Bloomberg Businessweek

JUST DON’T LOSE TO ADIDAS

Nike attempts to stay nimble in a fast-moving, fashion-forward world

A pair of platinum-colored Nike running shoes seem to levitate above a pedestal in the middle of a circular room. The left and right sneakers point outward, each poised at 45 degrees. Spotlights give them an ethereal glow and, here and there, illuminate strands of silvery suspension filament strung from the ceiling in a “V.” The walls, floor, ceiling, and pedestal are all white, save for a deep blue circle painted above. Were a choir to file in and begin singing hallelujahs, it wouldn’t seem out of place. Instead, there is Brett Holts, Nike Inc.’s vice president for running footwear, surrounded by about a dozen reporters and photographers.

We are in Steve Prefontaine Hall, a glass-roofed exhibition space at Nike’s headquarters in Beaverton, Ore., on a rainy morning in February. Geese honk on a pond outside. Holts is holding a shoe identical to the ones dangling beside him: the VaporMax, whose distinguishing feature is a sole resembling bubble wrap. There’s no foam, no rubber—just clear, tubular, thermoplastic polyurethane (TPU) bags filled with air (nitrogen, to be precise). “This innovation is going to take us a big leap forward in the marketplace with runners,” Holts says. Figuring out how to make the VaporMax took seven years, he explains.

Back when Nike started on the shoe, the company dominated the American sneaker market so thoroughly that its rivals seemed to have surrendered. Others sold shoes, but only Nike sold cool. With LeBron James and Michael Jordan, a brand man since 1984, under contract, the company set the trends in basketball shoes, and basketball set the trends in the broader market. In 2010, according to Sporting Goods Intelligence Inc., Nike accounted for 40 percent of the U.S. athletic footwear market; five years later the number was 46 percent.

Recently, though, Nike’s rivals have reawakened. James now competes for the NBA spotlight with Stephen Curry, the reigning league MVP, who jumped from Nike to Under Armour Inc. in 2013, helping to triple the upstart brand’s annual footwear sales in three years. And even Jordan can’t command the buzz of hip-hop artist Kanye West and his signature Adidas shoe, the Yeezy, which has supplanted the Air Jordan as the prime status symbol among sneakerheads. West had been Nike’s biggest non-athlete endorser until he left in 2013, citing Adidas’s willingness to pay him royalties Nike wouldn’t. By the time his first Adidas

You're reading a preview, sign up to read more.

More from Bloomberg Businessweek

Bloomberg Businessweek1 min read
Case Closed
Since it was first introduced in 1992, the Kelly Dépêches briefcase from Hermès ($10,200) has been almost as sought-after as its celebrated namesake handbag. This iteration, new for fall, has a slimmer profile, a shorter flap for easier opening and c
Bloomberg Businessweek1 min read
Floyd
1 It all started with a table leg. Floyd co-founders Kyle Hoff and Alex O’Dell marketed their first product—a leg that can be clamped onto any surface to create a table—in 2014 via a Kickstarter campaign. The hardware drew 1,395 backers who pledged
Bloomberg Businessweek5 min read
The Anger of Hong Kong’s Youth…
Billy Tung, a 28-year-old accountant, lives on Hong Kong Island in a tiny room in an apartment that’s been partitioned to accommodate six renters. His bosses expect him to work most Saturdays and Sundays, but recently he’s had another weekend activit