EAVERTON,
Ore. -- It has been a long time since Nike has been at the top
of its game. Now, the company hopes that it has found a way to
stimulate the lagging sales of its athletic shoes, and part of
the answer, surprisingly, comes from inside the guts of a
car.
This week, Nike will introduce Shox, a line of shoes that the
company calls its biggest basic technology innovation since
Nike-Air shoes made their debut more than a decade ago. The
design of the new shoes is modeled on the technology and
materials used to connect a car's body to its frame and the
column-like bumpers that help cushion the ride.
Nike executives say the timing of the new line is simply a
result of lengthy research that began in the early 1980's and
was shelved temporarily while the company focused on its hugely
successful Nike-Airs. But it is also clear that the company,
though still the world's dominant maker of athletic shoes, is in
need of a hit product.
Athletic shoe sales have tapered off a bit in recent years,
and Nike's overall share of the market has fallen to 43.5
percent in 1999 from 47.6 percent in 1997.
As a result, consumers are not the only people whose
enthusiasm has waned for Nike. The company's share price has
stagnated for much of this year in the $40 range, closing on
Friday at $41.5625. Competitors like Reebok and Skechers,
meanwhile, have been increasing their sales at Nike's expense,
and the market has rewarded them. Reebok shares have doubled in
price and Skechers shares have tripled.
And Nike's biggest competitor, Adidas- Salomon of Germany,
which like Nike has suffered weakening sales and a languishing
share price, is also moving aggressively with a marketing
campaign for its own new shoe, the Kobe.
"Nike used to be able to throw a swoosh on a shoe and it was
a big deal," said John G. Horan, publisher of Sporting Goods
Intelligence, a specialty trade publication in Glen Mills, Pa.,
referring to the company's logo. "Those times are gone."
Nike is promoting Shox as a significant departure for the
company. For one thing, Shox are not designed for looks; in
fact, some consumers in Nike's market testing called them weird.
And they will cost $150 a pair, at the pricey end of the market.
The company is also taking care to describe the Shox as a new
cousin of Nike-Air, not a replacement.
"Nike-Air is a very important cushioning system for us; we're
definitely keeping in that," said Juliet Moran, Nike's vice
president and global brand director for running. "This is an
opportunity for us to branch out by providing a different ride
and a different feel than Nike-Air."
"We're hoping Nike Shox is going give the industry a shot of
fun energy and something new that people will find
interesting."
The Shox, which has a much bouncier feel than the Air,
will have a staggered release through early next year. The
basketball shoe will have its debut in North America and Asia on
Wednesday, the running shoe on Dec. 6 and the cross-training
model on Dec. 20. On Feb. 1, 2001, all three categories will go
on sale in Europe and Latin America.
Some securities analysts who follow Nike said the company
thought it needed to do something to move beyond Nike-Air,
because that brand is simply getting old.
"Air is pretty much mainstream," said one of the analysts,
John G. Taylor, managing director of Arcadia Investment in
Portland, Ore. "It's pretty much permeated the entire athletic
footwear business. It's been copied and knocked off by anybody
that's in the footwear business in one form or another. There's
just so far you can go with innovating on that platform."
