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Sneaker giant in a slump: What happened at Nike?

Nikes profitability is taking a slump
Nikes profitability is taking a slump

Nike

Business Strategy

Brand Decline

Market Trends

Data Vs Creativity

Nike

Business Strategy

Brand Decline

Market Trends

Data Vs Creativity

Written by:

3 min read

Updated on: October 2, 2024

Irik Henry

Growth Marketing Director

Growth Marketing, Performance Marketing, UX

Irik Henry

Growth Marketing Director

Growth Marketing, Performance Marketing, UX

Nike, the once-unshakable sportswear giant, has recently been tripping on its own shoelaces. 

After 53 years of dominating the field, the brand is now grappling with sluggish growth—largely thanks to strategic blunders. Under CEO John Donahoe, a tech consultant by trade, Nike veered away from its classic strengths (creativity, bold marketing, boundary-pushing innovation) and leaned heavily on data-driven decisions. Data can be a powerful ally, but Nike’s overreliance on it has left the brand looking less like a cultural icon and more like a cautious number-cruncher.

In one brutal trading session, Nike’s market capitalisation tumbled by $28 billion—roughly enough cash to buy Under Armour ten times over. Now, as Elliot Hill readies to take the CEO reins, everyone’s analysing the numbers and second-guessing the brand’s route. The lessons, however, go beyond Nike: they speak volumes to any business—maybe even yours—that’s flirting with the idea of putting data ahead of daring vision.

Nike, the once-unshakable sportswear giant, has recently been tripping on its own shoelaces. 

After 53 years of dominating the field, the brand is now grappling with sluggish growth—largely thanks to strategic blunders. Under CEO John Donahoe, a tech consultant by trade, Nike veered away from its classic strengths (creativity, bold marketing, boundary-pushing innovation) and leaned heavily on data-driven decisions. Data can be a powerful ally, but Nike’s overreliance on it has left the brand looking less like a cultural icon and more like a cautious number-cruncher.

In one brutal trading session, Nike’s market capitalisation tumbled by $28 billion—roughly enough cash to buy Under Armour ten times over. Now, as Elliot Hill readies to take the CEO reins, everyone’s analysing the numbers and second-guessing the brand’s route. The lessons, however, go beyond Nike: they speak volumes to any business—maybe even yours—that’s flirting with the idea of putting data ahead of daring vision.

Why is Nike’s stock price down?

Why is Nike’s stock price down?

On paper, Nike was the brand all other players envied—and for good reason. They revolutionised sports advertising with agencies like Wieden+Kennedy and took performance wear to new heights. But more recently, its stock is down, and industry watchers are calling it a wake-up call.

Some claim the brand poured too much time and money into direct-to-consumer (DTC) channels, ditching key wholesale partners. Others point fingers at an overreliance on data at the expense of creativity.

Why is Nike’s stock price down?

Where did the failures lie?

  • Misguided reorganisation. Many see telltale signs of a “McKinsey style” shake-up—meaning overly rational, numbers-led decisions that neglected brand essence.

  • Neglected wholesale partners. By trying to pocket more margin via DTC, Nike left prime shelf space wide open for hungry competitors.

  • Diminished brand-building. There’s talk they dialled down their once-unmissable marketing, prioritising performance campaigns overbroad, culture-driving ads.

Former executive Massimo Giunco spelt it out on LinkedIn, labelling these as self-inflicted wounds. Another ex-Nike executive, Jordan Rogers, summed it up as a “death by a thousand paper cuts” rather than one colossal failure.

Nike Too much focus on direct-to-consumer sales

On paper, Nike was the brand all other players envied—and for good reason. They revolutionised sports advertising with agencies like Wieden+Kennedy and took performance wear to new heights. But more recently, its stock is down, and industry watchers are calling it a wake-up call.

Some claim the brand poured too much time and money into direct-to-consumer (DTC) channels, ditching key wholesale partners. Others point fingers at an overreliance on data at the expense of creativity.

Why is Nike’s stock price down?

Where did the failures lie?

  • Misguided reorganisation. Many see telltale signs of a “McKinsey style” shake-up—meaning overly rational, numbers-led decisions that neglected brand essence.

