There has been a widespread shift in where consumers are buying their athletic footwear, and experts predict this trend will only continue.
According to The NPD Group Inc.’s consumer tracking service, the largest retailer for eight of the top 10 brands in the market is themselves. At the top of the list is Nike, with Adidas coming in at No. 2. Other brands whose top retailer is themselves include Skechers, Vans, New Balance, Under Armour, Converse and Puma.
One of two brands to buck the trend is Jordan Brand, whose top retailer for the 12 months ended September was Foot Locker. The other brand to go against the trend is Asics, whose major account is Amazon.com.
“This is a culmination of the trend that we’ve been seeing for more than a decade now of brands growing their own retail business at the expense of their wholesale partners,” NPD senior sports industry adviser Matt Powell told FN. “There was a real surge in this during the pandemic and into this year, so it’s not a surprise. This was inevitable, this was going to happen. It further puts retailers on notice that their relationship with brands is in a different place now.”
News of brands becoming their own largest retailer should come as no surprise.
For example, Nike has worked on its Consumer Direct Offense since 2017, a strategy that was created to better serve its customers personally and at scale and which includes moving closer to consumers in key cities. In 2018, the company debuted Nike Live, a retail concept built as a hub for locals. And in 2020, the company revealed Nike Unite, created to serve and celebrate the people in communities with a design that reflects a neighborhood’s “heart and spirit.” These concepts have been rolled out in Los Angeles, the Williamsburg section of Brooklyn, N.Y., and areas of Boston.
In the years since the Consumer Direct Offense introduction, Nike has cut ties with several of its retail partners. Most notably, news broke in March that Nike ended its run with DSW, Urban Outfitters and Shoe Show.
“Every brand I talk to is committed to growing their own business, even if it comes at the expense of their wholesale partners,” Powell said. “We’ll continue to see the brands’ own retail arm be the dominant outlet for their business.”
Although this retail rationalization puts retailers in an unenviable position, Powell believes reducing the number of partners for brands is a necessity.
“Many of their partners don’t treat the brand correctly, or they don’t represent the brand the way it wants to be seen,” Powell said. “We have far too many retail stores in the United States — and particularly retail stores selling the same stuff, so I can’t fault a brand for saying, ‘I want to reduce the number of retailers that I do business with.’ That will make them stronger with the retailers that they continue to do business with.”
He continued, “Every brand needs to go through a rationalization of saying, ‘Is this retailer supporting me? Is this retailer presenting the product the way I believe my brand should be presented?’ If the answer is no, you’ve got to ask why are we continuing to do business with this retailer?”
However, Powell is leery of brands slashing their retail base significantly.
“None of these brands have a really extensive physical store network, and consumers are still shopping in physical stores. Last year, 60% of all athletic shoes were purchased in physical stores. That’s a smaller number than the previous year, but it’s still a big number, and I don’t think physical stores are going to go way,” Powell said. “Also, some consumers like shopping in multibrand locations where they can compare brand A to brand B. I believe there always will be physical stores selling multiple brands, but there will be fewer of them.”
And Powell doesn’t expect market leaders will walk away from working with multibrand retailers altogether.
“I don’t think any brand is in a position to do that today,” he said. “They don’t have the network of physical stores to to offset that, and when a brand stops selling to a retailer, they recoup some of the business, but they don’t recoup it all, so it would be fatal for a brand to walk away from all retail and think they’re going to make it up on their own in a short period of time.”
