Nike Will Be In The Middle And Low Shoe Market, But This Market Is A Bit Crowded.

Nike will spend more energy on the middle and low class shoes market, and CEO Mark Parker calls it an "untapped opportunity".

At Nike group's 2019 third quarter conference call, Mark Parker said: "next fiscal year, we will add new products to the price segment below US $100.

We are adjusting commodities and marketing teams to support them in the market as a whole.

Nike has not spent energy on cheap sneakers for a long time.

Nowadays, the most popular Nike shoes are sold for more than 1000 RMB. The discount shoes Air Vapormax is priced at 1499-1599 yuan, the main running shoes Epic React Flyknit2 sells for about 1299, and the newly released Air Max 720 sells for 1399 yuan.

These shoes, which Nike calls "top platform", are priced at more than 150 of the US dollar price.

The main reason why Nike has pushed these shoes in the past two years is, on the one hand, to speed up the technological innovation of high-end footwear to cope with Adidas's competition. On the other hand, the overall market of sports shoes has been influenced by luxury brands and become fashionable and expensive.

From a financial point of view, selling more expensive shoes is also good for boosting profit margins.

In the third quarter, the gross profit margin of Nike group increased by 130 basis points.

But from the scale of the market, sports shoes less than 100 dollars occupy the mainstream.

According to the NPD group, the average price of men's sneakers sold in the US in 2018 was $70.

The Nike Tanjun, which sells for about 65 US dollars, has been sold for the first time in two consecutive years.

At this price, although the marketing and product update speed is far lower than that of high-end shoes, it basically contributed more than half of Nike's revenue. Mark Parker called it the "core product".

For Nike, the shoes market below US $100 needs to face the following competition: Adidas's Super Star, Stan Smith (which is said to have slowed down the sales of these two shoes), Puma's Suede, IGNITE Limitless, New Balance's 574 and 247, as well as Vans, Cage, Anta, Lining and other brands.

It is not hard to see that these competitors sell well in the price range of $60-100, not because of the technological innovation of footwear, but most of them are catching up with the trend of retro shoe.

At the same time, Nike's AF1, Cortez, Nike Tanjun and ADI's Super Star are launched for many years.

For sports shoe brands, the introduction of old shoes is a very low risk strategy because demand has been proven and there is no R & D cost.

Then why is Nike now bringing the so-called technological innovation back into the $100 range?

In fact, in 2017, Nike once had a wave of retro marketing for Agam shoes (that is, Cortez), and sought Bella Hadid to shoot advertisements, offering all kinds of classic matching colors.

But according to Bloomberg, this shoe didn't get the desired response.

It is likely that since then, Nike has realized that it is difficult to sell itself to the middle and low end market simply by selling retro shoes. After all, it is difficult for you to talk about nostalgia at the same time talking about technological innovation and releasing futuristic advertisements.

"We must be competitive at all levels."

Mark Parker said, "we will bring innovation into the low price market, not only to reduce positioning, but to create unique products for those consumers at that price."

"Shoes less than $100 are not innovative.

Strictly speaking, they are shoe covers. "

NPD group footwear analyst Matt Powell holds a different view. He does not think that technological innovation is the key driver of the sports shoes market nowadays. Fashion is the only thing that customers who consume less than 100 dollars are looking for shoes with high quality but no technology.

They don't buy shoes for sports.

According to Mark Parker, Nike is about to launch a brand new slow shock system suitable for this price segment.

These products will be updated in the 2019 homecoming season (the peak season for sports shoes).