The sportswear giant is adopting a new strategy, reducing the availability of its acclaimed Air Force 1 and Nike Pegasus models, and this move serves a clear purpose.
Nike is scaling back the production of these classic shoes, not only to avoid unwanted discounts but also to highlight its latest releases.
Nike, Inc. is one of the most recognized and influential brands in the world of sports and fashion. Its history dates back to 1964 when Bill Bowerman, a track coach at the University of Oregon, and Phil Knight, one of his former students, founded the company Blue Ribbon Sports (BRS). Initially, the company primarily acted as a distributor of Japanese sports shoes, representing the Onitsuka Tiger brand (now known as Asics).
The business began modestly, with Knight selling shoes directly out of his car trunk at local sporting events. However, the potential for growth was evident, and in 1971, Bowerman and Knight officially launched their own line of shoes under the Nike brand, inspired by the Greek goddess of victory.
A pivotal moment in Nike’s history came in 1972 when the company launched its first running shoe, the “Nike Cortez,” which quickly became a hit among runners. In the following years, Nike continued to innovate and expand its product line, introducing revolutionary technologies like the air-cushioned midsole, featured in the famous Nike Air.
During the 1980s and 1990s, Nike solidified its position as a global leader in the sports footwear market, sponsoring renowned athletes and sports teams, including Michael Jordan, Tiger Woods, Serena Williams, and football national teams. Its aggressive marketing strategy and collaborations with celebrities helped establish its image as an iconic brand associated with athletic excellence and urban lifestyle.
Beyond footwear, Nike expanded its reach to sports apparel and accessories, becoming a comprehensive lifestyle brand. The company has also engaged in various social and environmental causes, including sustainability initiatives and programs supporting underprivileged communities worldwide.
Today, Nike remains a dominant force in the worlds of sports and fashion, consistently innovating in footwear, clothing, and sports equipment technology while maintaining its commitment to athletic excellence and corporate responsibility.
The Air Force 1 and Pegasus represent essential pillars in Nike’s footwear line, both being emblematic models with a long history in the company. The Air Force 1 is renowned for its all-white design, while the Pegasus stands out for the large Nike swooshes on its midsole.
Despite being designed for everyday use, the continued growth of these lines, along with other Nike products, has shown signs of slowing down. This has led stores to increase promotions on these shoes in an attempt to reduce excess inventory on shelves.
This move presents a challenge for Nike, which positions itself as a premium brand and seeks to safeguard its ability to sell its products at higher prices, avoiding excessive devaluation through aggressive discounts.
Thus, the company is choosing to limit the availability of these classic items in an attempt to stimulate demand and sell them at full price. Additionally, Nike aims to steer consumers toward newer and more expensive models, such as the Air Max and Pegasus products.
Matthew Friend, Nike’s Chief Financial Officer, stated during an earnings call on Thursday: “We are adjusting our product portfolio, focusing on newer lines. We are reducing the supply of classics like the Air Force 1 and Pegasus.”
The measures taken by Nike could also make it harder to find the iconic white Air Force 1 sneakers and Pegasus variants on store shelves.
Christopher Burns, a footwear industry analyst and founder of Arch USA, a blog dedicated to sneakers and lifestyle, observes that Nike’s loyal customers will likely transition to other models from the brand. He notes that this will not significantly affect true sneaker enthusiasts, as collectors tend to focus on limited editions and exclusive collaborations rather than mass-market lines like the Air Force 1.
However, Nike’s strategy could backfire if consumers fail to show interest in the proposed new styles.
Slowing consumption and growing competition are also among the challenges facing Nike. The company forecasts a sales decline for the next fiscal year, with a possible low single-digit drop during the first half of the year. This comes as consumers shift their purchasing habits, prioritizing essential items and experiences like concerts and travel over discretionary spending on expensive sneakers and sportswear.
In response to these challenges, Nike has lowered its revenue outlook for the year and announced plans to seek up to $2 billion in cost savings over the next three years. In January, the company also implemented staff reductions, affecting 1,700 employees.
Nike is also facing significant new competition from Hoka, a French sports footwear brand that has gained prominence in the market for its innovative approach to running shoe design. Founded in 2009 by Frenchmen Nicolas Mermoud and Jean-Luc Diard, Hoka was initially developed to offer high-performance footwear for trail runners and ultramarathoners.
Hoka’s differentiator lies in its thick midsoles and generous cushioning, designed to provide support and impact absorption, especially on uneven terrain. This revolutionary approach quickly drew the attention of elite runners and sports enthusiasts, leading to the brand’s rapid growth and popularity.
Over the years, Hoka expanded its catalog to include a variety of shoes for different sports activities beyond trail running and ultramarathons. Its shoes have also become popular among athletes in other disciplines, such as walking, road running, and even casual use, due to their comfort and distinctive style.
Famous for its chunky midsoles, even President Joe Biden was recently spotted leaving the White House wearing a pair of Hoka sneakers—a sign that the brand is gaining prominence and influence, even if it is not necessarily a Gen Z favorite.
Beyond technical performance, Hoka has also stood out in terms of style and visibility. In today’s competitive landscape, Hoka’s rise represents a challenge for established giants, forcing these companies to stay innovative and attentive to evolving consumer demands.
Meanwhile, Nike has adjusted its distribution strategy in recent years. It has reduced its reliance on traditional retailers and prioritized expanding its own sales channels, particularly online.
The company claims it can achieve significantly higher profits by selling directly through its website and physical stores than through wholesale partners. In line with this shift, Nike announced it would focus its resources, marketing efforts, and premium products on only 40 selected retail partners, including names like Dick’s Sporting Goods and Foot Locker.
