As Nike pulls back from wholesale, sportswear brands sense an opportunity

The opening: While some retailers, like under protectionfollowed in Nike’s footsteps by expanding their D2C business, others, like Puma and Reebok, are doubling their wholesale sales.

  • Foot Locker CEO Dick Johnson said in February that the retailer expects its stock of Nike products to “decline significantly” moving forward as the brand prioritizes D2C, giving other activewear companies an opportunity to fill the void.
  • Nike’s move away from Foot Locker opened on $1 billion in salesaccording Matt PowellThe NPD Group’s Senior Industry Advisor for Sports.
  • Brands were quick to pick up the slack: in addition to partnering with adidas, Foot Locker deepens relationship with Reebok with an expanded product assortment as well as exclusive items.
  • Puma’s wholesale business increased by 23.3% YoY at €1.53 billion ($1.81 billion), generating nearly four times the sales of the brand’s D2C segmentaccording to its first quarter earnings report.

Look forward: While D2C offers higher margins than wholesale, it also limits the number of channels brands can sell through, which in turn can limit their overall reach.

  • This leaves the door open for challenger brands like Running and Allbirds, as well as more established companies, to steal market share.
  • However, while Reebok and Puma are currently looking to wholesale to drive rapid growth after years of languishing in the shadows of Nike and adidas, they too could eventually decide to own distribution once they have builds a large enough base of dedicated consumers.

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