Sneakernomics: A New Day at Nike

9/19/24 will go down as one of the greatest days in Nike history.?

Elliott Hill will return to the company as CEO.? His wisdom, warmth and sense of humor will go a long way to bringing Nike out of the dark days of recent years.? Hill is widely respected both inside and outside the berm. He has been through rough patches before with the brand (although this may be the roughest).

I am confident that under Hill’s leadership Nike can make a comeback.? But the task will not be an easy one.

First of all, the marketplace has changed. The industry has consolidated with fewer but bigger retailers. The retail/wholesale dynamic that existed before the pandemic is much different.

The consumer is in a different place. In their search for unique and innovative brands, the consumer has turned to other brands and away from Nike. The competitive landscape has changed dramatically from a few years ago.

The massive brain drain brought on by all the layoffs has left key jobs filled with inexperienced leaders. Will Hill try to bring back some of the seasoned leadership?? Hill will need a strong team for this turnaround.

Some of the leaders who drove the failed initiatives will likely have to go. This will create further turmoil.

Internally, Hill will have to build back respect for the brand, for the product and for the people.? This respect was lost over the last four years as the brand became commoditized. This won’t be easy and will take time.

In the short term, many of the initiatives to turn the business will result in even fewer sales than projected.? Now is the time to make big bold moves to repair the franchise, even at the expense of near term sales.? Tweaks at the margins will not be enough.

Some of the big franchises (J1, AF1, Dunk, etc.) will have to be shut down temporarily in order to regain their exclusiveness. Hill knows how to do this, but in the near term, this means the brand will do substantially fewer sales. Reviving these franchises is not a quick fix.

The over promotion on Nike.com must be reigned in. This again means fewer sales. This initiative will take more time to wean the customer off buying everything on discount.

Repairing the retail relationships has already begun. But without new products, gaining back shelf space will be challenging.

The brand is already ramping up the innovation pipeline, but again this takes time.? The product development lifecycle in the industry is too long. The consumers’ demand for fresh and new has never been greater.

All of Nike’s ills are fixable, but they will take time, vision and a steady hand.

I believe Elliott Hill can deliver all of that.