According to analytics firm Vertical Knowledge, retailers dropped prices on twice as many Nike trainers in 2024 compared to the same period the previous year, jeopardising the sportswear giant’s usually robust pricing strength at a time when competing sneaker manufacturers are posing fierce competition.

Foot Locker, Dick’s Sporting Goods, and Macy’s were among the eight major chains from which the researchers collected online pricing data. The retailers reduced the average price of 44% of their Nike trainers in 2024. This is an increase from 19.4% in the similar 2022 timeframe, according data from Vertical Knowledge that was released to the public.

This represents a departure from the previous practice, in which Nike shops were able to sell all of their Nike inventory at full price, especially lifestyle sneakers like the Nike Air Jordan 1 Retro High. Nike retail costs range from about $50 for entry-level running shoes to $200 or more for shoes that are part of a special edition.

The world’s largest sportswear firm, Nike, may be in danger as a result of some shops’ decisions to drastically reduce the cost of their trainers. Nike’s mastery at charging premium rates to the mass market is evident, according to Brian Yacktman, head of YCG Investments, the company that holds Nike shares.

On Wednesday, a Foot Locker in New York City had a selection of discounted Nike footwear. Lebron 20 basketball trainers, which were originally priced at $170, were now only $129.99, while Nike Air Max types were also on sale. A number of Nike Air trainers, including the Air VaporMax and Air Huarache, were also available for purchase in Macy’s flagship shop in Herald Square.

According to the data, the average cost of Nike trainers at large retailers such as Macy’s decreased from $103.61 in the first quarter of 2022 to $79.92 in early 2024. As to the latest annual report from Nike, the company supplies its goods in bulk to “thousands of retail accounts.”

Nike “has a very diversified wholesale portfolio, with no single partner representing an outsized portion of total wholesale revenue,” according to a representative for the company.

Foot Locker and Macy’s declined to comment, and Dick’s Sporting Goods did not return requests for comment.

According to the research, the eight largest retail chains are offering trainers by On Running and Deckers-owned Hoka, two rapidly expanding competitors of Nike due to their emphasis on cushioned running shoes, for an average price of $148 per pair.

In a recent interview, Nike investor Yacktman expressed concern about the reductions. “My primary concern with Nike is when they will discontinue their promotional pricing and return to their core competencies.” His company also owns stock in LVMH and Amazon.

Nike declared in June that it will return to retailers like Designer Brands, which is owned by DSW, after stepping back from some wholesale distributors two years ago to concentrate on direct-to-consumer sales. This indicates that those chains are still a significant source of customers for Nike.

Nike shocked investors by lowering its 2024 annual sales projection in late December. When the company first announced that it was facing a “highly promotional marketplace,” especially in its online division, Chief Financial Officer Matthew Friend warned that preparations to restrict the supply of “key franchises” in light of the unpredictable demand from customers would be intensified.

Nike has always presented its footwear as a high-end, sought-after item. Additionally, in December, Friend informed investors that “strategic” price increases will contribute to Nike’s increased gross margins this year.

However, shoe industry analyst Matt Powell claimed that Nike has been “stuffing the market” by releasing an excessive number of models to stores despite indications that consumers are growing tired of the brand’s classic lifestyle sneakers and Jordan brand variants.

Based on pricing data from eight retailers that Vertical Knowledge tracked, the sample of eight sold far more Nike trainers at a discount than Hoka shoes (4.5%), Adidas shoes (18.9%), ON Running shoes (based in Switzerland, 23.1%), or Puma models (37.4%).

Cutting prices would lessen Nike’s appeal to customers. Powell stated that “Nike runs the risk of just becoming another shoe brand” in the eyes of consumers if they witness more regular price reductions on Nike designs.

Nike models, like as the Nike Dunk Low Retro, have also become less expensive on the sneaker resale market, which is another indication of declining consumer desire. According to Dylan Dittrich, head of analysis at Altan Insights, a company that tracks the collectible sneaker market, Nike created 116 new iterations of the shoe in 2023 as opposed to just 31 in 2019.

Towards the end of 2021, several shoe releases went up to $340 on resale sites like StockX, which is almost three times the $115 suggested retail price from Nike. However, the majority of Dunk Low designs can now be had for nearly, or less than the original list price. 

(Adapted from ApparelResources.com)