Nike Cuts Ties with Several Small, Local Retailers - EFFECTIVE JUNE 30, 2013 - MORE TO COME

[daddyrabbit251]

You're in Mobile, too, I take it based on your area code in your username? Lol

I'm from there... Went to LeFlore I'm in VA now tho

 

[oldsole96]

Took a week off from niketalk and i come back to see this.... Nike is making solid business moves to keep their shareholders.  With the "sneaker game" becoming the new fashion statement across the world, they need to capitalize. last year I touched on this point.  I'm sure it's not just shady business practices alone but I know for a fact Nike has had boutiques under the microscope, especially those with tier 0 accounts.  Here in houston a local rapper got the yeezy 2's early posted a shout-out to the Boutique he got them from, they almost lost their account.  Also their is the same guy who has a full size run of EVERY release on craigslist.... and based on his inventory he is being supplied by one of these boutiques.  Greed is never good... and this comes as a result of these small shops abusing their accounts and in turn bam...yanked but it's not just this.

Lets put it in this perspective: You own a business and you sell your product wholesale to these (small boutiques) who in turn sell them for (retail rarely) and now sometimes double triple msrp.  Since MSRP is only "suggested retail" these shops are at liberty to charge what they please... but now multiply this business decision removing accounts across 50 states.  There is some serious money to be made here... with no real cost to nike as a business as they can redistribute to their own non-outlet stores and beef up online inventory... which have the least overhead involved as all you need is a call-center which you can sub-contract out, and they already have the distribution channel in place.

So lets put numbers to this, U drop a modest 10 boutiques a state or an average of 10 since some states with many major cities will have more others less for a total of 500 stripped accounts.  We'll use jordans for this scenario since we can all relate.  Right now JB is dropping a average of 2-3 release a month.  

Lets say nike sells these jordans wholesale to all these boutiques for 50% of msrp which will average out to 80.00 a pair, and lets say nike pays 30 a pair for each shoe.

Now They pull the accounts that have done shady business or are no longer meeting their standards and keep the inventory to sell themselves. The can now sell at full msrp.

BAM!!! Their profit just went from 50 dollars a pair to 130.00 a pair per shoe!!! Now we'll say each store would get 2 full size runs or about 25 pairs.

80.00 profit x 25 pairs x 500 stores =1,000,000 profit!!!! This is per release!!!! so now 1,000,000 x 3 releases = 3,000,000 PROFIT each month!!!! x 12 equals 36,000,000 Profit per year!!!

We also know kobe,lebron and kd drop some hot shoes monthly with foamposites and other high dollar nikes.  lets just say nike does Just 4 releases a month....with the profit margin on all of these being the same.

add another 4,000,000 a month for a grand total of 48,000,000 a year plus 36,000,000 from jb for  84,000,000 PROFIT!!!!

What about the shoes all these boutiques have to buy wholesale to get the retros..... Nike redistributes to their outlets.... and raises requirements on the big box stores to buy more product to get retros... which is whats driving their business.......

Keep in mind this doesn't account for all the qs an limites shoes that drop monthly, sb's, air force 1's etc... so this move is major money for nike.

This is pure business, cutting out the middleman who in essence is no longer needed.  Not that I approve or condone... shady shops should lose their accounts but keep in mind many shady shops have direct connects at Nike too and some will never be closed... thats reality.  Good luck getting a nike account now!!!!!!

Thanks for the insight from Philly AP. And more detailed info about NYC spots 160. Always interesting to hear first hand accounts and information.

Nike is definitely about themselves number 1, but whether its a move to put their products in spots that can correctly market it or to streamline business (both ideas I think are behind this), I think Nike does have an obligation to some of these longstanding stores in less affluent areas that really put their shoes at the forefront of the industry.

Zoom air bags and light materials will still only sell so many shoes, and at $180-$235 a pop there's a cap on what people will buy just to run into the ground on a court. These shoes are strictly fashion for a huge portion of their customers, and some of these shops and the neighborhoods they are in are what gave Nike the image they have now. And now that they've run their course in Nike's business plan, they want to pull their shoes out of shops in these areas. These shops and areas used to be what sold a lot of these items and made these items the most popular. But now that every Tom, Harry, Jamal, Aziz, Chang, Juan, and Dirk in the world are all customers buying every release, maybe Nike doesn't feel like they need that "hood" presence. Maybe we'll see a store like Mercer in every large city as Nike's attempt to not completely commercialize their product into shipping malls, although that failed at that store lol. Definitely some good stuff in here.

