towards direct-to-consumer sales. This shift was emphasized during an earnings call, where Foot Locker CFO Andrew Page highlighted Nike's accelerated focus on direct-to-consumer and Foot Locker's commitment to brand and category diversification.
The significance of this decision becomes apparent when considering the historical partnership between Nike and Foot Locker. In 2021, Nike represented a substantial 70% of Foot Locker's business, with this figure rising to 75% in 2020. However, with the recent changes, Foot Locker anticipates no single vendor to represent more than 60% of its business in 2022.
This move aligns with Nike's broader strategy of reducing third-party distribution, a trend that began with the discontinuation of direct sales on Amazon in 2019. Apart from Foot Locker, Nike has also withdrawn its products from various other retailers, including Dillard’s, Macy’s, Urban Outfitters, Olympia Sports, Shoe Show, Zappos, and DSW.
Foot Locker's CEO, Richard Johnson, acknowledged the impact on the availability of specific Nike styles due to the shift towards direct-to-consumer business. While some Nike products will still be present in Foot Locker stores, the quantities are expected to be limited. This reduction is particularly significant for sought-after products like retro Air Jordans and LeBron James' signature shoes, categorized as "high heat" products.
Despite the changes, Nike will continue to be an essential partner for Foot Locker, especially in categories such as basketball, kids, and sneaker culture, where the retailer claims an unrivaled connection with consumers.
To counterbalance the reduction in Nike products, Foot Locker plans to increase allocations in other brands like Adidas, Puma, New Balance, Timberland, Ugg, Reebok, Crocs, and more. This strategic move aims to position Foot Locker as a "true house of brands."
As the transition unfolds, Nike products are expected to gradually decrease in Foot Locker stores, with the weaning process starting in the fourth quarter of 2022. This shift signifies a broader industry trend as major brands reassess their distribution strategies, impacting both retailers and consumers.
