Scalpers selling mobile phones are no longer frying iPhones, but scalpers selling shoes are still frying AJ.
The AJ series can be described as Nike’s hottest sneaker series now, even if it is a high imitation, it can sell thousands of pairs. In fact, the starting price of Nike sneakers is mostly more than 1,000 yuan, which can be said to be the iPhone in the sneaker industry.
Air Jordan I. at Jordan’s feet Image from: XXL
However, this situation will soon change, Nike CEO Mark Parker said in yesterday’s earnings conference that in the next fiscal year will launch more new series of sneakers priced under $100 to attract more consumers.
Mark Parker further explained the reasons for Nike’s decision, which believes that it needs to be more competitive at all price points, and the plan to improve the price/performance ratio of the product is not only for the North American market, but on a global scale. While reducing prices, more innovative designs will be incorporated into these affordable products.
The market behind sneakers under $100 is huge, and according to market research agency NPD Group, the best-selling sneakers in the United States in 2017 and 2018 are not classic series such as Air Max or Air Jordan, but Nike’s $65 Nike Tanjun.
Nike Tanjun has a simple appearance and no high-tech blessings such as air cushion shock absorption, but because of its comfortable, lightweight and affordable price, it is widely popular, known as “mother’s favorite shoe”, and it seems that Nike may launch more of this low-end price sneaker in the future.
For Nike, there is also an urgent need to find a new growth engine. According to Nike’s third-quarter earnings report released yesterday, although sales increased by 6.6% year-on-year, it was the first time in six quarters that the highest expectations were not met, and the stock price also fell sharply, on the contrary, Adidas performed strongly in North America, gradually eating into Nike’s casual sneaker market share.
The basketball shoe market, which Nike is most proud of, is also facing challenges, although Nike has signed most of the NBA stars, but the recent next NBA favorite candidate Zion Williamson was injured because the Nike PG2.5 sneakers he wore suddenly burst during the game, making Nike questionable, and the market value lost $1.3 billion on the same day.
Nike should vigorously develop the low-priced sports footwear category, reminiscent of the dual-brand strategy of mobile phone manufacturers such as Huawei and Xiaomi. Huawei’s Glory and Xiaomi’s Redmi Redmi are both focusing on the low-end market, distinguishing them from the main brand, and both have achieved outstanding shipment results.
With the high cost performance of Redmi, Xiaomi also occupied the top position in Southeast Asian markets such as India in one fell swoop, while Honor contributed nearly half of Huawei’s sales, and not long ago, Honor and Redmi have successively become independent brands, and this dual-brand strategy will continue further.
▲ Redmi Note 7
Although Nike has not announced the details of these new series under $100, it is possible to develop sub-brands similar to Redmi and Honor in the future, allowing classic series such as Air Max or Air Jordan to continue to focus on the high-end market, with a cost-effective new series to specialize in the low-to-mid-end market.
This is also conducive to Nike opening up a new path in the fierce competition with Adidas in the mid-to-high-end sports shoe market. Especially in the Chinese market, where Nike has the strongest growth, it has achieved double-digit growth for 19 consecutive quarters, and Nike, which can also be afforded by a pair of student parties, will further unleash the potential of the Chinese market.