On Sunday, Kelvin Kiptum ran the Chicago Marathon in 2 hours and 35 seconds, setting a men’s world record and coming tantalizingly close to breaking the mythical 2-hour barrier.
He ran in a pair of the still-unreleased Nike Alphafly 3 sneakers.
On Thursday, 13 runners met after work at Foot Traffic in Southeast Portland, less than 2 miles from Nike cofounder Phil Knight’s childhood home.
Only one wore Nike.
Historically, Nike capitalized on the achievements of superstar athletes. More than two decades since he played his last NBA game, the original colors of Michael Jordan’s sneakers still sell out in seconds.
But Nike’s recent failure to capture the imagination of everyday runners, even with the help of blistering times from Kiptum and other elite marathoners, has insiders and industry watchers questioning whether Oregon’s biggest company risks losing more of its original market.
“In running specialty, Nike’s not the boss,” said Sean Rivers, owner of the Portland running retailer Foot Traffic. “Brooks and Hoka are running the show.”
On a September earnings call with stock analysts, CEO John Donahoe conceded Nike is struggling to connect with everyday runners, a once-unthinkable statement for the head of a company cofounded by a collegiate runner, Knight, and his former coach, Bill Bowerman.
“We’re working hard to better connect with runners in their community,” Donahoe said, mentioning Nike’s apps as well as its growing presence at marathons and foot races and in running stores.
Analysts who spoke with The Oregonian/OregonLive wondered if the company’s focus on direct sales, at the expense of local running stores and other retailers, cut it off from too many consumers. They also wondered if a talent exodus, especially in footwear, is dulling Nike’s efforts to get sneakers back on the feet of 5K and 10K runners. And they said Nike’s been disengaged from local running communities for too long to expect a quick turnaround.
The sportswear giant’s problem isn’t a lack of demand for performance running shoes.
Hoka, a California shoemaker owned by Deckers Outdoor Corp., reported $1.4 billion in sales last year, a 59% increase. The Swiss company On reported $1.3 billion in sales, a 69% increase. Brooks, citing NPD Group data, considers itself the No. 1 performance running brand in the U.S.
Nike’s still the industry Goliath, but it’s nowhere near as white hot.
When Nike reported 2023 fiscal year-end numbers in June, Donahoe said the company’s running business grew 10% for the year. The company no longer publicly reports sales for its running division. When it last reported the data at the end of fiscal 2021, running was a nearly $4 billion wholesale business.
It’s not selling any shoes to Foot Traffic customers.
The company’s Sellwood store sells 16 Brooks models, 13 Hoka models and 13 On models. Rivers said the store has a Nike account, but he chooses not to sell its running shoes.
“I don’t think people respect Nike as an everyday running brand right now,” Rivers said.
Nike declined an interview request for this story.
“Our passion has always been to serve all runners, and with our investment in research and innovation and design capabilities, we’ve never been better equipped to serve every runner’s needs,” the company said in a statement.
The Sellwood Foot Traffic store sells several models of Brooks, Hoka, and On running shoes. But it doesn't sell Nikes. Dave Killen / The Oregonian
Nike’s disappearance from the walls of stores like Foot Traffic started about a decade ago. Nike was one of the first large footwear and apparel companies to start prioritizing direct sales, both in its stores and on its website and mobile apps.
In 2017, the company formalized the shift under a business plan called the “Consumer Direct Offense.” At the time, Nike had about 30,000 wholesale partners. By March 2022, the company had cut that by more than half.
Wall Street loved the strategy. Selling direct to consumers can mean more profits. Nike stock nearly doubled under the plan, while the broader stock market – as measured by the S&P 500 – climbed only 25%.
But parting with longtime sellers came with a bruising downside. Many of the retailers who lost Nike accounts felt blindsided by termination letters. Foot Traffic’s Rivers called Nike’s execution of its direct shift “boneheaded.”
“All the brands go direct,” he said. “That’s OK. They could have done it and not alienated so many people.”
Nike’s support of the running community also waned.
“They used to sponsor local runners and events,” said Tracy Reisinger, president of the Oregon Road Runners Club. “The only thing Nike does now is try to get people into their stores.”
Beth Martin, who joined Thursday night’s 3-mile run at the Southeast Portland Foot Traffic, previously worked in a running store. She didn’t know the store’s Nike sales rep, but she said, “Brooks came in all the time.”
