Stores scramble as Nike cuts wholesale accounts
Amid Nike’s moves to consolidate wholesale accounts, a few affected retailers are expressing confidence they’ll be able to shift to other vendors to fill the void.
In March, Nike informed six chains — Big 5 Sporting Goods, DSW, Dunham’s Sports, Olympia Sports Shoe Show and Urban Outfitters — that they were being cut off. Nine others, including Belk, Dillard’s, EbLens and Zappos, were similarly informed in 2020.
Under a shift first announced in 2017, Nike is emphasizing direct-to-consumer sales while limiting wholesale to a few accounts that best support its positioning. Competitors Adidas and Under Armour are taking similar steps, albeit to a lesser degree.
Among the impacted retailers, Big 5 in early May said products impacted by Nike’s decision represented seven percent of 2020 sales and predicted minimal long-term impact.
“We source products from many vendors, and we have a very diverse and flexible product mix. Although we are disappointed by Nike’s decision, we are encouraged by the response of other vendors, both new and existing, about the opportunity to expand their presence in our stores,” Steve Miller, Big 5’s CEO, told analysts. “From a customer standpoint, we believe that many customers enter our stores relatively brand agnostic and shop us for our value and convenience. I’m quite confident in our team’s ability to work through this transition to continue to offer a compelling product assortment in 2022 and beyond.”
At DSW, Nike grew to represent over seven percent of sales in 2020 as the pandemic shifted trends towards athleisure (athletic/casual) styles.
“We have spoken with the leaders of every major athleisure brand that we work with,” said Roger Rawlins, CEO of Designer Brands, DSW’s parent, on a quarterly call last week. “These conversations have been very positive. They see this news as an opportunity for growth.”
DSW is also increasing its focus on trail, hiking and technical running categories.
For some independent sneaker stores, skate shops and soccer outlets, however, more than half of their mix consists of Nike, and articles have detailed their devastation after receiving an account termination notice.
- Nike says goodbye to more longtime wholesale partners – RetailWire
- Nike Will No Longer Sell to DSW, Urban Outfitters, Shoe Show + These Stores, Analyst Says – Footwear News
- Big 5 Sporting Goods (BGFV) Q1 2021 Earnings Call Transcript – The Motley Fool
- Designer Brands inc (DBI) q1 2021 Earnings Call Transcript – The Motley Fool
- Nike’s killer blow for small stores – The Times
- Shut out by shoe giants, ‘mom and pop’ stores feel pinched – The New York Times
- Nikes are getting harder to find at stores. Here’s why – CNN
- Exiled On Main Street – Nike’s obsession with digital sales has been punishing for mom-and-pop retailers – Portland Business Journal
DISCUSSION QUESTIONS: How difficult will it be for most chains to replace Nike’s sales? What advice would you have for stores that have seen Nike terminate their accounts?