Nike is one of the world’s most recognizable brands, known for its quality products and powerful air of affluence and social status. However, like many brands, it has both strengths and weaknesses, and faces obstacles it must rise above in order to maintain its success.
Let’s explore a full analysis of the strengths, weaknesses, opportunities, and threats facing this company.
1. It is a highly recognizable brand.
Nike is a household name in practically every major part of the world. The iconic swoosh and ubiquitous tagline “Just do it” are powerful status symbols in many social and industry circles, and the brand has come to represent the pinnacle of sportswear and footwear for decades.
Nike’s brand value across the globe was $34.8 billion. (Statista)
2. Its customer base is very strong.
Customers flock to stores in droves to purchase Nike products. While many choose this brand for normal use, others select it as a fashion statement to be kept in pristine condition and promptly replaced or upgraded over time. Quality and style are a winning combination for Nike across the board.
Nike commanded nearly 27% of the global market share for athletic footwear. (Statista)
3. Its base product line touches most parts of the market.
Nike isn’t just shoes. It maintains a vast line of athletic wear for all seasons and many different sports. Nike stores and other retailers spotlight its ability to offer something to every customer in the market for performance gear, and its lines continue to expand based on consumer demand.
Nike generated $30.6 billion in revenue worldwide from its major product segments, including sportswear, running gear, training gear, and specialty sport and footwear lines. (Statista)
4. It has a number of celebrity endorsements.
Michael Jordan, Lebron James, and Tiger Woods are just a few of the names that helped catapult Nike to buyers’ collective consciousness. These endorsements are a vital part of the brand’s success that cannot be discounted.
Nike generated $3.6 billion in 2020 revenue from its Jordan footwear line alone. (Statista)
5. It maintains other valuable brands.
Nike has acquired and divested a number of companies over time, including Cole Haan and Hurley International. It currently only owns one other major brand: Converse. Converse remains an immensely popular brand, and further opportunities for acquisition may present themselves over time.
There were 98 standalone Converse stores in the United States in 2020. (Statista)
6. Manufacturing costs typically stay low.
Nike has mastered the art of producing quality products at a relatively low cost. This helps increase their profit margins, as well as the development of a trade and distribution empire sure to keep every retailer well-stocked to meet increasing demand.
Nike produced $16.2 billion in gross profit in 2020. (Statista)
7. It has powerful development and marketing branches.
Brand recognition does not happen overnight. It has taken hundreds of marketing minds decades of work to craft the powerhouse image we know today. Beyond simple marketing and advertising, Nike has also remained at the forefront of athletic wear research and development, positioning itself as a reliable brand for quality as well.
Nike’s stock value grew 183% from 2017 to 2021. (Forbes)
1. Labor conditions are problematic.
Nike has frequently fallen under fire for working conditions in its overseas factories. It relies on inexpensive labor to keep its operating costs down, but fair treatment of its employees across the globe remains a blemish on its record.
Nike has 75,400 employees worldwide. (Statista)
2. Retailers are a major factor.
Nike is reliant on third-party retailers to get its products into the hands of consumers. This dependence on other corporations means that it may end up sacrificing some of its profits or drive costs up and pass those along to buyers. While many would likely remain loyal anyway, this markup may turn some customers away.
Nearly 65% of Nike products are sold at third-party retailers. (BStrategyHub)
3. It is most well-known only for its footwear.
Although it does offer a diverse line of products in athletic and performance wear, it is most well-known for its footwear – specifically its sneakers. Some consumers may not be aware of the full line of products, or may be turned away by higher costs when compared to other comparable products.
Nike generated more than $23 billion in revenue from footwear. (Statista)
4. It is very dependent on the U.S. market.
The vast majority of its sales comes from the United States, and while it continues to diversify its sales portfolio, it must overcome this heavy dependence on American consumers if it hopes to gain a wider foothold across the globe.
North America comprises 36% of its market. (Investopedia)
5. It has been vulnerable to lawsuits.
As with any company, corporate missteps or issues with employee treatment have led to lawsuits. These unfortunate incidents can expose poor corporate practices, cause public relations nightmares, and take years to undo the damage to the overall brand perception.
Nike fell victim to a class-action lawsuit regarding gender pay discrimination. (Vox)
6. It has been plagued by sexual harassment allegations.
Particularly troublesome are some allegations of sexual harassment and unfair treatment of women in the workplace. This issue has led to a number of shakeups that resulted in positive action for the company, but the damage to its reputation has already been done.
Female executives at Nike exposed a culture plagued by sexual harassment, leading to resignations from other male leaders. (New York Times)
1. It can expand into emerging markets.
Many companies are looking overseas to other markets to increase their revenues. More and more nations are showing an increasing appetite for American brands in some ways, and Nike would be wise to take advantage of this hunger for its products.
