By Mark Wyatt, Money blog reporter
The trainer market is now more diverse and competitive than ever before, and its biggest player has felt the pinch.
While new brands have been popping up and taking market share, Nike suffered its biggest single day drop in share price on record in late June.
A whopping $28bn (£21.6bn) was shaved off in market capitalisation overnight after the company’s management reported an expected sale drop in early 2025.
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But why has this happened?
Nike remains the largest sports retailer in the world and still has the biggest slice of market share. However, analysts say strategic decisions at boardroom level have contributed to a downturn in its fortunes – with consumer concerns and the emergence of new competition also in play.
Shift in strategy
John Donahoe became Nike’s new CEO in January 2020 and was tasked with updating the company’s online operation and bringing in more digital revenue.
Mr Donahoe arrived from one of the world’s biggest ecommerce companies, eBay, and quickly began shifting Nike’s focus towards its digital sales efforts and away from the high street.
Shortly after, the COVID pandemic hit, and the world’s shoppers were forced online whether they liked it or not.
With people not going into offices to work, there was no need to buy smart, formal footwear. Comfortable, everyday shoe sales rose, and Nike’s profits surged past projections.
Everything looked to be going well, so Mr Donahoe doubled down, accelerating the digital strategy and moving Nike out of hundreds of bricks-and-mortar stores.
Soon, Nike had severed a third of its relationships with sales partners.
“The consumer today is digitally grounded and simply will not revert back,” said Mr Donahoe on an earnings call in 2020.
Nike believed they were the ones best able to deliver their vision straight to consumers, and they didn’t need retailers like FootLocker and JD Sports diluting that as middle men.
But as lockdowns ended across the world, people returned to stores and online sales slowed, and the decisions that had been made started to be questioned.
“I think they underestimated the cultural aspect of brick-and-mortar shopping as part of the social life of young consumers,” Daniel Herval, who worked at Nike between 2017-20 on some of its biggest trainers including Air Max, Jordan and Air Force 1, told the Money blog.
“Nike thought people had shifted to online, and they’d left the brick-and-mortar experience behind.
“But as soon as things started reopening, the social aspect of shopping, the community bonding aspect of shopping, returned, and Nike weren’t really there.”
Nike had started to divest by the time people returned to stores, but they had lost pace against other brands.