Sales Portfolio: The NIKE Air Force 1
Industry Profile
NIKE operates within the industries of footwear, streetwear, apparel, and sports equipment. These industries include lifestyle, performance, and sports footwear; lifestyle and performance apparel, outerwear, and accessories; and equipment for a multitude of sports.
The global footwear and apparel market is valued around $1.9 trillion USD as of 2019, and is projected to reach $3.3 trillion USD by 2030. The market value of NIKE in 2020 was approximately $223 billion USD, making NIKE the leading company in these industries on a global scale both in value and net revenue. NIKE holds around 27.4% of the global market share in athletic footwear alone, dominating especially in the North America market.
Major competitors to NIKE include adidas, Anta, ASICS, Li Ning, lululemon athletica, Puma, Under Armour, and V.F. Corporation; Puma and adidas being the largest competition within these industries.
These companies are all large international actors in the footwear, apparel, and sports equipment industries — most using similar strategies for growth and success. Some popular strategies seen today include social media presences, campaigns, and collaborations; endorsements and partnerships with athletes, sports leagues and tournaments, influencers, and celebrities; social and political commentary and stances regarding sustainability, equality, and peace; and ever-evolving development and innovation of both technology and products.
Consumers of lifestyle and performance apparel, footwear, streetwear, and equipment are not only focused on the performance, value, and quality of products — but also the impact in innovation and creativity that a brand exhibits.
Company Profile
NIKE was created in 1964 by Phil Knight, and is based in Beaverton, Oregon, USA. It is a world-renowned footwear, athletic apparel, and sports equipment brand that has been supplying the market through not only the NIKE entity, but also the subsidiaries of Converse, the Jordan Brand, and Umbro.
NIKE provides products to consumers with their 338 US and 758 non-US retail stores, along with on their large eCommerce platform, nike.com, and through wholesale ventures with third party distributors. Popular third party distributors available to Canadian consumers include Sportchek, Sporting Life, Journeys, and SSense; available in both storefront and eCommerce purchasing options. In 2020, NIKE recorded $37.4 billion USD in revenue — 66% being from footwear, 31% from apparel, and 3% from equipment. Of these sales, 41% came from the North American market.
In the early days of the company, NIKE differentiated themselves from the established European companies of adidas and Puma by creating a shoe that lasted longer and cost less than the German competitors. From there, a loyal customer base was secured, strong marketing actions were taken, and positive testimonies spread.
Goals and initiatives of NIKE’s brand revolve greatly around product and experience innovations, sustainability, collaborations and endorsements, and technological evolvements and trends.
Social media continues to grow and serve as a highly influential tool for promotion, brand awareness, content distribution, and community engagement. NIKE currently has many social media accounts across the platforms of Instagram, Twitter, Facebook, and YouTube — currently boasting the highest following compared to all close competitors. Their Instagram (@nike) currently sits at 143 million followers; Facebook at 35.9 million; Twitter at 8.4 million; and YouTube at 1.6 million. Their social media presence is used successfully to increase brand awareness and loyalty, website traffic and conversion rates, sense of community, and influence within the market; improve better SEO (Search Engine Optimization); and perpetrate repetitive/limitless exposure through their accounts, collaborations, and promotions.
NIKE has been using collaborations with and endorsements of athletes, celebrities, influencers, and sports teams/leagues/tournaments as a pinnacle of their marketing strategy since they began gaining popularity. Today, NIKE has partnerships with huge sports names such as Michael Jordan, Lebron James, Cristiano Ronaldo, Kevin Durant, Tiger Woods, and Serena Williams.
Another form of collaboration that increases the popularity and revenue of the NIKE brand is limited edition releases of products made with high-end/luxury brands. NIKE has collaborated with Off-White, Dior, Supreme, Comme des Garçons, Sacai, OVO, Rick Owens, Fear of God, and more. These capsules create hype around the brand and popularity in the streetwear market. The Jordan Brand has the highest resale value overall for a shoe brand, especially in terms of rare/limited edition products. The average resale value of the Air Jordan is 1816% of the original price, while the Yeezy Boost (adidas) has an average resale value of 589%.
Regarding sustainability, NIKE is committed to decreasing their environmental impact through zero carbon and zero waste initiatives, recycling and implementing eco-friendly materials, streamlining their sourcing and methods of manufacturing, and using renewable energy in all their facilities.
Effects of the COVID-19 Pandemic
The COVID-19 pandemic has affected the majority of points in supply, distribution, and consumption chains internationally — and NIKE has not been exempt from these disruptions. Participating at an international scale within global markets comes with risks as trade, consumption, manufacturing, supplies, distribution, and import/export abilities can be affected by local economic and political conditions as well as aspects of trade protectionism, taxes, and tariffs.
The pandemic has caused issues for NIKE in all of said aspects, contributing to slowdowns and shutdowns regarding physical storefronts; manufacturing, transportation, and shipping; sports leagues and tournaments; worsening economic conditions; additional costs of precautionary measures; ever-changing policy and law; and more.