Nike operated over a thousand stores worldwide. (Statista)
2. It can lean into sustainable practices.
Nike currently engages in some sustainable practices, but other corporate mandates have led to inconsistencies in execution. In order to remain successful and seen as environmentally-friendly, it must take full advantage of the growing pool and research into earth-conscious practices for manufacturing and development.
Nike has struggled to maintain an environmentally-conscious brand image. (Fashionista)
3. It could continue to develop unique products.
Nike has all but cornered the market on footwear, but the opportunity remains for it to set the standard in other areas. It could rely on its strong reputation for quality in other product lines moving forward, or even develop new products that create new segments.
Nike held 21.1% of the market share for U.S. footwear. (Statista)
4. It can sell directly to customers more.
Nike has recently made drastic moves to sell directly to consumers, opening its own retail storefronts and even selling directly online. It offers a unique and fully customizable buying experience that can’t be imitated in a department store, allowing consumers to purchase products that are specific to their tastes and preferences.
Nike operated 338 retail locations in the United States. (Statista)
5. It can improve working conditions.
Addressing the concerns and allegations about its labor force will be key to undoing some of the damage the brand has sustained over time. Only time will tell if continued reliance on poorly-paid employees and adverse (and potentially unsafe) working conditions will be enough to turn most consumers away, decreasing the potential revenue and growth over time.
Nike’s worldwide employment grew 119% from 2009 to 2020. (Statista)
6. It can rely less on other vendors and retailers.
As Nike moves toward selling directly to consumers, it is also shifting slightly away from a heavier presence in other retailers. This allows it to more tightly control distribution and pricing and also creates an air of exclusivity and scarcity that could continue to contribute to its valuable brand perception.
Retail sales worldwide for apparel and footwear reached $1.9 trillion in 2019. (Statista)
1. Counterfeits and copycats remain a threat.
Many popular brands suffer from the counterfeit goods market. Scam artists create knockoff versions of an otherwise identifiable brand, hoping to fool buyers into thinking they are the genuine article when the quality is shoddy and the product is not authentic. Nike is no exception to this, and cracking down on counterfeiters is a never-ending battle.
Counterfeit goods accounted for $461 billion in world trade. (ABC News)
2. Competition continues to be fierce in the market.
Even though Nike remains fairly dominant in the market, competition is stiff, and brands continue to jockey for the top spot in consumers’ minds and will continue to try to hold onto their loyal customer bases. Carving out even a small percentage of growth could mean millions or even billions in sales, so Nike cannot simply rest on its laurels.
Nike outperformed competitor Adidas in revenue by 69%. (Statista)
3. Marketing budgets continue to skyrocket.
The cost of advertising and marketing only grows over time, and it must do more and more to maintain its massive brand presence in the market. Word of mouth and social media can be low-cost alternatives, but that will not be enough in emerging markets or to promote new product launches.
Nike spent $1.47 billion on marketing in the United States. (Statista)
4. It has been engaged in patent and trademark disputes.
Intellectual property is incredibly important to any retailer, but especially to a powerful brand like Nike. It will never be above imitation or outright infringement of its products, and lawsuits to rectify these problems take time, energy, and expense away from the company – with the potential of losing out on a contested case.
Nike has filed suit against companies citing patent infringement, including against Adidas and MSCHF for its Lil Nas X shoes. (Reuters)
5. Economic uncertainty can cause major issues.
Any downturn in the market typically results in consumers cutting back on luxuries, and Nike is likely at the top of the list for many buyers. Any overall decrease in consumer spending could cause Nike to lose out on significant portions of revenue, and since its products are mostly sold at premium prices already, this high-end status could become problematic if spending drops for extended periods of time.
Nike lost 5% of its global revenue between 2019 and 2020. (Statista)
6. International trade could become a pitfall.
Much of Nike’s manufacturing happens outside of the United States (where the majority of its sales occur), which means it is vulnerable to international trade laws and sanctions. Any changes in trade law, supply chain management issues, or other pitfalls inherent to an international company could cause major problems if left unchecked, leading to short supply or delayed product delivery.
Nike generated $6.7 million in Chinese revenue. (Statista)
Nike benefits from a well-established brand image that is beloved by most of the market. It is a hallmark of quality and status, and it has also benefited from powerful celebrity endorsements that let any buyer take part in something they may see as bigger than themselves. However, high costs and problematic working conditions could cause issues for the company if they refuse to change with the times. Growing into new markets and expanding their product lines could shore up avenues for future growth, but failure to beat out the competition and address crucial concerns over the brand could cause major issues down the road. Overall, though, Nike is a strong company that must work hard to remain strong in the future.
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