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: Nike fears movement toward ‘New Balance and smaller, independent brands’: report


““High heat, hype is ‘killing the culture’ and consumers are migrating towards New Balance and smaller, independent brands.””

That was a line from an internal Nike

presentation last week, lamenting the performance and perception of the company’s shoe-release software, SNKRS.

The internal meeting, whose contents were obtained by Complex, addressed problems that some Nike users have with SNKRS, like limited drops and lack of fairnesses for new releases.

“Our community is becoming disenfranchised by our low fairness numbers,” SNKRS global VP Ron Faris said during the meeting, according to Complex. “Our fairness numbers are not where they should be. They’re at, like, the mid-20s; they need to be in the 80s.”

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Hundreds of thousands of would-be shoppers enter some of these shoe raffles on SNKRS, and most of them are unsuccessful. The lack of perceived fairness for shoe and apparel releases on SNKRS cannot simply be dismissed as disgruntled customers upset they didn’t secure a sought-after product — the odds actually are not in their favor.

Each user attempting to get a pair of sneakers on release day does not have equal chances, according to the company. Nike oftentimes gives “exclusive access” to highly sought-after shoes to Nike members who use their app more.

During the company’s earnings call in September, Nike CEO John Donahoe said these are its “most deserving” shoppers.

This is important because shoes, like the recent Off-White x Nike Dunk Low for example, can be purchased from Nike $110, but can be resold for hundreds more on the secondary market, due to limited quantities.

Nike did not respond to MarketWatch’s request for comment on this story.

See also: Runner sues ex-coach, Nike for $20 million over alleged abuse

While rival shoe company New Balance has seen an uptick in popularity in recent years with releases like the New Balance 550 and the New Balance 990v3, it’s still nowhere near as popular as Nike — Nike does more than double New Balance’s yearly revenue in a single quarter.

Nike’s first-quarter revenue rose 16% to $12.2 billion, from $10.6 billion a year ago. Nike’s stock rose 2.09% on Wednesday is up 22.22% over the past 12 months, compared to the S&P 500

which is up 23.5% over the same period.

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