Shoes

Has Nike’s Very Special Sneaker Strategy Gone Too Far?


Left to right: Seasonal basketball shoes for Durant, LeBron, and Kobe

Courtesy Nike

Left to right: Seasonal basketball shoes for Durant, LeBron, and Kobe

Another holiday, another batch of fancy new basketball shoes to choose from.

Nike (NKE) has unveiled signature Christmas shoes for LeBron James, Kevin Durant, and Kobe Bryant, its three marquee hoopsters. The new kicks will be worn in NBA games on Dec. 25 and show up in stores the following day—in limited quantities, of course. James gets a mint-green treatment with snowflakes, Bryant’s appear to be made out of snakeskin, and Durant’s have a pure holiday look from an intense cherry-red color offset by green soles.

But those on-court shoes mark only a portion of Nike’s holiday shopping extravaganza. The company is getting set to release one of the most anticipated shoes of the year, the Air Jordan Retro 11 Gamma Blue, and on New Year’s Day will roll out the Zoom HyperRev. The full-court press is enough to overwhelm even the most aggressive sneakerhead.

Of course, Nike knows better than most companies how to carefully manage a brand and a supply chain. Its major launches produce as many as 750,000 pairs of shoes, according to Matt Powell, an analyst at SportsOneSource. And even at those volumes the company is careful not to fully meet demand, creating a sense of scarcity that drives sales of its next release.

Designers crank out a stream of special-edition Nikes in batches of 10,000 to 20,000, and many are snapped up by collectors and often resold for multiples of the retail price. Sneaker enthusiasts burnish their collections while Nike garners its standard price, plus all of the brand buzz that comes when an exotic shoe hits the blogosphere.

Nike appears to understand that the customer, more than ever, is king. In the 1980s, kids lusted after the single shoe of the moment—1985’s Air Jordans, 1989’s Reebok Pumps—the more ubiquitous and mainstream, the better. Today the opposite is true, so Nike conducts its incessant launches and a program that lets buyers customize shoes for an extra 15 percent.

But the more special releases a company unveils, the less “special” each one becomes—and if there’s a point of diminishing returns in the niche-market sneaker supply curve, it seems Nike is toeing it. The company has six different basketball shoes coming out in the last 10 days of December, a feast of festive footwear for those who may have missed out on its recent “Ugly Christmas Sweaters,” a shoe with a satin tongue and sides plastered with gaudy snowmen and poinsettias.

SportsOneSource’s Powell says sneaker giants are testing the fervor of its biggest fans. “I think it’s starting to lose a little bit of its luster. There seems to be a special release every day now,” he says. “I have ‘Nike releases’ set up in my Google (GOOG) Alerts, and it shows up more than anything else.”

And there’s no sign of a slowdown. Next year, every company that makes basketball shoes is setting a time machine for the 1990s. Nike is rebooting its Charles Barkley franchise, and Fila is dusting off its Grant Hill models. Reebok is betting Shaquille O’Neal still has sneaker cred, while Adidas (ADS:GY) goes big with a Dikembe Mutombo line.

“There definitely could be a glut in the marketplace,” Powell says. “In some cases, brands are bringing back shoes that didn’t sell the first time around.” In economics, as in basketball, sometimes the art is in not taking a shot.

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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