  • Neglected wholesale partners. By trying to pocket more margin via DTC, Nike left prime shelf space wide open for hungry competitors.

  • Diminished brand-building. There’s talk they dialled down their once-unmissable marketing, prioritising performance campaigns overbroad, culture-driving ads.

Former executive Massimo Giunco spelt it out on LinkedIn, labelling these as self-inflicted wounds. Another ex-Nike executive, Jordan Rogers, summed it up as a “death by a thousand paper cuts” rather than one colossal failure.

Nike Too much focus on direct-to-consumer sales

Key missteps that hurt Nike

To understand why Nike’s once-impervious brand mojo took a hit, it helps to break down the critical fumbles that led to its current slump. Here are some strategic pitfalls that kept the sneaker titan from staying on top of its game.

1. Too much focus on direct-to-consumer sales

A few years ago, Nike calculated it was losing too much control (and profit) via wholesale channels and decided to end partnerships with half the retailers selling its products. Initially, that looked strategic: skipping the middleman can boost margins and brand consistency.

But it turned out to be a double-edged sword. Reducing retail presence meant less shelf space overall. That’s prime real estate your rivals are all too happy to snag. Coupled with fewer in-person touchpoints, sales volumes suffered. Sometimes, an “efficient” solution on paper collides with a messy reality in store aisles.

Over-reliance on data, neglecting creativity cause Nike's downfall

2. Not keeping up with trends fast enough

From athleisure to big leaps in streetwear, Nike’s once-forward approach has cooled. Competitors like Adidas and Lululemon capitalised on emerging trends more quickly. Meanwhile, in an earnings call, Nike emphasised it was “doubling down on running”—a statement that felt a tad stale, given how well-known that angle is. It’s not that running’s unimportant; it’s that Nike’s lost the aura of being cutting-edge, at least in that domain.

3. Fear of failure stifling bold moves

Rather than unleashing the next big idea, Nike increasingly plays it safe. It’s as if they’re anxious about risking brand blunders. Relying on beloved legacy lines and old marketing themes dulls a brand once famous for brash campaigns. With data-driven strategies overshadowing the old “Just Do It” spirit, even new ads feel a bit…predictable.

4. Over-reliance on data, neglecting creativity

Data can be wonderful, but it’s not the end-all. At some point, the sports giant swapped its iconic, culture-shaping ads for algorithm-chasing formulas. Sure, you might get short-term conversions, but iconic brands often come from creative leaps, not strictly from what the data says worked last quarter.

To understand why Nike’s once-impervious brand mojo took a hit, it helps to break down the critical fumbles that led to its current slump. Here are some strategic pitfalls that kept the sneaker titan from staying on top of its game.

1. Too much focus on direct-to-consumer sales

A few years ago, Nike calculated it was losing too much control (and profit) via wholesale channels and decided to end partnerships with half the retailers selling its products. Initially, that looked strategic: skipping the middleman can boost margins and brand consistency.

But it turned out to be a double-edged sword. Reducing retail presence meant less shelf space overall. That’s prime real estate your rivals are all too happy to snag. Coupled with fewer in-person touchpoints, sales volumes suffered. Sometimes, an “efficient” solution on paper collides with a messy reality in store aisles.

Over-reliance on data, neglecting creativity cause Nike's downfall

2. Not keeping up with trends fast enough

From athleisure to big leaps in streetwear, Nike’s once-forward approach has cooled. Competitors like Adidas and Lululemon capitalised on emerging trends more quickly. Meanwhile, in an earnings call, Nike emphasised it was “doubling down on running”—a statement that felt a tad stale, given how well-known that angle is. It’s not that running’s unimportant; it’s that Nike’s lost the aura of being cutting-edge, at least in that domain.

3. Fear of failure stifling bold moves

Rather than unleashing the next big idea, Nike increasingly plays it safe. It’s as if they’re anxious about risking brand blunders. Relying on beloved legacy lines and old marketing themes dulls a brand once famous for brash campaigns. With data-driven strategies overshadowing the old “Just Do It” spirit, even new ads feel a bit…predictable.

4. Over-reliance on data, neglecting creativity

Data can be wonderful, but it’s not the end-all. At some point, the sports giant swapped its iconic, culture-shaping ads for algorithm-chasing formulas. Sure, you might get short-term conversions, but iconic brands often come from creative leaps, not strictly from what the data says worked last quarter.

