Aiming for the legions of budget-conscious women shoppers trolling the mass channels, Nike Inc. recently launched an exclusive line of women's sneakers at Payless ShoeSource Inc.
Under terms of the multi-year deal, Exeter Brands Group LLC, Nike's wholly owned subsidiary that targets the mass market, will design and produce shoes under the Tailwind name with Payless serving as the exclusive retailer. The women's line hit 400 Payless stores on February 26 and will be expanded to all 4,600 locations by year-end. Footwear and accessories for girls will be added in July, and a men's and boy's performance footwear line is being considered.
Tailwind provides Nike with yet another opportunity to dig into the massive mass channel while attracting an entirely new audience previously alienated by the high prices and athletic focus of Nike's core product offerings.
"What this does is afford a big-name brand the ability to enter an even bigger market without diluting the core essence of its dominant brand," NPD Group chief analyst Marshal Cohen told Business Week. "Nike really has nothing to lose and a lot of volume to gain ... Consumers like the idea that Nike is behind [the new brand] - it seems like a good bargain."
But Nike so far hasn't found loads of success in mass. While the 2004 acquisition of Exeter Group, which owned the Starter and SHAQ labels, officially marked its entry into mass, the sneaker giant hasn't reshaped the channel as quickly as many had predicted.
Perhaps learning from its missteps, the Tailwind launch seems to mark a change in tactics for Nike in attacking the mass channel.
While the first Starter product engineered by Nike for Wal-Mart was quietly launched in 2005 with limited assortments and little fanfare, Tailwind represents a much more comprehensive collection consisting of six styles ranging in price from $19.99 athletic sandals to $34.99 running sneakers. The styling and performance attributes also seem to have been beefed up. Running shoes tout Nike-developed technology called "G-Zone," a honeycomb gel that compresses on impact to cushion the heel.
The biggest difference is that Nike hasn't been as shy to note its association with the brand. At a press conference in New York on Monday, soccer stars Brandi Chastain and Hope Solo and world-renowned volleyball player Logan Tom were brought out to launch the collection. All three athletes will be featured in print ads to promote the brand and a standalone, e-commerce enabled website, tailwind.payless.com, featuring the three stars expounding on the philosophy of the brand was also launched.
"We saw the need to go in and create a premium experience in this value space," said Exeter president and CEO Clare Hamill. "There are other players and people, but we very specifically saw a need to bring a premium experience through innovation, messaging, and athletes. So we went for it."
But Nike also seems to be taking on some risks. Well known for being obsessed over preserving its brand integrity, Nike famously pulled its product out of Sears in the aftermath of the Kmart merger, and the quiet rollout of Nike Starter product seems to have echoed these concerns over possible dilution of the Nike name. Touting Nike technology and rolling out Nike endorsers behind the Tailwind launch seems to be some measured risk the brand is willing to take to succeed at mass.
Discussion Questions: What do you think of Nike's new approach to reaching the mass channel? What will the new Tailwind line mean for Payless?
- Payless, Nike to make high-tech sneaker - Business Week
- Nike enters the world of discount chains with cheap shoe - The Associated Press/KATU.com