Is the Downward Trend for Sneakers Simply a Seasonal Swing?
The last three months website traffic for Footlocker.com decreased 4.73%. Finishline.com decreased 6.10%. Hibbett.com dropped 6.37%. These are all stores heavily reliant on the Nike Wall. Meanwhile Nike's site remained flat with only a 0.85% decrease in traffic with an incredible 153.7 million visitors. Nike's visitors obliterate the website traffic of its wholesale partners. This of course has been a trend since Nike began removing wholesale partners, but the intriguing thing is Nike has had to realign with accounts they removed. While many analysts feel that this justifies how Nike needs wholesale, the discussion isn't so simple.
adidas’ website traffic over the last few months grew 5.38% to 30.4 million visits a month. Hoka.com grew 9.35%, Brooks Running grew 0.5% from April to May, and New Balance has grown 3.82% hitting 11.1 million for the first time. What exactly does a comparison between brands and their wholesale accounts mean? If brand sites are either flat or growing, while retail is declining, what's happening here? The initial response would be that the market is experiencing the typical slowdown of the summer months. When the school year ends, sales tend to trend downward. This year isn't any different… or is it? The answer lies in the growth of brand website traffic obviously, but adding sneaker resale in the mix and the fact that in 2021 this post explained an important detail about sneakers in a post pandemic world and brand traffic growth gains perspective:
Is StockX in the 4-6 year Slump Window?
The reality was and is… the trend for sneakers has been pointing south for years. Outside of a few anomalies like post-Covid Quarantine, I’ve shown a consistent decline in resale. Why this has happened can be attributed to a variety of reasons, but when you tie in strategies by brands to recapture a lot of those sales via programs like Nike Refurbished, adidas’ partnership with ThredUp, increases in the SRP and the supply chain limiting the number of sneakers available, the decline in resale accelerated.
The quote above was written in May of 2021. The line about the strategies of brands to recapture sales is critical to this discussion. Brand website growth means direct-to-consumer strategies are working, but what does the decline in wholesale accounts selling the most popular brand indicative of? Are people shopping? Yes. Are they shopping at stores dominated by the Nike Wall? No. Are they shopping at stores where the sneaker wall is diverse and filled with more options? Yes. Dick's Sporting Goods’ website traffic looks a lot like New Balance and Hoka. It has grown a ridiculous 10.6% in the last three months. Running Warehouse's website traffic is also up an astounding 13.5%. While Nike's dominance is directly under fire, this is one of the first times in recent memory other brands are picking up steam and rising.
The downward trend for sneakers seems to be directly tied to retailers dependent on Nike. The logical position should be that third party sites should be declining since the majority of sneakers sold on those sites are Nike and Jordan Brand, but there is a really interesting thing taking place with the two most popular resale platforms, StockX and GOAT. StockX in the last month has seen an increase in traffic after declining over the last two years. StockX is now up 8.55%. This can be attributed to the Yeezy effect. adidas began announcing the sale of the inventory from their former partnership with Ye. This announcement hasn't turned the tide for GOAT. The popular 3rd party site didn't see a spike in traffic from Yeezy. GOAT.com is down 2.18%. There may be a hidden connection with Foot Locker here, but that can't be quantified.
The seasonal drop in sales isn't often connected to items sold in the mid-premium price points. This is because Nike, adidas and other brands drop more hyped sneakers throughout the year. At least sneaker media would make anyone believe this is the case, but if data shows an annual trend down in more expensive shoes, what happens with less expensive retail? If sneaker culture is supposed to be a big driver of sales in the industry, website traffic tells a completely different story. The end of the school year has always been slow on the resale side of things or the higher priced products. When the cool kids in high school and college no longer need to represent, sales slowdown. Data reports on this site show this trend. Here is where things are intriguing. If the cool kids aren't buying Jordans and Nike, families aren't buying or visiting sneaker websites either right? Remember what happened with retailers who carry a diverse product mix? Dick's Sporting Goods, Running Warehouse… If seasonality was a factor, Shoe Carnival traffic should be in decline since it's in the lower price tier, except that's not true. Shoe Carnival's website traffic grew 16.64% from April to May. Famous Footwear, a direct competitor to Shoe Carnival also saw website traffic growth creep up 4.44%. What does this all mean?
Nike operates in the premium market, but so does New Balance, Hoka and On-Running. The consumers for non-Nike brands associate Nike's primary wholesale partners, Hibbett, Foot Locker and Finish Line with Nike and expensive footwear. A slowing economy means there is less money to spend, but stores like Shoe Carnival and Famous Footwear can pivot to low-cost sandals and a diverse selection of product for families preparing for vacation. A retailer reliant on the Nike wall has pushed so much product onto the cool kids, those buyers are taking a break. Ready for the coup d’état? Crocs.com has seen a 52.09% increase in website traffic. Between performance running and Crocs, premium has become less important. If I’ve purchased ten pair of Jordans this year, a bottle of Jason Markk will keep my collection fresh and ready to rock in the fall. Jasonmarkk.com's website traffic grew 41.78% in the last three months. There are a lot of factors shaping resale right now, but who would’ve thought running shoes, shoe cleaner and nurse's clogs would be the things to bring about market correction?