Nike Competitors Analysis

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Competing in the athletic footwear, apparel, and equipment industry is no easy feat. New companies with innovative designs and technologies seem to pop up daily. Despite the industry’s highly diversified and ever-changing landscape, one company continues to reign supreme: Nike. Nike is a leading athletic footwear, apparel, and equipment company with a mission to “bring inspiration and innovation to every athlete in the world.” Established in 1964 as Blue Ribbon Sports, Nike has since become a household name, with its iconic swoosh logo recognized around the globe. It has its headquarters in Beaverton, Oregon, employing over 73,300 employees in 170 countries globally.

Nike’s success is due in part to its aggressive marketing campaigns and celebrity endorsements but also to its deep understanding of the needs of its customers. In 2021, it reported $44.5 billion in global revenue, up 19% from the previous year. As of July 2022, Nike’s market capitalization was $169.857 billion. As the undisputed athletic footwear, apparel, and equipment industry leader, Nike faces stiff competition from many well-established companies. In this Nike competitors analysis, I’ll detail five of Nike’s top competitors. I’ll look at their business models, their strategies for success, and how they stack up against Nike.

Bottom Line Up Front

Nike is the world’s leading athletic footwear, apparel, and equipment company, with an estimated 27.4% market share in the athletic footwear market. Its competitive landscape includes many large, well-established companies and small, nimble startups. Nike’s competitive advantage revolves around its focus on the customer, its strong brand, and its global reach.

Top 5 Nike Competitors

  1. Adidas
  2. Puma
  3. Under Armour
  4. New Balance
  5. Skechers

Nike Business Model and Competitive Strategy

Nike bases its business model on a direct-to-consumer approach. The company designs, develops, markets, and sells its products directly to consumers through its retail stores, e-commerce site, mobile app, and third-party retailers. Its focus on direct-to-consumer sales allows it to control the customer experience better, generate higher margins, and collect valuable customer data.

This model also enables Nike to keep a close eye on inventory levels and prevent overproduction, which can result in markdowns and heavy discounting. Nike breaks its financial metrics into three categories: Converse, NIKE Brand, and corporate overhead. In 2021, Nike’s total revenue was $44.5 billion, with the Converse segment accounting for $2.2 billion and the NIKE Brand segment making up the remaining $42.3 billion.

Converse

Corporate revenues consist primarily of hedge gains and losses related to entities within the Nike brand, geographic operating segments, and the Converse segment. It manages these risks by entering into foreign currency contracts to minimize the impact of changes in exchange rates on operating results and cash flows. Nike’s competitive strategy focuses on innovation, brand building, and expanding its direct-to-consumer channels. Its focus on research through the Nike Sport Research Laboratory (NSRL) and partnerships with universities and sports medicine centers are Nike’s primary means of developing new products and technologies. While it has a manufacturing plant in Oregon, the company outsources most of its production to low-cost contractors in Asia and other parts of the world.

Nike Competitor Analysis

Nike competes in an industry with well-established companies and up-and-coming startups. Five of its main competitors include Adidas, Under Armour, Puma, New Balance, and Skechers.

Adidas

Founded in 1949, Adidas is one of Nike’s oldest and most formidable competitors. The Nike vs. Adidas rivalry is one of the most iconic in the business world. The two companies compete for market share, mindshare, and endorsement deals cutting across all product categories, including footwear, apparel, and equipment. The company has its headquarters in Herzogenaurach, Germany, and employs over 57,000 people globally. Adidas is a German multinational corporation that designs and manufactures sports clothing, shoes, and accessories. It’s the largest sportswear manufacturer in Europe and the second-largest globally after Nike. Adidas reported $25.122 billion in global revenue in 2021, up 10.83% from the previous year. As of July 2022, Adidas’ market capitalization was $32.86 billion.

Adidas’ competitive strategy focuses on elevating consumer experience, increasing brand credibility, and pushing the boundaries of sustainability. The company has invested heavily in artificial intelligence (AI) and data analytics to drive its product development and marketing efforts. By partnering with North American superstars like Kanye West and Pharrell Williams, Adidas increased its brand presence and credibility in the U.S. market by 17% in 2021.