Nike’s plunging sales reveal the difficult task ahead for incoming CEO

Elliot Hill is stepping in as Nike’s new CEO on 14 October, facing fierce challenges. The brand recently withdrew its full-year guidance in favour of quarterly updates—a move that rattled shareholders, especially after an 8% stock price drop on disappointing results. If that’s not pressure enough, analysts have set the bar of expectation pretty low.

Nike’s plunging sales reveal the difficult task ahead for incoming CEO

Yet, despite the gloom, Nike CFO Matthew Friend hinted at some small victories in key sports categories and a renewed push on innovation. That suggests the brand still has the potential to bounce back—assuming they refine their approach.

Elliot Hill is stepping in as Nike’s new CEO on 14 October, facing fierce challenges. The brand recently withdrew its full-year guidance in favour of quarterly updates—a move that rattled shareholders, especially after an 8% stock price drop on disappointing results. If that’s not pressure enough, analysts have set the bar of expectation pretty low.

Nike’s plunging sales reveal the difficult task ahead for incoming CEO

Yet, despite the gloom, Nike CFO Matthew Friend hinted at some small victories in key sports categories and a renewed push on innovation. That suggests the brand still has the potential to bounce back—assuming they refine their approach.

What brands can learn from Nike's strategic missteps?

Nike is hardly about to vanish: it remains a powerhouse, and we’re likely to see it re-emerge. But its recent stumbles do hold some key lessons:

  1. Balance data with imagination: Data is brilliant for refining tactics but doesn’t always spark genius ideas. If creativity is your brand’s birthright, don’t trade it for short-term metrics.

  2. Tread carefully when overhauling distribution: If your brand pulls out of major retail partners, you’d better be sure you can replicate or exceed that exposure on your own.

  3. Stay fearless: Nike thrived on pushing boundaries. The moment it got spooked and toned everything down, the brand’s distinctiveness took a hit. People still crave authenticity and excitement.

What brands can learn from Nike's strategic missteps?

As of that day, it lost $28 billion in market capitalisation. That’s a scorching lesson in how quickly the market can punish poorly executed strategies—and how no brand is too big to fall if it forgets its core strengths.

Nike is hardly about to vanish: it remains a powerhouse, and we’re likely to see it re-emerge. But its recent stumbles do hold some key lessons:

  1. Balance data with imagination: Data is brilliant for refining tactics but doesn’t always spark genius ideas. If creativity is your brand’s birthright, don’t trade it for short-term metrics.

  2. Tread carefully when overhauling distribution: If your brand pulls out of major retail partners, you’d better be sure you can replicate or exceed that exposure on your own.

  3. Stay fearless: Nike thrived on pushing boundaries. The moment it got spooked and toned everything down, the brand’s distinctiveness took a hit. People still crave authenticity and excitement.

What brands can learn from Nike's strategic missteps?

As of that day, it lost $28 billion in market capitalisation. That’s a scorching lesson in how quickly the market can punish poorly executed strategies—and how no brand is too big to fall if it forgets its core strengths.

Final Thoughts

Nike’s not gone; it’s just in a slump. The brand built its empire on bold marketing, iconic ads, and—yes—some data-driven optimisations. If it manages to recapture the creative spark that made it a cultural juggernaut, it could soon bounce back into the spotlight. For the rest of us, watching Nike stumble should confirm that data isn’t always the hero if it means leaving creativity and risk-taking behind.

And that’s how brand storytelling can become a springboard for future growth—even for the biggest names in the game. Sometimes, the old formula—bold ideas, emotional resonance, and, yes, some data—still works best.

Nike’s not gone; it’s just in a slump. The brand built its empire on bold marketing, iconic ads, and—yes—some data-driven optimisations. If it manages to recapture the creative spark that made it a cultural juggernaut, it could soon bounce back into the spotlight. For the rest of us, watching Nike stumble should confirm that data isn’t always the hero if it means leaving creativity and risk-taking behind.

And that’s how brand storytelling can become a springboard for future growth—even for the biggest names in the game. Sometimes, the old formula—bold ideas, emotional resonance, and, yes, some data—still works best.

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