Just don’t do it.
Words which Nike executives probably wish they could now share with former Nike Oregon Project leader, Alberto Salazar, regarding alleged coaching/training tactics.
Words those same executives probably wish they could convey in the upcoming days, weeks and months with current and would-be customers who are thinking about abandoning the “swoosh” in the aftermath of Mary Cain’s claims of being “emotionally and physically abused” during her time as a Salazar pupil.
Last Thursday, Cain detailed for the world her story. A story of a young female champion runner who saw her athletic performances suffer while being subjected to abusive training techniques.
And now, as we reflect not only on the Cain revelations but also the weight of other ethically nefarious scenarios Nike has been linked to within the last several months (Salazar’s 4-year doping ban, both Alysia Montano and Allyson Felix claiming Nike was less than sensitive/accommodating during their respective pregnancies), one must wonder if/when all of these disclosures will have a material impact upon Nike’s bottom line.
Here is what we do know:
1) Nike is the unquestioned market leader in the sneaker world.
As the graphic below shows, Nike’s 2018 sales are more than 50% larger than their next closest competitor (Adidas), more than 7 times greater than Asics, roughly 9 times greater than Puma, and 22 times greater than Under Armour.
2) Millennial and GenZ consumers increasingly care about the ethics of brands they select.
Thought leaders I’ve met at professional conferences in the Sport Marketing space tell me that the push for being authentic and culturally relevant and winning the heart of your consumers has never been more critical to strategic brand management than it is today…largely because millennials and GenZ consumers – who are so desperately coveted by almost all companies in order to build lifelong brand loyalties – are less trusting of traditional ad messaging, and crave an experiential, digital, personalized and socially shareable connection with the brands they wish to align with.
3) The marketing power of social media continues to grow.
In today’s social media environment, breaking news stories – especially ones which paint large companies into bad lights – tend to illicit others to share similar stories of mistreatment, which have a particularly reverberating feel within the dynamics of social media. The Cain revelations are a perfect case example of this dynamic, as numerous fellow runners came virtually running to Cain’s support on social media (examples here and here)
With these considerations in mind, these are my forecasts:
a) Nike’s perch atop the sneaker world is not in peril, but their 2019 Q4 revenues will take a hit that will likely extend until 2020 Q1;
b) In particular, I expect their short-term sales with millennial and GenZ women will fall, thereby opening the door for all other challenger brands to target this market segment with advertising themes conveying the importance of caring holistically about the individual.
c) Furthermore, I expect Nike’s stock price to drop in the short run. As of Friday’s close, their stock was selling at $89.81 per share. Both because of the negativity related to this latest scandal, and the general uncertainty at Nike with the recent departure of former CEO Mark Parker, I could see Nike’s share drop to between $77-80 per share by the end of 2019…with an outside chance of dropping even further if more scandalous allegations/revelations in the coming days/weeks.
In a Forbes piece published in September 2018, Nike was applauded for being woke and on the side of inclusiveness, freedom of expression, and diversity with its iconic ad featuring – among several athletes – Colin Kaepernick. Showcasing how athletes from all walks of life have overcome various odds to achieve athletic success.
Unfortunately for Nike, they have fallen asleep at the wheel of late when it comes to showing their concern for and promoting the holistic health of their athletes like Mary Cain, Alysia Montano and Allyson Felix.
Nike won’t lose their position as market leader in this space, but unless they play the damage control game shrewdly, they may slumping sales among a generation of younger women who want their brands to stand for something much deeper than win-at-all-costs.