The Air Force 1 Shoe
One of NIKE’s bestselling shoe is the Air Force 1 which is most popular in the all-white colorway and is offered in both low and high top styles. This shoe was created in 1982 by Bruce Kilgore as a high top court shoe, but has since gained popularity by the masses and is available in men, women, children, and infant sizing and a plethora of colours and customizable designs.
Because of its versatility and popularity, it is considered both a basketball shoe and a streetwear/fashion style and has been one of NIKE’s top selling products for decades. Analyst Tim Powell estimated that there were 12 million pairs sold in 2005 alone, and have continued to retain this level of popularity (and more) 3+ decades later.
While the shoes are popular with the public today in a variety of different communities, it is important to note the history of the Air Force 1 in terms of targeted marketing that was motivated by both race and class in the late 80s and early 90s, coincidentally during a crack epidemic along with the emergence of mainstream hip-hop. The Air Force 1 was purposefully of lower cost than other NIKE shoes at the time, and was being targeted towards inner city communities. The people in these communities, specifically drug dealers and hustlers, drove the desire behind these shoes and can be credited for the popularity and success seen today.
When the Air Force 1 was initially released, little to no marketing was committed to promoting this style. Instead, popularity came from brand awareness and identification due to consumers marketing the shoe for NIKE. Limitations were placed occasionally on the shoe’s availability to create more hype and desire for the shoe itself, successfully so. When different colorways were introduced, this allowed for even more coveted and rare versions to be created and released.
Currently, the price for a pair of Air Force 1s is around $95 USD for adults, and $55 USD for children’s sizing. On NIKE’s official website, the Air Force 1 can be seen selling for up to $400 depending on collaborations/style. The most popular all-white styles are frequently seen in very limited to no stock, both on the official NIKE website and many third party platforms, speaking to the highly sought after status of these shoes.
Below is a figure exemplifying the top features and benefits of the Air Force 1 shoe:
Competitor Profile
Adidas was formed in 1949 as a sport footwear company in Herzogenaurach, Germany, by Adolf Dassler and includes the brands Reebok and TaylorMade under the company.
In their 2020 final report, adidas claimed $25.3 billion USD in net sales, which is considerably less than their competitor NIKE, but a close second in the entirety of the apparel, footwear, and sports equipment market for yearly earnings. While NIKE leads in the North America and China markets, adidas performs slightly better in the Western Europe market.
One of adidas’ most popular lifestyle shoe and closest contender to the Air Force 1 is the Superstar (seen in the photo above). Traditionally created for basketball, adidas named this shoe the Supergrip when released in 1965, before changing it to the Superstar in 1969— after it became the top shoe in basketball at the time. The style originated as a court shoe, but has been accepted into the fashion scene for decades since. The shoe is historically made from white leather, with rubber for the iconic shell toe, and a touch of colour in the 3 side stripes and on the heel.
Because of the explosion of hip hop in the 80s, the Superstar started being seen on rappers and cultural influencers of the time, gaining popularity outside of basketball, alike the Air Force 1.
Like NIKE, adidas likes to create hype around their classic style. They personalized the shoe and collaborated with celebrities and high end brands to create more buzz. They’ve recently became very trendy again and compete within the fashion community against Air Force 1s and similar casual sneakers today.
Also similar to NIKE, Superstars are available for purchase within physcial adidas and third party stores, as well as on each respective eCommerce website (such as adidas.ca). They are priced around $80 USD for adults, and $65 USD for kids styles which is comparable with NIKE Air Force 1 prices.
Competitor Matrix
Prospect Profile
Aritzia is a Canadian company that originated from Vancouver in 1984, and now has stores across Canada and the US, along with international shipping from their eCommerce site (aritzia.com). Their focus is on women clientele of middle-upper class who appreciate considered designs and quality pieces. They have lines for all lifestyles including office, active, outer, formal, and casual wear.
In their 2020 report, Aritzia recorded $275.4 million CAD (approximately $222.2 million USD) in net revenue; a growth of 6.3% overall — and 29.4% in their United States market alone.
Currently, Aritzia offers their exclusive in-house brands, but occasionally adds pieces from other brands to their online store including NIKE and adidas in terms of accessories, sports wear, and shoes (not currently available). However, they would benefit from both an in-store shoe section, as well as a larger online section dedicated to casual footwear. Their current online selection features 14 styles of sandals, and only one pair of sneakers (New Balance).
Due to their success as a company across North America, NIKE would be a perfect edition to Aritzia stores as NIKE dominates in the North American shoe markets already, and Aritzia is growing steadily.
Air Force 1 styles have become increasingly popular among women as lifestyle shoes, something that has not been seen historically in footwear brands as they have targeted professional athletes and hip-hop icons — communities of which women have largely been ignored within. This is a large opportunity for NIKE to offer styles to a boutique that markets to women to further their success as the top footwear company, but also to integrate more female representation within the brand.
References
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