Why Nike’s CFO says ‘it’s incredibly important for Nike to win with runners’ to right the brand’s ship
As Nike charts its comeback, the activewear apparel behemoth is looking to its offerings for runners — and the group’s reception of said offerings — as a bellwether for success.
“We are especially encouraged by the momentum building in our running offense,” Matthew Friend, evp and chief financial officer of Nike, said during the company’s earnings call on Tuesday evening. “This has been one of our toughest fights over the past few years and it is one of our biggest opportunities. Our team’s focused here first in driving our comeback.”
It makes sense that Nike would focus on running in the wide spectrum of activewear. In recent years, the company has seemingly lost market share in the space to burgeoning footwear brands like Hoka and On, both of which have made gains in the running market. The so-called boom in running culture that’s followed the early days of the pandemic has driven brands like Hoka, On, New Balance and Asics to woo run clubs with shoe try-ons and other tactics to capture consumer attention.
Throughout the first quarter, “men’s and women’s running footwear delivered positive growth” and “a meaningful improvement versus the prior quarter,” Friend noted during the earnings call, adding that Nike was up “double digits this quarter with running specialty partners.” The company also recently debuted new work focused on runners, marking “one of our biggest Running brand investments in years, which will carry into fall and holiday,” said Friend. “So far, consumer engagement has been very strong,” Friend added.
Aside from the new work, Friend pointed to Nike’s “ground game activations” as well as the launch of its Pegasus 41 model earlier this year as other efforts to make inroads with runners. The company also has new Pegasus models slated for spring as well as a “full product pipeline in running,” Friend said.
To industry analysts and observers, Nike’s move to focus on running is a natural one for the brand. “It’s in their DNA,” Malcolm Buick, chief creative officer and partner at Athletics NYC, a brand studio that has worked in the sporting space with the likes of Major League Soccer, said when asked if the approach makes sense. “This may help Nike to get back to the roots a little bit and really focus on this core strength, iconic designs, brand heritage in associations with elite athletes.”
Michael Miraflor, chief brand officer at early stage venture firm Hannah Grey VC, echoed that sentiment. “Nike did start out as a running shoe company,” said Miraflor. “I don’t think a lot of younger consumers know that. In a way, they’re re-exploring their heritage and getting back to their roots. It makes sense from a DNA perspective. They’re not faking it.”
Getting a brand back on track in this way often involves going back to its roots, noted Allen Adamson, brand consultant and co-founder of brand consultancy Metaforce.
Nike’s renewed focus on running comes the brand experiences a leadership shake-up, with CEO John Donahue slated to hand the reins to Elliott Hill on Oct. 14. The consensus among former employees and analysts seems to be that Hill is the right leader to steer Nike back to the top of the market and return the brand to its reputation as an innovator in the activewear space.
Friend also noted on Nike’s earnings call that the company recognizes it lost market share in running as it pulled back in engagement in the channel. Nike sees reinvesting in running both as a way to regain revenue and to connect with “the community of running,” explained Friend. “It’s about connecting directly with runners. And while we’ve seen tremendous success at the top of the pyramid with innovation with marathons and on the track, we haven’t made as much progress with everyday runners. And that’s where our team’s focus and attention has been over the last year,” Friend said.
“Nike’s a running company,” said Friend. “Nike is a running brand, and it’s incredibly important for Nike to win with runners.”
While Nike is charting a path to win with runners — through its running campaign as well as new footwear models and apparel — it will likely take time for the company to make up the losses in market share in the category, noted industry analysts and observers.
“It’s the right strategy, but it will still be incredibly hard to execute,” said Adamson. “But having the right strategy in business isn’t enough. You need brilliant execution and the brilliant execution here is going to be tough because competitors have gotten better [at focusing on running innovation with their products]” so product differentiation is now the bare minimum.
“It won’t be easy because the market has changed,” said Adamson.
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