Sneakernomics: Lessons from Levi’s

My first buying job (a very long time ago) was buying Levi’s for a department store.  Well, “buying” is probably too strong a word. Twice a year my Levi’s “salesperson” would come in and hand me a piece of paper, telling me what I could buy and each month’s allocation. (sound familiar?). Levi’s was the largest apparel brand in the world then and, as a buyer, you did what you were told, regardless of if it fit into your open to buy plan or flowed according to the business. There was no alternative.

Then, a few years later, after I became a merchandise manager, the jeans world began to change. Suddenly, smaller upstart brands like Britannia and Jordache burst on the scene, selling for much higher price points than Levi’s and capturing the Baby Boomers’ attention.

Levi's was no longer the most important brand. Levi’s was really the victim of its own success. The brand was overdistributed and far too dependent on a handful of styles to drive sales. When the more expensive “designer jeans” emerged, Levi’s could not chase those price points of the “better” jeans. Nor could they effectively diversify from their core products.

The denim industry grew rapidly, with Levi’s shedding share. While Levi’s was still the largest denim brand, it is no longer the largest apparel brand, now with dozens of brands competing for the consumer’s dollar.

I see some interesting parallels to where the sneaker business is today.

Nike is the largest footwear brand in the world but has been shedding share for some time now. Smaller upstart brands had captured all the heat and all the growth. Nike is in no danger of going away, but if trends continue will be a much smaller player than they were at their peak.

I do not expect the small brands to continue to grow at their current pace, but I do expect they will grow. Nike’s current weakness has opened the door for every brand to gain shelf space and to take share.

Adidas seems poised to take significant share in the US, if they focus on making products the BIPOC teen wants to wear.  If Adidas gets it right, they could take significant hare in the US.

Nike is finally saying all the right things they need to do: focus on wholesale; regain position in mid-market; pull back on the largest items to regain heat; stop promoting so much on DTC.

But all of these initiatives will take years to take place, and during the transition, Nike’s sales will be weak, and the brand will continue to donate share.

This revolution of the business will be fun to watch.