Thursday, September 28, 2017

Nike-nomics

Nike-nomics
VInny Rondinelli
Nike has been the dominating sneaker company in the entire world with bringing so many new shoes to the market frequently, keeping sneakerheads and athletes on the edge of their seat to snatch the newest Nike sneaker release. But recently, the hype for Nike has been starting decrease. Nike’s dominance has started to decrease with declining sales and people showing less interest.

In 2016, in more than a decade, did not have the top selling sneaker in the US, which was the Adidas Retro Superstar. This made Nike cut 2% of their labor, about 1,400 people. Adidas products have been making their products more scarce, so it will mean more to sneakerheads that they are more collectible than Nike shoes. This also gives Adidas a shortage in their products since they had a high demand in the last year, with the NMD and Yeezy shoes being the most popular.

People are predicting that Nike will go down hill while Adidas will keep rising in the sneaker community by identifying problems Nike creates. Nike thought of an opportunity cost by releasing workers to save more money for the company, instead of trying to follow trends. They are also giving customers more discounts on shoes people do not care for, which also decreases the company’s value. The marginal cost of this is not making trending type shoes, which will lose some customers. But the marginal benefit of making shoes less scarce can increase sales by lowering prices.

Overall, Nike needs to jump on the wagon by creating more fashionable and casual sneakers rather than sticking to workout and basketball shoes. They need to listen to their customers and try to out beat their main competition right now, Adidas. Nike has not been beat yet, but if they keep up these problems they create, they will fail and be a forgotten company. That is why Nike’s dominance has started to decrease because of their declining sales and people showing less interest towards the company.

Citations

Bain, Marc. “Nike is still the king of the sneaker industry, but even great empires can fall.” Quartz, Quartz, 6 Sept. 2017, qz.com/1067801/nikes-iron-grip-on-the-sneaker-market-is-slipping/. Accessed 18 Sept. 2017.


Brown, V. (2017). NIKE, Inc. (NKE): What are the Technicals Saying? – Economics and money. [online] Economicsandmoney.com. Available at: https://economicsandmoney.com/2017/09/15/nike-inc-nke-what-are-the-technicals-saying-2/ [Accessed 18 Sep. 2017].

33 comments:

  1. I liked this topic in general and I think it is quite relevant to the time right now. I know of Adidas being very popular in the sneaker head community. I also know that they don’t sell as much products but have the prices higher on each making them very profitable and in more demand. They also helped their sales by innovation a boost material that nike doesn’t have anything to offer in comparison. I think that the scarcity of the products is the main problem. Nike has no hype shoes that are popular yet scarce besides the occasional retro Jordan shoes that come out every once in awhile. Even then they can be hit or miss. Overall I think this is a great topic to debate around and it can show how Nike need to innovate more popular options to their buys.

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  2. I agree that Nike has been slacking a little bit in their “trending” shoes. Many other sneaker companies have come out with very unique styles of shoes that have become very popular. I didn’t know that they had cut 2% labor so that their company could save some money, so that was interesting to hear. I think that sometimes, though, people buy shoes for the name brand, and if they are a Nike person, they will buy Nike, so I’m not sure how that would work if they were to create a more trendy shoe, and then have nobody to help make it. That would increase the scarcity of the product, and possibly turn away customers as well. I think it depends on the consumers likes and dislikes, and so the designers of the shoes should look into creating more unique, or on trend styles, that will help their sales.

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  3. Nike is one of the companies that just about every one wants. Adidas has been coming up though because they are making their products more tailored to the customers while I feel Nike just isn’t doing as much of that. I know that Nike is cheaper but they are most likely selling less than Adidas is but they have a higher price. Overall I feel as Nike will pick it up with new products that they release for Jordan or Nike.

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  4. I agree with your statement on how Nike is going down hill and need to make more fashionable shoes and not always stick with your average tennis shoe. Nike will get more attention and more profit if their shoes are more designed like everyday shoes like Adidas has been successfully doing. Like in my own situation, I used to be a person that loved Nike shoes but now I’m leaning towards adidas shoes because of the wide variety of different shoes they sell. I like how you found a graph to show the overview of the competition between each brand, it really shows what is going on in the shoe industry. Overall, I think this topic is very interesting to talk and debate about as to which will have a better outcome in the near future.

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  5. I agree as well that Nike needs to bring their shoe game up. I've known that Nike has been a high-selling shoe brand for a long time, but I never thought that they'd be moved from the first place by Adidas. I agree with you that they need to make changes to stay at the top, but how? Nike has been around for so many years, what if they make the right changes but the people don't notice? They haven't really made different changes through the years in terms of their shoes so if/when they do, people are going to be surprised most definitely. So, for Nike to stay on top, I agree with you that there needs to be some changes.

