In the midst of a years-long surge, Nike is coming off of a rough month. Looming tariffs threaten to cut into profits potentially creating greater reason for a pause in enthusiasm. Some are even seeing the sneaker giant’s competition with adidas as being closer than might be expected.
So we dug into the sneaker giants offline performance by focusing on visits to their dedicated stores in the US.
Swooshing in the Right Direction
Forgiving the need to use a terrible pun, it’s clear from visit data that the Nike brand is alive and well. Analyzing data from the start of 2017 through July 2019 shows that in-store visits declined in 2018, but have seen a strong resurgence from late 2018 and throughout 2019. December, a key time period for Nike, saw visits that rose 21.8% above the period’s baseline compared to an 18.3% rise in 2017.
Cashing in on Back-to-School
But far more important to the sportswear brand is the Back-to-School season in July and August that lifts in-store visits to their yearly peaks. Between 2017 and 2018, there was a significant decline with the baseline increase decreasing from 39.7% in July and 41.6% in August to 25.2% and 30.4% in July and August 2018 respectively. Yet, July 2019 already demonstrated a significant rebound with visits rising 38% above the baseline for the period, falling just short of July 2017’s pace.
However, early data from August is already showing that this year’s peak might surpass anything seen in 2017 or 2018. Looking at weekly data for the same period, but extending it through August 25th shows a significant spike in visits. The three weeks from July 29th through August 18th were three of the four strongest weeks of the entire period with only the week of Black Friday 2017 enjoying the same level. The week from August 5th through August 11th of 2019 rose 83.9% above the baseline, the most single-week visits of the 32 month period. The next two weeks came in at 40.9% and 35.0% above the baseline respectively before the period ended in the beginning of September.
Sports Retail Rebound
Interestingly, this trend doesn’t seem limited to Nike, with other activewear companies seeing in-store growth as well. We’ve covered Lululemon’s rise multiple times and another sports apparel retailer is also showing similar trends. The following graph shows Foot Locker visits (red) nationwide compared to its respective baseline alongside Nike visits compared to its baseline (blue). The striking similarity in trends shows that there is a potential surge coming for the entire industry, with wider appeal for these products.
Conclusion - Why It Matters
There are a few important takeaways for Nike, its competitors and the shopping centers that house them. Firstly, the Nike brand value appears to be surging and while there are certainly risks as mentioned above, the ability to drive significant in-store visits is a powerful indication of Nike’s strength. Secondly, growth isn’t just limited to Nike. The entire sportswear sector seems to be enjoying a period of strength making the wider space especially interesting.
Finally, the move has wider meaning for other Direct-to-Consumer and large scale CPG brands. Owned stores, especially in the apparel space, present a unique opportunity to boost sales and marketing simultaneously. With Puma the latest to launch a massive flagship, this trend is something that could very likely continue if not expand.
