Nike, Run Clubs & Affiliates

Written By Tim Richardson

Welcome to the bi monthly Your Basket Is Empty newsletter, Issue #44

So. What’s been going on?

Stoked to announce that our client, Rapanui, went live on Shopify. Our role was to act as their technical commerce brain. We plugged into their team to bolster their Shopify knowledge and support on project governance.

A very smooth project delivered by an exceptional inhouse team - and digital marketing partner, Spec Digital. We’ll be following up soon with a podcast where we deep dive on the project with Managing Director, James Kearns.

Otherwise, we’re squirrelling away in the background developing our new brand. We’ll be launching it in the next three weeks

Your pals, Lucy & Tim

Just Do It

I grew up in the 90s in Adelaide, Australia. Adelaide has experienced somewhat of a renaissance in the last 10 years. But in the 90s, it was a pretty boring place. So when my mate’s dad travelled to L.A for business and came back with cool shit from America, we were stoked. What was the coolest thing he brought back? A pair of Nike Air Huarache’s. It was the talk of the town. And it kickstarted my brand appreciation, obsession and consumption, of Nike for the next 25 years.

But something ain’t right over in Oregon.

Nike shares, which have fallen by 59% from the highs they hit at the end of 2021, currently languishing at levels last seen when the world went into lockdown in March 2020. What’s more, they  missed recent sales estimates and lowered revenue guidance for the current fiscal year. The result? Analysts hungry to make bonus downgraded Nike stock and the wider business world discussing their relevance in today’s modern sports and cultural world.

Many pundits suggest that it was their misdirected D2C strategy which cut out their retail partners that has put Nike in its current position. Others have suggested that it’s taking a hit from upstarts like Hoka and On. I can certainly attest to the impact those brands are having on the explosion of niche run clubs. I conducted a survery at a recent run club and less than 3 of the entire group were wearing Nike’s. Which is very curious. One would have thought Nike would be at the forefront of the rub club explosion. They’re clearly not.

The team at Prof G analysed Nike on their latest markets pod. Their position is that yes, the D2C strategy may not have worked and they shouldn’t have been so trigger happy in severing ties with their retail partners. They also agreed that Hoka and On are gaining market share. But they’re the ‘cool growth brand’. Their longevity is still to be seen and ultimately, Nike is still a behemoth. The big issue, they suggest, is a move away from ‘the brand’. They attribute some - or most of it - to the instalment of a tech CEO type (John Joseph Donahoe II - what a name!). And as you can imagine with his PayPal experience, John probably came in promoting a more tech-focussed supply chain (or some other tech-focussed programme) to drive EBITDA to the moon. Has this come at the cost of ‘the brand’? Can an ex Bain & Company bloke really be a ‘brand guy’? Hard to tell.

How are they going to turn it around?

This is an Olympic year. So no doubt they’ll capitalise on that. They’re picking up the retail partnerships they severed - Foot Locker, DSW and Macy’s. They’re investing in new product innovation (Air Max Dn - I’m on the fence about this one, tbh) and cool experiences like dynamicland. And they’ve just pulled off one of the greatest brand coup’s of all time - they are replacing Adidas after 70 years as the German football team’s kit sponsor. And they clearly have people who have their finger on the cultural zeitgeist pulse. Their very recently released collab with Druski is both relevant and very funny.

My take?

Nike is way too big to fail. The brand, heritage, reach, symbolism, and endorsements of the greatest athletes of all time are unchallenged. They just need to focus on creating products and marketing that appeal to kids from the 90s.

Run Clubs

Something I talked about on LinkedIn the other day was my take on run clubs. What was the steaming hot take? It only just dawned on me that niche running brands are the new niche cycling apparel brands. My two cents:

There was an explosion of cool, niche, cycling apparel brands circa 2014 - 2018. Much of this was on the back and hard work of Rapha. As I discussed in my newsletter a few months ago, Rapha made it acceptable to walk into a boujie cafe wearing a thin layer of Polyester and horse shoes. Game changer.

But most of them died. Why?

They couldn't compete with Rapha's dominance, product range / quality and marketing. How do I know? I created an inspirational Instagram account in 2018 to capture all of them. The account is still alive but most of the brands are gone.Who survived and thrived? Pas Normal Studios and MAAP. I'm happy to be challenged on this, but they are the only two brands to challenge Rapha.

Why do I think this?

When I'm on a ride, I count the number of cyclists wearing Pas and Maap gear compared to Rapha. The numbers have increased exponentially. What's more, the cycle club I'm in is dominated by Pas and Maap. *note - the club is almost exclusively comprised of small tattoo'd East London dweller types that have either been featured on or consume house wives of clapton. Make of that what you will.

What's changed in 2024?

I think niche running brands have a greater ability to succeed as their appeal is much broader than cycling and the entry point into running is much lower (let's be honest, cycling is an elitist sport / past time). What’s more, it's not just niche cool running brands that are gaining traction (Acid Running, SATISFY®, Tracksmith, SAYSKY et al). It's the lifestyle brands that are incorporating running into their brand worlds (Represent, Puresport etc). Lots of opportunity for collabs / amplified exposure.

Also. Look out for a potential professional run club collaboration we have coming up in the next couple of months.

 

What Else Is Clucking?

  • Friends of ours, and the coolest Ai negotiating tool, Nibble, got some love from the Morning Brew team. Given that Morning Brew is one of our main reference points, we see this as the greatest brand marketing initiative of 2024

  • Toddle launched a no-code platform designed as a full-featured alternative to JavaScript frameworks. Is this more evidence that the no-code space is the future? Is this also evidence that the no-code space is getting crowded? We like no-code. So what ever it is, we think it’s cool

  • Hudson's Bay has agreed to buy Neiman Marcus with Amazon and Salesforce also taking stake.  I’ve been seeing Amazon push further and further into ‘want’ type purchases, ie luxury, in the last while. This seems like it’s part of that strategy

  • In other luxury news, Burberry have booted their boss. The change of leadership came as Burberry reported a sharp fall in sales, as it continued to be hit by a downturn in demand for luxury goods, particularly in China. Maybe my predictions that rich people will also buy luxury stuff isn’t as robust as I’d initially intended

  • Beauty and culture hub, SheerLuxe announced their newest recruit - an AI enhanced team member called 'Reem,'. She will be giving her best recommendations when it comes to fashion, beauty, interiors, travel, food and more. Early reports are that it’s gotten quite a lot of push back. Which sucks as I love these guys’ BTS TikTok

  • Activewear brand TALA lands £5m from existing investors Pembroke VCT, Venrex and Active Partners. I had the pleasure of sharing a panel with CEO, Morgan, a few weeks back. She was super impressive. Stoked for her and the team

  • Finally. Nike’s upstart mates, On, have unveiled their spray-on shoe. As the name suggests, the shoe is literally made from spray-on material. Mad. Hoping that Dr Marten’s do the same and I’ll never have to tie shoelaces again

Playlist

Tim let me loose on the playlist again. This week? A load of Gracie Abrams, a bit of Brat and of course, Chappell Roan (who I need you to know I’ve been listening to since 2020) plus some other bangers

Want to know what it’s like to work with the A-team?

Tim Richardson
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