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  6. I like the argument that Adidas shoes are becoming more popular because there are less of them so they have higher profit margins, but even though Nike has few super popular shoes, they still sell quite a lot of regular shoes. If Nike comes out with a really nice shoe that the general population can afford, that would significantly increase their overall popularity which would allow them to overtake the competition. Basically, I think that Nike might be in a slow spot in terms of sales at the moment, but they have the opportunity to come back at any minute. Also, although you mention that the hype for Nike shoes is starting to decrease, the graph show makes it look like Nike is continuing to rise in popularity.

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  7. It's interesting how such a popular brand is starting to become less popular. I've realized the decrease in Nike products but I never noticed how it really effects the company. It's crazy how about 1,400 people were cut from the company and left without jobs. Although Nike is still very well known, nobody had a clue about how much Nike has and probably will continue to decrease.

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  8. This was an interesting topic to read about. I think Adidas will keep growing, partially because of the fashion trends today. I used to like Nike products more than Adidas, but now I prefer Adidas over Nike. Adidas keeps up with the trends, and Adidas's All Star shoes are currently very popular, as well as the boosts. Kanye West has created a positive impact in the Adidas company, since he has had Adidas make his shoe, and he endorses in their products.

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  9. This comment has been removed by the author.

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  10. I agree with the idea of making more casual shoes but what kind of reaction do you think consumers will get if they do start to make more casual shoes. Another issue you mentioned was the fact that they have so much basketball and workout shoes makes them less valuable, or is it the quality that goes into the shoes. You used the Yeezy as an example of a high quality shoe Adidas makes but would you suggest that Nike makes a similar shoe in quality to bring back the hype sneaker heads used to have? If so what kind of impact will that have on their sales?

    -Cam Maderski

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  11. I agree with Alyssa by saying a lot of people buy sneakers because of the name brand, because I do it sometimes. I did not know some of the facts such as dropping 2% labor. Another thing that is hard with he shoe business is for instance, I was at payless and bought a pair of sneakers for $30 and everyone thought they were brand new nikes when they were just champion shoes. It's hard because when Nike comes out with a good looking shoe a lot of other brands create something like it and more affordable.

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  12. Recently, Adidas have been becoming more and more popular in the sneaker head community. I do agree with you that this is because the scarcity of their products. Nike mass produces almost all of their sneakers, making their shoes easily attainable. Adidas on the other hand has changed their style of shoes, and in addition have made there shoes limited. Now sneaker heads have switched to Adidas, since they are purchasing limited products which are valued higher. Adidas is similar to the brand Supreme. Supreme produces limited products valued at high prices, causing more and more clothing fanatics to purchase their products. Nike need to make their products scare, or they will continue to see a decrease in revenue.

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    1. I also agree with your blog post but I am also going to have to agree with Mariano because even though Nike has dominated shoe selling, Adidas is on the rise. They are starting to become more and more popular and there styles are becoming "cooler". But the reason Nike is still dominating shoe selling is because their shoes are so easy to get a hold because they are literally in every athletic shoe store there is if not more. I definitely think Nike needs to start making more collectible and High-end products to stay in the lead of shoe selling.

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    2. I also think that Adidas is on the rise and Nike is losing its grip on the market. For the first time in a while Adidas is starting to sell more then Nike Brand Jordan who has been at the top of the game for a while now. Even though this is happening I think Nike as a company over all is still dominating Adidas and other companies. Recently Nike took over rebock to sponsor the NFL jersey and took Adidas over for NBA.

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  13. This is really interesting because of the comparison between Nike and Adidas. I personally wear Nike more because of their prices being more reasonable, but it's interesting to see that Adidas is becoming more preferable by most people.

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    1. I think that Adidas makes more interesting shoes which makes consumers want to buy more.

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  14. Over the years on the shoe company market share chart one company has always been seen at the top. I predict that because of the scarcity of Adidas shoes they will replace Nike at the top of the chart because Nike makes a large quantity of most of their shoes. Similar events are occurring in the phone industry. The new IPhone X is priced at being $1,000 making it have a much higher demand because of how scarce it is compared to substitutes like Samsung. Although it may not have better features it is seen as a luxury good that is cool to have.

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  15. I think the shoe market overall is very interesting due to the change in preferences from year to year. A couple years ago it was popular to wear basketball shoes as casual wear, causing nike to be more popular, since they are much more popular in basketball shoes. Now that it isn't in to wear basketball shoes around, adidas has taken over. I don't really think this will be permanent, as nike and adidas have switched back and fourth for years, and will probably continue to do so.

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  16. I agree with your point about how Nike seems to be on a downward slope meanwhile Adidas seems to be on the rise. It was interesting to hear your reasoning to support this claim in particular the part about how making high end shoes could help Adidas rise even further to the top. I agree with that claim and think that you have done a nice job understanding the demographic in which these companies target by knowing which products will best appeal to their taste. I especially like the graph you found. It was a nice visual representation of the competition between the two brands.

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  17. I agree that Nike has been going down since there are so many other companies that come out with new an unique styles. I didn't know that Nike cut down 2% of there labor. I like how you compared Nike to other companies like Adidas. I think that Nike should make less shoes and sell them for more. This makes people want to buy the shoes and they also know that the shoes will run out fast making consumers buy them quickly.