Took a week off from niketalk and i come back to see this.... Nike is making solid business moves to keep their shareholders.  With the "sneaker game" becoming the new fashion statement across the world, they need to capitalize. last year I touched on this point.  I'm sure it's not just shady business practices alone but I know for a fact Nike has had boutiques under the microscope, especially those with tier 0 accounts.  Here in houston a local rapper got the yeezy 2's early posted a shout-out to the Boutique he got them from, they almost lost their account.  Also their is the same guy who has a full size run of EVERY release on craigslist.... and based on his inventory he is being supplied by one of these boutiques.  Greed is never good... and this comes as a result of these small shops abusing their accounts and in turn bam...yanked but it's not just this.

Lets put it in this perspective: You own a business and you sell your product wholesale to these (small boutiques) who in turn sell them for (retail rarely) and now sometimes double triple msrp.  Since MSRP is only "suggested retail" these shops are at liberty to charge what they please... but now multiply this business decision removing accounts across 50 states.  There is some serious money to be made here... with no real cost to nike as a business as they can redistribute to their own non-outlet stores and beef up online inventory... which have the least overhead involved as all you need is a call-center which you can sub-contract out, and they already have the distribution channel in place.

So lets put numbers to this, U drop a modest 10 boutiques a state or an average of 10 since some states with many major cities will have more others less for a total of 500 stripped accounts.  We'll use jordans for this scenario since we can all relate.  Right now JB is dropping a average of 2-3 release a month.  

Lets say nike sells these jordans wholesale to all these boutiques for 50% of msrp which will average out to 80.00 a pair, and lets say nike pays 30 a pair for each shoe.

Now They pull the accounts that have done shady business or are no longer meeting their standards and keep the inventory to sell themselves. The can now sell at full msrp.

BAM!!! Their profit just went from 50 dollars a pair to 130.00 a pair per shoe!!! Now we'll say each store would get 2 full size runs or about 25 pairs.

80.00 profit x 25 pairs x 500 stores =1,000,000 profit!!!! This is per release!!!! so now 1,000,000 x 3 releases = 3,000,000 PROFIT each month!!!! x 12 equals 36,000,000 Profit per year!!!

We also know kobe,lebron and kd drop some hot shoes monthly with foamposites and other high dollar nikes.  lets just say nike does Just 4 releases a month....with the profit margin on all of these being the same.

add another 4,000,000 a month for a grand total of 48,000,000 a year plus 36,000,000 from jb for  84,000,000 PROFIT!!!!

What about the shoes all these boutiques have to buy wholesale to get the retros..... Nike redistributes to their outlets.... and raises requirements on the big box stores to buy more product to get retros... which is whats driving their business.......

Keep in mind this doesn't account for all the qs an limites shoes that drop monthly, sb's, air force 1's etc... so this move is major money for nike.

This is pure business, cutting out the middleman who in essence is no longer needed.  Not that I approve or condone... shady shops should lose their accounts but keep in mind many shady shops have direct connects at Nike too and some will never be closed... thats reality.  Good luck getting a nike account now!!!!!!

I'm oldsole96 and approve this message 

 

[nyc23]

I talked to a sneaker store owner in the SJ area he said a Nike rep came into his store a month ago he was was very arrogant and rude. They didn't want hang tags on the sneakers that display prices or sneakers lined up across the floor. The store is really small but they told him that wanted him to put 80,000$ into his store. Also I found out those stores in SJ and Philly who got shut down are filing a law suit vs Nike

 

[deltadogman1]

Man I went to my Mom and Pop's today and Jordan Brand has him loaded with clothing. I can almost see it coming. I bought a couple tees just o help him, plus he had them half off just trying to get rid of them. He had GMP gear and didn't even get the packs. 

 

[alp]

Man I went to my Mom and Pop's today and Jordan Brand has him loaded with clothing. I can almost see it coming. I bought a couple tees just o help him, plus he had them half off just trying to get rid of them. He had GMP gear and didn't even get the packs. 

lol y would they give him the gear for the GMP without giving him the pack? Makes no friggin sense

 

[deltadogman1]

lol y would they give him the gear for the GMP without giving him the pack? Makes no friggin sense

Olive 9, shirts to!

 

[1ix8vi]

lol y would they give him the gear for the GMP without giving him the pack? Makes no friggin sense

The stores Nike Rep probably allocated that stores pair to another store that slide him some cash or favors and then sticks store X with the apparel and no shoes!!! It's a conspiracy I tell you!! Lol

 

[sneakercreeper]

I feel like Nike needed to crack down on these stores for a long time now. I've seen all of these mom&pop shops in NYC go to the darkside. $350+, and selling early. That's not how a "legit" business should be running things.

Shout out to SportsTech in Coney Island, Brooklyn. They stay selling early, marked up 350+ pairs

Its nuts how these retailers are really resellers.

 

[alp]

I feel like Nike needed to crack down on these stores for a long time now. I've seen all of these mom&pop shops in NYC go to the darkside. $350+, and selling early. That's not how a "legit" business should be running things.

