Nike Inc. (NYSE:NKEC) should be accessible but not too accessible. That’s what some observers say anyway. Retail in general is in a state of turmoil, to say the least. In that climate, Nike wants to make sure lots of people are seen wearing Nike-emblazoned shirts and shoes. To that end the company recently began selling on Amazon.com Inc. (NASDAQ:AMZNC).
All well and good – except for those who think the company’s cachet may be weakened. And therein lies a dilemma for Nike.
Sales Are Booming
Nike is the world’s largest sportswear maker and now that it is selling on Amazon.com as well as on its own website – Nike.com – not to mention via apps, sales have doubled to more than $2 billion since 2015.
Traditionally, Nike released its most desirable products through sales partners like Foot Locker Inc. (NYSE:FLC) and Dick’s Sporting Goods Inc. (NYSE:DKSB), especially for limited shoe releases. Often the new lines were introduced at midnight and resulted in shoppers camping outside stores in order to be able to buy the new products.
A Change Of Tactics
Now the company has asked these same partners to shift releases to morning hours because of some negative publicity and shoppers who have gotten out of hand.
Industry watchers worry that going to more online releases of new products could weaken the brand’s desirability. In addition, making certain shoes available only through Nike channels there is fear the company may be diminishing smaller stores that previously capitalized on having the latest and greatest releases.
A New "Old" Kid In Town
Rival Adidas has been creeping up on Nike while debate about Nike’s marketing practices has gone on. One reason for the spike in sales has been the Kanye West Yeezy line of shoes known for high prices and – wait for it – limited availability.
Despite the bump in sales, Adidas claims only 11.3% of market share in the space. Nike owns 34.7%. the “rub” is that Adidas is up 5% in market share from the 6.3% it had in 2016 while Nike is down a little more than 1% from the 35.9% it had in the same period.
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The Instagram Connection
Despite concerns expressed by analysts and observers, Nike continues to seek out new online marketing tools. The company recently announced plans to sell on social media in addition to Amazon.com and other online platforms. The company will even sell shoes via Facebook Inc. (NASDAQ:FBC) owned Instagram.
This caused Raymond James analyst Cedric Lecasble to make Nike his “top pick” in the consumer sector. Lecasble started his Nike price target at $71, representing a 23% upside from the stock’s recent closing price.