It wasn’t long ago that Nike(NYSE:NKE) appeared as a virtual monopoly in the athletic apparel space. Adidas (OTC:ADDYY) was in the doldrums, and Under Armour(NYSE:UA) yet to achieve all the success it earned with its endorsement signings that have elevated the brand to new heights. Nike has been the worst performing stock in the Dow Jones in 2016 and is losing ground as dominate player in the Rio Olympics.
Nike operated with complete arrogance towards the competition, and rightfully so for the most part. The company held a 96% share of the basketball shoe business as recently as last year, a key segment of all the top shoe companies.
This figure simply was not sustainable over the long term, when an fashion brand has close to 100% market share, the brand loses its exclusivity and cool factor, and it opens the door for some new players to come in. People look elsewhere to differentiate themselves. Nike has recently lost about 20% of its basketball business, and has finally showing signs of paying attention to its competition.
Nike Answers By Lowering Shoe Prices
The company lowered the price of its Kevin Durant and LeBron signature shoe models to compete with Curry’s recent footwear success. Under Armour has carved its own share of the market, a small one currently, but poised to grow. The brand only has one signature shoe line for basketball, but we will see more over the next few years, as the company adds new stars to its lineup.
The biggest performances we have seen in Rio have come from UA’s Michael Phelps and Usain Bolt (ETR:PUM). While some analysts don’t believe that athletes performance don’t move the needle much for these massive brands, much of the excitement in the sports recently have come from endorsers that aren’t on the Nike Roster.
Adidas on Fire
Adidas stock has been on an absolute roll in the last year, more than doubling since August of 2015. The company has shifted its focus towards individual endorsements and is starting to improve their product lineup in the process. Adidas done very well with influencers that aren’t athletes, but celebrities and pop stars, making Adidas more of a fashion staple in the past year. The company has also announced its Second ‘Speedfactory’, their first in North America, to compete for incoming 3D shoe trend we will see in the near future.
While Nike run certainly isn’t over and still remains the leader of the industry, the company cannot ignore the competition at this point.