Nike’s disappearance from local tracks and running stores opened opportunities for competitors.
“This inability to show love to subcultures, running in particular, has left a ton of cracks in their foundation, which are being filled beautifully by On, Hoka and other brands via specialty running stores,” said Chris Burns, founder of the sneaker industry analysis firm ARCH.
On June 25, 2020, five months after he was named CEO, Donahoe announced the “Consumer Direct Acceleration,” which ramped up the previous plan while reshuffling the entire company.
The CDA, as it’s known internally, simplified Nike’s complex organizational structure, organizing it under men’s, women’s and kids, and deemphasizing sport-specific categories like running. Nike insiders said the move sapped some product momentum.
As part of the streamlining, Nike laid off 700 employees in 2020, including many with decades of experience. The talent exodus has continued, with some top footwear employees voluntarily leaving.
The plan hasn’t paid off like its predecessor. Nike’s stock is up 7% since the CDA was announced. The S&P 500 is up 44%. The issues with the Oregon company’s running shoes may be emblematic of broader problems.
Some Nike insiders said the company is at a turning point, while Donahoe in June told stock analysts the “CDA strategy is working.”
Among the problems that have come into view: In recent years, Nike cut some large wholesale accounts. In 2021 it cut DSW, Urban Outfitters and Macy’s. Those sorts of stores historically sold a lot of Nike products, including low-cost running shoes.
“Most of those retailers sold a lot of opening-price point product,” said Matt Powell, a senior adviser for BCE Consulting. “They weren’t able to translate that to Nike.com.”
Nike has since gone back to DSW, Urban Outfitters, and Macy’s, but analysts said the company’s product line is lacking in the low- and mid-priced running channels.
“In the family channel, there just doesn’t seem to be a lot that anyone is excited about,” said Williams Trading analyst Sam Poser, who has a hold rating on Nike’s stock.
Foot Traffic buyer Dan McDuff said the Nike Pegasus, a $140 performance running shoe, “could slot right back” on the company’s wall, but there’s not much else in Nike’s catalog for everyday runners.
“The product’s OK,” he said. “Where they shine is competition footwear. But that isn’t a huge part of our business.”
Kelvin Kiptum set a men's marathon record on Sunday wearing a pair of Nike Alphafly 3 running shoes. Nike is working to make the technology in its high-end marathon shoes more accessible. (Eileen T. Meslar /Chicago Tribune via AP)AP
On last month’s call with stock analysts, Donahoe was upbeat about Nike’s ability to regain its lost mojo with everyday runners. He and Chief Financial Officer Matt Friend spoke with high hopes for several Nike running shoes, including the Vomero, Infinity and Invincible, which retail between $160 and $190. The company’s also working to make the technology in its celebrated marathon shoes more accessible.
Donahoe said Nike’s leaning back into working with running stores, even launching the React 4 in partnership with stores, although the company didn’t answer a written question about what that meant.
“That’s a step in the right direction, and we’re really working to break through in these channels,” he said.
Analysts and insiders don’t doubt Nike can win back more everyday runners. It has unmatched resources, including the LeBron James Innovation Center, an 84,000-square-foot biomechanics funhouse where the company develops new footwear technology.
But they said there’s no quick fix.
“It’s great that Nike can claim a record-breaking marathon athlete, but that won’t have a lot of impact on the runner who frequents run specialty stores where Nike hasn’t been a leader in a long time in part because it’s less focused on performance than it once was,” said Lois Sakany, OTR Global director of retail research, in a direct message. “To make a dent and take share from Brooks, Hoka and On, it’s going to have to invest a lot more globally in sponsoring races, hosting running groups and attending relevant events, which is going to take time.”
Rivers, the owner of Foot Traffic, said he’d welcome a renewed relationship with Nike, but he said he’d need to see a commitment to everyday runners.
“It would take a vision beyond immediate sales,” he said.
Reisinger, the president of the Oregon Road Runners Club, also said she would welcome a bigger Nike presence in the running community.
“There’s a hunger for more involvement with all the local running shoe companies, but especially Nike. They’re Oregon. They’re Portland,” she said.
But for now, she’s not running in the company’s shoes.
“I switched to Hoka because they’re more comfortable,” she said.
– Matthew Kish | mkish@oregonian.com