Nike last week laid out a broad comeback plan for the increasingly competitive running category.
In recent years, the footwear giant has lost share to smaller, running-focused brands like Hoka, Brooks and On, all three of which have found success with their niche perfomance offerings. But after growing its running footwear business 10 percent in fiscal year 2023, Nike is angling for a bigger rebound in the crucial category.
“Running has been a competitive battlefield lately with more and more brands joining the market, and today, we’re more aligned and resourced to compete and win,” Nike CEO and president John Donahoe said in a Thursday call with analysts, discussing the company’s fourth quarter and full-year results. He added that there is a “a lot of work ahead” for growing the business, but Nike is “firm in our belief that we’re all set to compete with strength.”
To get back on top, the Swoosh would need to demonstrate a strong commitment to the category and “bring innovative and fashionable product to market,” explained Matt Powell, an advisor at Spurwink River and senior advisor at BCE Consulting.
“Nike has large franchises in lifestyle running but they are all very old at this point,” Powell said. “Lack of style innovation hurts here.”
In addition, a focus on winning over everyday runners could also help Nike capitalize on the persisting consumer interest in running and walking.
The need for innovation
Like Powell, Williams Trading analyst Sam Poser also recently noted Nike’s need to be more creative. In a recent note to investors, Poser attributed Nike’s current product issues to a lack of innovation, which was stunted throughout the pandemic.
“There is not enough compelling new product offerings, and the old product has become stale,” Poser wrote. “Specifically, AirMax running product appears almost dead, and footwear for the moderate channel (family footwear) is stale, and will remain stale through the balance of 2023, and into the beginning of 2024.”
Donohoe said last week that Nike’s focus on innovation will be its advantage in running. Nike plans to unveil new running footwear products as it gears up for the Olympics in Paris next summer, and is already seeing success in racing and trail running with the Vaporfly 3 and Peg Trail 4, Donohoe said. He also noted that since Nike launched the Invincible 3 in Q3, the broader franchise has doubled its retail sales versus last year.
In the running lifestyle category — a strategic area of focus for Nike — Donohoe called out Nike’s Vomero 5, which since its launch in 2023 has been a crucial part of Nike’s “relaunch into the intersection of running and streetwear,” he said.
Reaching the average runner
To fuel growth, Nike is also looking to win over the average or novice runner, something its smaller competitors — Hoka, Brooks and On — have excelled at.
This approach proved crucial when the pandemic ignited a massive movement towards running, walking and jogging during lockdown.
“[These emerging brands] really focus on your average runner, or someone who is just starting,” said Jane Hali & Associates analyst Jessica Ramirez. On the other hand, Nike had traditionally led with its elite perfomance focus and vast presence among top athletes.
“[Nike] lacks that part where it’s for your everyday customer … who is really trying to learn how to get into it and feel comfortable,” Ramirez said.
But the approach will change, Donahoe noted.
“Following a recent reset, we’re prioritizing the needs of everyday runners through newness and consistency in the key styles they love most,” Donohoe said.
