2016 was a banner year for athletic footwear, helping to drive sales for retailers, but for Nike, the world’s largest producer of athletic shoes, it was a year where it saw the market shift underneath it.
As rivals Adidas and Under Armour revved up the competition, the Beaverton, Ore.-based company struggled to excite consumers. In a new survey conducted by Cowen & Co., Nike remained the most popular athletic brand among U.S. consumers, but its lead was found to be slipping.
In 2016, 41 percent of consumers cited Nike as their favorite apparel brand, down from 44 percent a year ago, while 51 percent said Nike sneakers were their favorite, down from 55 percent last year.
Among younger shoppers in particular, the change was more dramatic. Among men aged 18-35, Nike’s popularity fell from 50 to 48 percent. Among Millenial women, Nike’s popularity plummeted from 54 to 46 percent.
According to Cowen analyst John Kernan, Nike’s market share and growth potential may have peaked, leading the brand to sell apparel at lower prices at value retailers like Kohl’s and Dick’s Sporting Goods.
Part of the problem may be related to Nike’s basketball category, which is hurting in the wake of Under Armor’s red-hot Stephen Curry deal. At the same time, the brand is fighting larger shifts in consumer preferences, which are currently trending towards more casual sneakers like those sold by Adidas.
Nike knows it’s in trouble, and replaced its former head of global basketball Michael Jackson earlier this year, this in addition to CEO Mark Parker taking up the role of chairman following the departure of Phil Knight.
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The company is also trying to counter Under Armour with lower-priced versions of its LeBron James and Kevin Durant basketball shoe lines, but that has hurt margins, which were down 2 percent in its most recent quarterly earnings report.
But 2016 wasn’t all bad news for Nike. In fact, there were many good bits of news that bode well for the future of the company. Its advertising has proven to be a particular strong point, with studies indicating that Nike’s ads are more effective than its competitors. Another study also indicated that Nike has the most “intimate” relationship with shoppers.
This year also saw the company make significant leaps in technology and sustainability. Most prominent was the debut of Nike’s first-ever self-lacing sneakers to the market, retailing for a staggering $720 in the US.
The company also unveiled the expansion of its European Logistics Campus in Belgium, a state-of-the-art centralized distribution network in the center of Europe enhanced by a fleet of sustainable features and initiatives. Nike says the investment allows the company to serve a vast network of retailers and consumers not just on the continent, but across the world.