Nike put itself in this mess

The fashion mainstay tried to pull more customers to its dot com experience by reducing its footprint in retail partners, but in the process, they gave their competition a leg up.

As described in the recent Bloomberg article, Nike let competitors like Nike, Vans, and New Balance take their space at sneaker mainstays like Famous Footwear and Footlocker.

Two crucial marketing concepts are now working against them - physical availability and mental availability. By limiting the physical availability to customers shopping in stores, Nike is in turn reducing it’s own mental availability and letting competing brands take up the leftover space.

I recently discussed this in a video - take a look and read the transcript below.

Transcript:

Can Nike recover with a new CEO?

A lot of the conversation around this article ignored two crucial marketing concepts that you have to understand.

Part of the Nike strategy under John Donahue was to drive people to nike.com, and how they did that was in part by pulling back on a ton of relationships with existing retailers. That meant there was going to be less product to find in person in a lot of key retailers where Nike previously had a foothold.

Initially the strategy did work for Nike and they had a ton of increased traffic to their website, especially early in the pandemic. The impact was that there was less Nike product to be on shelves at these existing retailers where people knew they could go to find footwear, and if Nike's not taking up the shelves, retailers are going to fill it with something else.

And this is especially bad news for Nike when the brand has lost a little bit of its luster and people are not spending as much on footwear.

These are two really important concepts I want you to understand: physical availability and mental availability.

Physical availability is how easy it is to access a product: can you find it in the store, how quickly will it get shipped to your house?

And mental availability is how easy is it to think of a particular brand when you are in a position to buy from that category. So if you're thinking “I'm going to start running again: or “it's going to be the first day of school and I want some new sneakers,” how easy is it to think of Nike compared to any other brand within the category?

Even though online shopping has become a lot more prevalent and a lot easier in a lot of ways, there are still a lot of people who prefer to shop in person. So for all of those shoppers, when you take away the physical product from the shelves because you're trying to bring everything more inhouse, you're limiting the physical availability of your product, whether or not people wanted to buy your particular brand in the first place.

It's going to be harder for them to buy in person. Someone who goes in and thinks they might want to get a pair of Nikes, they're going to also see more availability of different brands that people do buy from this category: Adidas Vans Converse Etc .

For those people even if they thought maybe they'd want to get Nike, do you think it would be easier for them to maybe choose from a different brand?

Because even though everyone talks about brand loyalty the reality is most people shop categories. If you're not there physically, people will buy from a different brand, even if they like you.

When you limit physical availability, that will impact mental availability. The less that you see of a particular brand on the shelves when you are in a store shopping that category, it's not going to be as easy for you to recall that particular brand when you're thinking of all the options within the category, and it's going to be easier for you to think of all the other competitors that you could choose from. Not only when you're at the store, but all those other times when you're not even actively shopping, but you might be thinking about a particular category.

It turns into this vicious cycle of “I see it less out there, so I think about it less, and if I think about it less I'm going to be less likely to look for it when I'm out actually buying the category.”

If you want to grow and sustain a successful brand, you need to reinforce physical availability and mental availability, and the two go hand in hand.