Adidas

The Covid-19 pandemic was a major setback for Adidas, as it closed most of its stores and saw a significant drop in demand for its products. As the Covid-19 subsides and people return to normal lives, Adidas expects its double-digit top-line growth to extend past 2022. However, the Russia and Ukraine war risks about 50% of Adidas’ revenue in that region and about one percentage growth point of its total revenue. The Nike vs. Adidas rivalry will likely continue for the foreseeable future as both companies jostle for position in the global sportswear market. Nike will look to maintain its position as the market leader and possibly overtake Adidas in the European market. Adidas will seek to regain its footing in the North American market and grow its market share in emerging markets like China and India.

Under Armour

Founded in 1996, Under Armour is a relatively new entrant into the athletic apparel industry. The company has its headquarters in Baltimore, Maryland, and employs over 17,500 people globally. Under Armour reported $5.57 billion in global revenue in 2021, up 27% from the previous year. As of July 2022, Under Armour’s market capitalization was $3.9 billion. Nike and Under Armour reported increased sales and revenue in their most recent fiscal years. North America, also Nike’s primary market, is Under Armor’s main driver of growth. In 2021, North America contributed 67% of its total revenue. However, the company is looking to expand its reach in other parts of the world and grow its sales internationally, such as the 2021 launch of Asia’s 1000th store.

Under Armour

Under Armour’s competitive strategy focuses on innovation, brand building, and expanding its product line. Its marketing efforts are heavily reliant on celebrity endorsements and high-profile partnerships. However, it’s also focusing on digital marketing through content marketing and social media to grow its e-commerce sales. Nike’s competition with Under Armour sounds like a Goliath and David story. Nike is the clear market leader with revenue that’s nearly ten times that of Under Armour and a higher market capitalization. However, Under Armour is a faster-growing company with a more focused niche in the athletic apparel market. Under Armour will need to continue innovating its product line and marketing efforts to stand out in the industry.

Puma

Puma is a leading German multinational corporation that designs and manufactures athletic and casual footwear, apparel, and accessories. The company is the third-largest sportswear manufacturer behind Nike and Adidas, with 6.81 billion Euros in global revenue in 2021. Like Adidas, Puma hasn’t been lenient in its sustainability efforts as it looks to achieve carbon neutrality by 2030. The DTC model has been a critical driver of Puma’s success in recent years. The company’s sales grew by 32% in 2021, with the Americas leading the way with 53.9% growth. While the Americas is an important market for Puma, Europe is its largest, with over 50% of total sales.

Puma

Puma uses a competition-based pricing strategy where it prices its products lower than its competitors, such as Nike and Adidas. However, it also offers premium products at a higher price to capture different market segments. Puma plans to continue expanding its product line and geographical reach to fuel future growth. When analyzing their social media channels, Nike has a neutral sentiment on social media while Adidas and Puma have a slightly positive sentiment. The findings suggest that people generally think positively of all three brands, but Nike is more likely to be seen as a status symbol.

New Balance

New Balance is one of Nike’s main competitors in the athletic footwear industry. Although the company isn’t as large as Nike, it has a significant presence in the market. Founded in 1906, New Balance is one of the oldest athletic footwear brands. Its headquarters are in Boston, Massachusetts, with operations in over 120 countries. The company employs about 6,000 people worldwide. New Balance achieved $4.4 billion in global revenue in 2020, a 10% increase from the previous year. New Balance’s competitive strategy focuses on product differentiation and innovation. Its most popular product lines are its running shoes, which use innovative technologies to improve performance.

New Balance

New Balance’s aggressive marketing campaigns, such as its “Endorsed by No One” philosophy, helped it gain market share in the athletic footwear industry. Unlike Nike and Adidas, New Balance doesn’t rely on celebrity endorsements. Instead, it focuses on connecting with its customers through grassroots marketing initiatives. New Balance is a privately held company competing in an industry with many publicly traded companies. It doesn’t enjoy the same economies of scale as its larger competitors. However, its nimble size makes it more agile and quickly responds to changing customer needs. To stand out in the competitive athletic footwear market, New Balance focuses on creating innovative products. It invests heavily in research and development to develop new technologies for its running shoes. Apart from product differentiation, New Balance commits to domestic manufacturing, which helps it price its products at a premium.

Skechers

Skechers is an American footwear company headquartered in Manhattan Beach, California. Founded in 1992, the brand offers a wide range of shoe styles for men, women, and children. While Skechers doesn’t have the same market share as Nike, it is a major competitor in the athletic footwear industry.  In 2021, Skechers made $6.285 billion in revenue, a significant increase from the $4.597 billion it made in 2020. Its strong international presence contributed to 35% of its total revenue in 2021. As of December 31, 2021, Skechers operated 2,946 distributors, license, and franchise stores spread across the globe.