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  18. I agree with your argument and can see that Nike sales are starting to decrease while Adidas is increasing. Your argument about why that is happening, and overall I think it is very interesting that how Nike, as you said is best for producing workout and basketball shoes is not meeting the constumers needs, therefore more consumers are leaning towards Adidas due to it's wide production of casual shoes. Then you did a great job at explaining that Nike needs to change their types of products produced in order to increase their sales so they aren't beat by Adidas. But if they make a change, will the change be made in time in order for Nike to still remain ahead of all of their competition? Overall, a very good argument.

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  19. The shoe market is very unpredictable due to trends and new styles causing Nike to have to stray away from their common shoes and more into casual shoes or others and stated above they can either produce cheep shoes with low scarcity so their is a big demand crating revenue for the company, or they will have to create more expensive high scarcity shoes for "sneakerheads" to bring back more revenue from the expensive shoes

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  20. Perhaps Nike isn't going down hill. It could be that Adidas is going up hill and is creating more appealing footwear. It might just seem like Nike is doing worse since their competition is doing so well. Additionally, Nike is known for their athletic footwear, so making a wider variety may require them to do some rebranding within the company. Overall, I agree that Nike needs to make some changes in order to improve and continue to compete with brands that are thriving, such as Adidas.

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  21. I love the line graph you used to help give a visual representation of the companies competition. I would have to agree with the fact that it is true how the Nike product is seeming to be less valuable to many consumers, but I think it is less of what Nike is now doing then what Adidas IS doing. Adidas has made brand deals with people like Kanye West and other celebrates, but instead of selling them for reasonable prices they go for much more because they produce much less. This gives a different kind of value as when there is less of that product, more people want it and the price rises as they then are considered collectibles. This gives Adidas a more prestigious band outlook because the shoes are looked at as better quality.

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  22. I think that it's hard to really judge at any period in time. Nike has created shoes that become popular and same with Adidas. I think that as time continues it there will continuously be a trade off in sales as people tend to go to what's cool and popular. Each company has had multiple shoes gain popularity, however just at different times. I believe that at different times, different companies will design something different that gains popularity, however it will just be a matter of time before the next shoe gains popularity. Right now Nike may be down on sales, however it is likely that it will simply be a matter of time before a new design will bring them more profit.

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  23. I also agree that Nike is now becoming irrelevant. It seems like most of their products are just re-skins of their previous products while Adidas is coming out with these fresh new ideas that a younger audience is more appealed to. This relates to a popular trend of buying designer cloths such as Gucci, Supreme, and many others. Adidas has been coming out with high price sneakers such as Yeezy's and NMD's which fall under the category of a designer clothing idem which is making these high quality clothing collectors to go after products like that. Recently, there have been a significant increase in people who are starting to collect designer clothing idems. As a result, Adidas having more sales then Nike.

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  27. I agree with your point about how Nike seems to be on a downward slope meanwhile Adidas seems to be on the rise. It's interesting how quickly things in the fashion market can change. not long ago Nike was undoubtedly the top dog but as casual running shoes became more and more popular Adidas has taken over the top. Your reasoning to support this claim was I think very accurate. especially the part about how making shoes that are more high end could help Adidas rise even further. I also especially liked the graph you found. It provided a great visual representation of the competition between the two brands.

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    1. I agree, it seems as only a few years ago Nike was so popular and Adidas was not well known, but now with all the new shoes Adidas making they are slowly beating Nike with their sales. Nike and Adidas are good examples of competition and since they are substitutes, Nike will have to lower their prices if they want to get back to the top.

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  28. I feel that if Nike wants to rule this shoe kingdom that they are gonna have to start pitching new ideas. They may have to modify there shoes or change things up. Everyone wants be different they are expecting something exclusive and unique. I liked the graph because I could actually sit there and decipher the stats.

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  29. I think your graph does a great job of giving a visual of the popularity trends amongst the different brands listed. Being someone who is very passionate about sneakers and clothing, I agree that Nike product's are seeming to be less desirable to many consumers. I don't think it is that Nike is doing anything wrong, but it's almost like Nike's product isn't innovative while Adidas is coming out with all kinds of new technologies such as boost and prime knit and collaborating with many artists such as Pharell Williams and Kanye west, who have really increased brand recognition with their signature silhouettes the "Yeezy" and "Human Race". In 2012 Kanye West left Nike and went to Adidas, which was when this topic came about as Adidas then became significantly more popular, and Nike was left with a void that would be impossible to fill considering the star power that Kanye west brings. If you look at when Reebok was at the top of the market, they had Allen Iverson under contract who was an extremely marketable figure as he was what every kid wanted to be during that time, and as soon as he retired you notice their global market share dropped off significantly. The limited releases of Kanye West's shoes have a ton of hype behind them as there is an extremely low quantity which generates extremely high demand for anything with his branding on it that the brand releases, no matter its quantity resulting in a lot of profit.

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