How sportswear giants are losing ground

It’s not looking very good for Nike lately.

The sportswear giant’s “Winning Isn’t For Everyone” campaign, starring LeBron James, Serena Williams, Sha’Carri Richardson, Cristiano Ronaldo and others, debuts in a season of uncertainty for the world’s sportswear leader. 

“How Nike Missed the Boom in Running Culture”, reads one article in the Wall Street Journal. “Will Nike’s Investment in the Olympics Save the Brand? Yes and No”, reads another from Forbes Magazine.

Per reports, the world’s largest sportswear brand saw its biggest stock drop since 2001 in June. “The shares fell as much as 18% on Friday morning ... wiping out billions in market value. The stock had already declined 17% over the last 12 months,” the Los Angeles Times said, adding that this came short of expectations; stoking investor concerns over waning demand, and competition from upstart brands On and Hoka, as well as rival Adidas.

While Adidas appears to be doing just fine, the emphasis really is on “just fine”, as it has also struggled after cutting ties with Kanye West’s Yeezy. Per Reuters, back in March: Adidas “posted its first annual loss in more than 30 years on Wednesday and warned sales in North America would fall again as sportswear retailers in the US struggle with high inventories. Adidas has been battling to right itself after it cut ties with Kanye West in October 2022, suspending sales of the highly profitable Yeezy sneaker line.”

It was reported at the time that Adidas would clock in an operating loss of $772m as a result of the Yeezy line’s withdrawal from the marketplace. New CEO Bjorn Gulden’s resumption of sales mid-2023 is seen as one of the reasons the brand was spared a deeper decline. The resurgent terrace sneaker trend, which sent the popularity of its retro styles like the Samba and Gazelle skyrocketing, is another. 

And herein lies the problem for the sportswear giants. 

Setting aside weak demand due to consumers cutting spending on non-essential goods, the sportswear giants don’t seem to be innovating much. Even at a time when there is considerably much more competition in the category, they are riffing off old styles, brand name recognition and hedging bets on big name celebrity partnerships that don’t seem to have had much of a positive effect on their bottom line. 

For the last few years, Adidas’s strategy has centred on partnerships with Pharrell Williams, Beyoncé and Bad Bunny. It has not proven to be a winning strategy. In 2022, for example, sales for Beyoncé’s Ivy Park line fell below Adidas’s $250m projection, according to the Wall Street Journal. 

Healthy Competition

Elsewhere, Nike has been reported as losing ground with running clubs — a space that is increasingly being filled by smaller competitors including Hoka, New Balance and Asics. The likes of Lululemon, On Running and other similar brands are eating away at market share and turning the heat up in the celebrity ambassador game.

Since 2019, Nike has lost athletes like American gymnast Simone Biles to brands like the Gap-owned Athleta, which also wooed a number of women sports stars including swimmer Katie Ledecky, and golfer Albane Valenzuela. 

In a bid to connect with people beyond sports, Swiss brand On Running recently tapped Hollywood actress Zendaya, signing her on to a multiyear creative partnership. Per Vogue Business: “On’s multipronged strategy reflects a fresh approach to sportswear marketing, one that bridges sport, fashion and culture, as these spaces deepen ties. Instead of taking the Kardashian and Hailey Bieber route like (American athletic apparel retailer) Alo — or the athletes route like sportswear incumbents Nike and Adidas, On is carving out a new space at this intersection. It’s one that’s sure to draw many more eyeballs than the either/or.”

The writer further notes that this partnership happens at a moment when “tennis mania is at its peak, and in the wake of what felt like one of cinema’s buzziest press tours, On is also cementing itself as a player in the Challengers (movie) fashion multiverse.”

The Olympics strategy might work for Nike, and maybe the resurgent retro styles will remain popular for Adidas. Whatever the case may be, both will have to come up with another act soon before they miss another boom in the culture in favour of shiny strategies. This is at the cutting edge of culture where sports intersect with everyday life — it’s in the movies, it’s in the running clubs, and now padel courts. That’s where to regain lost ground.