Cutting costs and visibility

Nike is sacrificing visibility, but there’s a better way to save cash

Nike has recently been seeming to look for lots of ways to cut costs. From the biggest drains, like player sponsorships to smaller things, like stopping the personalization on player’s boots, Nike is doing its best to try and save money. There has been a spate of big-name players that have dropped the Swoosh, like Neymar, Raheem Sterling, Lewandowski and others as well. There is an excellent video on this done by Athletic Interest on YouTube that will be embeded below and its well worth a watch.

Dropping the endorsements of some more well-known players was something that Nike had started even before the pandemic began, it was sped up by the continued fallout of the global economic downturn. So, events gave Nike even more reason to continue down this path. And its not necessarily the worst idea. Nike already has a good amount of stars in its books and it does seem like the brand will be making more ads that focus on the quality of players it has, like Marcus Rashford and Kylian Mbappe, rather than quantity. Considering how solid their current lineup is, this will no doubt pay off in the long run.

The Swoosh can also pull this off because they remain the most desirable brand in football. A lot of other brands make excellent product and while adidas and Puma are growing in presence, Nike’s marketing power means they are tough to topple. This means that Nike remain in healthy shape, visibility-wise.

But the cost-cutting doesn’t stop there. As has been mentioned earlier, Nike has even begun dropping personalization on their player’s boots. While this doesn’t have too much effect in terms of marketing, its sure to annoy the players the sponsor. The reason why Nike has done this could be that they furloughed workers at their Montebelluna factory. If not that, maybe they didn’t want to spend the money on personalizing player’s shoes. An effect of this does make it seem like the company is struggling to pay it’s bills. Which, its Nike, they’ve got the money. But its not a good look.

Another issue that is happening not just with Nike, but to a lesser extent adidas (who had an absolute nightmare with the launch of the X, we can’t let them off the hook for that), is that shipments of product have been delayed by months at a time. Some stores had their June orders show up in late October/Early November, which means they arrive just in time to be marked down. This is understandable to a point because of the pandemic and how its messing with global supply chains but other brands like Puma, New Balance and Mizuno are still stick to their release dates. The fact that some smaller brands are not having issues makes it seem like Nike isn’t putting as much effort into fulfillment as they could be. Nike is a massive company, so there’s also a chance that the supply management resources, and time are spent on other, more profitable, parts of the company, like their sportswear category.

Did we really need a black Vapor so soon after the boot launched?

Since Nike is doing a lot of cost-cutting to balance the books and increase profit forecasts, this means there are probably looking for other ways to reduce costs. Luckily, there are so very easy ways to achieve this, and without reducing the number of employees they have. The first way is to stop producing so many different colourways in product. It has been less than one month since the launch of the new Mercurial and we have already seen three colourways drop. Surely dropping one of these colourways would mean there would be less cost when it comes to production. There’d be less need to produce extra colour palates and the brand could even save on the cost of shipping. This is because each colour has had an extra release date and the logistics wouldn’t have to be figured out. It’d also take pressure off their already-strained supply routes. They shouldn’t be afraid to swing the axe and cut back on the number of SKUs (stock keeping units) on offer. Adidas already did this with the Captain Tsubasa limited edition X Ghosted, even though a lot of people were looking forward to it. If it’s a stretch to do, just drop it!

Nike’s CEO, John Donahoe

The second option that Nike has is probably the one that could save them the most money is to cut the CEO and Board’s pay. Nike’s CEO received $53 million last year, which was the largest compensation package in the history of the company. The lowest compensation package was the $3.3 million given to Nike Executive Vice President and Chief Financial Officer, Matthew Friend. In total, Nike’s executives received around $111 million in compensation last year alone. Cutting their pay would go a long way towards helping stabilize the company. But as we all known, they’re the least likely ones to have their pay cut. They’ll just fire more people instead. But hey, if they wanted to help right the ship so to speak, they should cut executive’s pay. Simple and save a ton of money.

What do you think about Nike’s cost-cutting? Please share this with your friends and make sure to follow me on Instagram and Facebook!

じゃあね!

aglockhart

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