Sketchers

Like Nike, it actively pursues the DTC model and has a significant online presence. Its factories also feature outlet stores where Skechers sells its products at a discount. Skechers’ competitive advantage is offering a cost-effective solution to its customers.

Skechers is a company that’s quick to capitalize on trends. When athleisure became popular, it launched its comfortable sneakers and apparel line. It has also tapped into the growing demand for eco-friendly and sustainable products with its D’Lites Eco shoes made from recycled materials. Skechers’ competition with Nike in the athletic footwear market is intense. While Nike has a more substantial brand presence, Skechers offers more affordable products. Skechers needs to continue expanding its product line and geographical reach to fuel future growth to stay competitive.

Nike SWOT Analysis

Below is a detailed SWOT analysis of Nike, highlighting its strengths, weaknesses, opportunities, and threats.

Strengths

  • Strong brand equity: Nike is a very well-known and reputable brand. It’s the most valuable brand in the world, with a brand value of $30.4 billion as of 2021
  • Innovation: Nike is constantly coming up with new and innovative products, which keeps its customers engaged and loyal
  • Strong financials: Nike is a very financially strong company, with a revenue of $44.5 billion in 2020
  • Diverse product portfolio: Nike offers a wide range of products, including footwear, apparel, equipment, and accessories
  • Support from black communities: Nike has been very vocal in its support of the black community, which has endeared it to many customers
  • Legendary side brands: Nike has several very successful side brands, such as Jordan, Converse, and Hurley

Weaknesses

Nike

  • High dependence on North America: Nike generates a majority of its revenue from North America, which makes it vulnerable to economic conditions in the region
  • Poor labor conditions in suppliers’ factories: Nike often faces criticism for the poor labor conditions in its suppliers’ factories. Such issues include forced overtime, low wages, and unsafe working conditions
  • High customer churn rate: Nike has a high customer churn rate, which means that it often loses customers to its competitors

Opportunities

Nike and Dior
Nike alliance with Dior
  • Expansion in emerging markets: Nike has an opportunity to expand its operations in emerging markets, such as India and China
  • Partnerships with other companies: Nike can form alliances with other companies to expand its product range and reach
  • Merges with metaverse: As the metaverse continues to grow, Nike has an opportunity to merge with smaller companies to gain a more significant presence
  • Artificial intelligence: Nike can use artificial intelligence to improve its operations and better understand its customer

Threats

  • Nike faces intense competition from other companies, such as Adidas and Under Armour
  • The sporting goods industry is cyclical, which means that Nike’s sales are vulnerable to changes in the economic climate
  • Imitations by other companies often end up in lawsuits. Nike has to spend a lot of money on litigation to protect its designs and patents from being copied by other companies
  • Unfavorable macroeconomic conditions, such as a recession, can reduce Nike’s sales and profitability
  • Trade tension such as the US-China trade war can also negatively impact Nike’s business

FAQs

Question: Who’s Nike’s main competitor?

Answer: Adidas is Nike’s main competitor. Both companies compete in the athletic footwear, apparel, and equipment market, producing some of the most popular sports brands in the world. Adidas’ main competitive advantage over Nike is its significant European presence.

Question: What marketing strategies does Nike use?

Answer: Nike brands itself as an edgy, cool company and uses a lot of celebrity endorsements to market its products. In 2021, it spent 3.1 billion on marketing globally. Moreover, Nike has a robust online presence and uses digital marketing strategies such as influencer marketing to reach its target customers.

Question: What’s Nike’s competitive advantage?

Answer: Nike’s competitive advantage is its strong brand equity. It’s the most valuable apparel brand globally, with a brand value of $30.4 billion as of 2021. Nike also has a diversified product portfolio, which includes footwear, apparel, equipment, and accessories. Furthermore, the company has a solid financial position, with a revenue of $44.5 billion in 2020.

Conclusion

The Nike brand is one of the most valuable and well-recognized brands worldwide. It has a strong presence in North America but also does business in other regions. Nike competes for a global market share with some of the most iconic brands, including Adidas, Puma New Balance, Under Armour, and Skechers. It also competes with up-and-coming companies, importers, and smaller specialty firms.

The company has a diversified product line that includes footwear, apparel, equipment, and accessories, making it less vulnerable to changes in any product category. As a result of its strong brand equity, comprehensive product line, and global reach, Nike is one of the leaders in the sporting goods industry.

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