UK’s largest sporting goods chain calls for probe of Nike-Adidas dominance
Sports Direct, the UK’s largest sporting goods chain, is calling for a Europe-wide investigation into the dominance of Nike and Adidas in sports retailing. The call follows ongoing moves by Nike to end distribution to “undifferentiated” retailers and conjecture that Adidas may follow suit.
Nike announced in October 2017 plans to shrink its wholesale account base to about 40 global partners and exit “undifferentiated, mediocre” retailers. Both Nike and Adidas are also aggressively expanding their direct-to-consumer businesses.
In a statement, Sports Direct referenced an article that ran September 13 in The Sunday Times entitled, “Nike’s killer blow for small stores.”
The article indicated that Nike sent letters to “dozens of independent retailers” indicating they would no longer have access to Nike product by 2021 because their store experience was “no longer aligned” with the brand’s distribution strategy. The article further stated that “retailers are fearful that Adidas will follow suit” and how the two brands dominate sports retailing.
A source told The Sunday Times, “All those companies that built a business on the back of Nike and Adidas are toast — there’s no way they can replace that [business].”
In its statement, Sports Direct wrote that sports retailing has “long been dominated by the ‘must-have’ brands such as Adidas.” Those brands have an “extremely strong bargaining position” that has enabled them to restrict or “in most cases” refuse to supply product to certain stores.
The retailer wrote, “Sports Direct believes that the industry as a whole would benefit from a wide market review by the appropriate authorities in both the UK and Europe.”
Nike said in a statement, “Nike continually evaluates the marketplace and competitive landscape to understand how we can best serve consumers. As part of this, from time to time we do make adjustments to our sales channels, in order to optimize distribution.”
Adidas in a statement to CNBC said that, while a “strong partnership” with retailers is critical, “in an increasingly digital world, the consumer decides where to go for information and where to purchase.”
- Media Statement – Sports Direct
- Nike’s killer blow for small stores – The Sunday Times
- Sports Direct calls for inquiry into Adidas and Nike dominance – Telegraph
- Adidas and Nike supply tactics are an abuse of market dominance, British retail giant says – CNBC
- Nike turns its back on ‘undifferentiated, mediocre’ retailers – RetailWire
DISCUSSION QUESTIONS: Do retailers have any rights to the brands they’ve built their business around? Does Nike or Adidas have any obligation to help “undifferentiated” retailers? Do they face risks should they cut off retailers who have long supported them?