| Name | Nike |
| Industry | Sportswear |
| Founded | 1964 |
| Headquarters | Beaverton, Oregon, United States |
| CEO | John Donahoe |
| Revenue | USD 44.49 Billion, 2021 |
| Profit | USD 5.73 Billion, 2021 |
| Competitors | Adidas, Puma, Converse, Asics, Vans, Brooks. |
Company Overview
Headquartered in Beaverton, United States, Nike is a sportswear company. It was founded by Bill Bowerman in 1964. Initially, Nike was renamed Nike Inc. in 1978 and became listed two years later. Currently, Nike has retail outlets and distributors in more than 170 countries all across the world. According to Forbes, Nike is estimated to have a brand value of USD 39.1 Billion in 2020, making it the 13th largest company globally in terms of brand repute (Swant, 2020). Let’s dive into the detailed swot analysis of the company.
Nike Strengths 2021:
- Strong Brand Image.
Nike is considered the largest household brand worldwide. Its iconic tagline “Just do it” is one of the powerful status symbols in industry and social circles. Nike is representing the pinnacle of footwear and sportswear for decades. It has a net brand value of USD 39.1 billion in 2020, ranking the 13th company on the global list (Swant, 2020). - Vast Line of Products.
Nike has a vast line of athletic wear for all types of sports and seasons. Nike generated worldwide revenue of USD 44.49 billion from its major segments, including sportswear, training gear, running gear, and special footwear and sports lines (Macrotrends, 2021). Nike’s ability to offer something for everyone in the market for athletic apparel is highlighted in shops and other retailers. - Sustainable Brand.
Nike has adopted sustainable means to manufacture their products, almost 75% of all Nike apparel and shoes contain recycled material (Nike, 2018). Owing to robust disclosures about its supply chain and production practices, Nike topped in the sustainable clothing and footwear brands. Nike is also collaborating with NASA and other government organizations to spur chemical innovation in order to make the processing of raw materials into items more environmentally friendly (Virgin, 2016). - Diversified Workforce.
Nike has a diversified workforce, including highly trained labour and diversified staff. Currently, it has more than 75,400 employees working all across the world (Forbes, 2021). Nike spends a massive amount of resources on its human resources, in order to train them and keep them updated with ever-changing market conditions.
Nike Weaknesses 2021:
- Labour Controversies.
Nike has mostly outsourced its manufacturing facilities to developing countries, in order to keep its operating costs low. The term “Sweatshops” is mainly used to mock the abhorrent conditions in the overseas manufacturing facilities of Nike (Wazir, 2001). Therefore, fair treatment to its employees remains a blemish on its record worldwide. According to a report issued by San Francisco-based Global Exchange, Nike workers are forced to work excessive hours in high-pressure work environments, while not earning enough to fulfil basic needs. - Ineffective Product Mix.
Nike mostly earns revenue from its footwear business, as it contributed lion’s share on the overall business revenue. While other segments, such as apparel and equipment segments still have a limited presence in the market. During the existing recessionary market conditions, it is not a good practice to place over-reliance on one segment. - Limited Market Presence.
Even though Nike has diversified operations in multiple international markets, but its growth is mainly focused on the profit generated from the home country. Nike has quite restricted performance in developing countries, making it difficult for it to compete with the local brands in the host markets. - Over-reliance on Third-party Retailers.
Nike has over-reliance on third-party retailers to deliver products to the end consumers. This dependence on other organizations may force Nike to give up some portions of its profits or incur extra costs to get along with them. Almost 65% of Nike products are sold to customers through third-party retailers.
Nike Opportunities 2021:
- Industry Growth.
Over the past years, the apparel and footwear industry has observed tremendous growth and is forecasted to further expand in the coming years. In 2019, the sector showed USD 1.9 trillion in revenue, which was USD 1.8 trillion in the last year (Statista, 2021). This extensive market growth can benefit Nike to increase its sales. - New market opportunities.
The emerging market growth in India and China can prove extremely beneficial for Nike, where the Billion Plus new customers are now aspiring to adopt a western lifestyle, meaning that they will demand more international brands, like Nike. Shand & Tanchua (2016) states that capturing an emerging market with newly affluent consumers can be a game-changer for international brands, such as Nike, due to its recognition as a premium market brand. - Growing Digital Trends.
Due to the COVID-19 pandemic, in-stores sales have observed a significant decline, as most of the countries faced lockdowns or travel restrictions. In such conditions, the trend of sales through online mediums has increased. According to UNCTAD (2021), pandemic increased the online sales share among total retail sales from 16% to 19% in 2020.
Nike Threats 2021:
- Counterfeiting.
Almost all popular brands suffer from counterfeit goods in the market. Scammers produce counterfeit copies of well-known brands with the hope to fool the customers through fake products. As per OECD (2019), 3.3% of global trade includes counterfeit goods, representing USD 509 billion in 2016. Moreover, footwear holds the top trade of fake goods with 22%, following by 16% of clothing (OECD, 2019).
- Fierce Competition.
Owing to steep competition in the global apparel and footwear market, Nike always remain in hot waters. Its key competitors, such as Adidas and Puma hold quite strong market presence, but still Nike is considered as the market leader in terms of market share, as it outweighs Puma and Adidas with 57% revenue in 2020 (Statista, 2021). - Suspended Sports & Outdoor Activities.
Due to COVID-19, most of the sports and outdoor activities were suspended leading to negative impact on the sales of sportswear. According to Just Style (2021), the US apparel sales was estimated to reduce by 50% in 2020 due to pandemic, which can cause severe threat to the profits of Nike.
SWOT Analysis of Nike Conclusion 2021:
- As a whole, Nike is a leading premium footwear and apparel brand with a global presence in more than 170 countries. It is also considered a market leader, owing to the highest market share in the global sportswear industry. Despite this, Nike has faced several threats, mainly related to a significant drop in revenue in 2020, while due to aggressive marketing strategies, its competitors managed to have stable revenues.
- Strong brand repute and premium branding are some of the key strengths of Nike, which must be leveraged to capture market shares of the developing countries, such as India and China. In the pandemic, Nika has managed to support its sales through digital means, but management still needs some innovative and diverse strategies to mitigate the existing risks and boost sales in the future.
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References
Forbes, 2021. Nike (NKE).
Just Style, 2021. Timeline – How coronavirus is impacting the global apparel industry
Macrotrends, 2021. NIKE Revenue 2006-2021 | NKE.
Nike, 2018. Nike’s Latest Sustainable Innovations and Environmental Impact.
OECD, 2019. Trade in fake goods is now 3.3% of world trade and rising.
Shand, D. & Tanchua, J., 2016. Emerging Markets May Offer the Most Potential for the World’s Largest Consumer-Focused Companies.
Statista, 2021. Adidas, Nike & Puma revenue comparison 2006-2020.
Statista, 2021. Apparel & Shoes.
Swant, M., 2020. the World’s Most Valuable Brands.
UNCTAD, 2021. Global e-commerce jumps to $26.7 trillion, COVID-19 boosts online sales.
Virgin, 2016. 10 global companies that are environmentally friendly.
Wazir, B., 2001. Nike accused of tolerating sweatshops.