Shout out to SportsTech in Coney Island, Brooklyn. They stay selling early, marked up 350+ pairs

Its nuts how these retailers are really resellers.

those types of stores b chargin more than FC sometimes

 

[theonewskill]

I talked to a sneaker store owner in the SJ area he said a Nike rep came into his store a month ago he was was very arrogant and rude. They didn't want hang tags on the sneakers that display prices or sneakers lined up across the floor. The store is really small but they told him that wanted him to put 80,000$ into his store. Also I found out those stores in SJ and Philly who got shut down are filing a law suit vs Nike

it really sucks that nike has these shops by the balls. Without nike product a lot of the interest in the store will die down obviously. I really hope the stores have a case against nike, but I doubt it.

Makes me wonder if nike is doing this in an effort to stop early sales and retail stores marking up prices or if they are trying to cut out non-nike owned distribution. why give mom & pops' a % when they can just slang mostly everything at nike-owned locations and online. no soul its all about the bottom line and nike's no fools.

 

[160jordansdeep]

I feel like Nike needed to crack down on these stores for a long time now. I've seen all of these mom&pop shops in NYC go to the darkside. $350+, and selling early. That's not how a "legit" business should be running things.

Shout out to SportsTech in Coney Island, Brooklyn. They stay selling early, marked up 350+ pairs

Its nuts how these retailers are really resellers.

the funny thing is these stores are getting the shoes at 53% off the box price

that nike's wholesale price for their merchandise

tell that to a retailer that has an account direct from nike and see their eyes light up when you hit them with that information
either the shop owner will laugh it off or curse you out

 

[daddyrabbit251]

It take Nike bout $13 to make and ship a shoe. The wholesale they charge retailers is still 6 times more than what it cost to make the kicks

They just gonna funnel those mom & pop shipments to their NTs b/c theres no excuse for a place like the Niketown in miami to close and who knows maybe Jordan or Nike Basketball store concepts are in the works...

 

[bucknuteagle]

I talked to a sneaker store owner in the SJ area he said a Nike rep came into his store a month ago he was was very arrogant and rude. They didn't want hang tags on the sneakers that display prices or sneakers lined up across the floor. The store is really small but they told him that wanted him to put 80,000$ into his store. Also I found out those stores in SJ and Philly who got shut down are filing a law suit vs Nike

That Nike rep might've been arrogant and rude but he makes some good points. Not putting the hang tags with prices on the shoes helps to prevent sticker shock. Most of us are used to it, but Nike shoes are EXPENSIVE, especially when compared to many of their competitors. If a customer can fall in love with the look and feel of the shoe first then they might find that high price more palatable. As far as sneakers lined up across the floor, that's probably something that Nike just happens to find in poor taste. I know that Nike pays to have the best visual real estate in all of the major retailers so placing the shoes on the floor might be against the retailers contract. Having said that, I haven't talked to a Nike rep or store owners about this, so everything I've said is just conjecture based on old conversations and observation.

As far as telling a small business owner to put $80,000 that they probably don't have into their store, that seems pretty dumb unless the place is just absolutely dilapidated.

 

[alp]

That Nike rep might've been arrogant and rude but he makes some good points. Not putting the hang tags with prices on the shoes helps to prevent sticker shock. Most of us are used to it, but Nike shoes are EXPENSIVE, especially when compared to many of their competitors. If a customer can fall in love with the look and feel of the shoe first then they might find that high price more palatable. As far as sneakers lined up across the floor, that's probably something that Nike just happens to find in poor taste. I know that Nike pays to have the best visual real estate in all of the major retailers so placing the shoes on the floor might be against the retailers contract. Having said that, I haven't talked to a Nike rep or store owners about this, so everything I've said is just conjecture based on old conversations and observation.

As far as telling a small business owner to put $80,000 that they probably don't have into their store, that seems pretty dumb unless the place is just absolutely dilapidated.

i dont think doing a decent renovation costs 80 g's. Even if it does, the upgrade to a QS acc. would be worth it for most stores

 

[asj439]

They are prolly stated in the contract.

 

[rhythmentality]

What the hell's going on in the east coast?

Cali, we've been straight.

 

[beh235]

at the Mercer hate

 

[deltadogman1]

i dont think doing a decent renovation costs 80 g's. Even if it does, the upgrade to a QS acc. would be worth it for most stores

You think. In small business spending 80 grand to cater to one product line with hope of getting limited sizing of a limited model with no guaranteed release schedule or pattern is not justifiable. But making modest renovations to keep your general account is more feasible. Honestly, I would be in their working a 3rd shift with a hammer and nails, while weighing my overall options because once you sink money into this location you still risk the chance of loosing the account. 

 

[freddy fig]

Damn 100 over sticker in NYC.. I always heard it costs to live there...glad I live In the south with all the dope boys rocking jays

 

[tjonpoint]

This is a good thing right?

 

[alp]

You think. In small business spending 80 grand to cater to one product line with hope of getting limited sizing of a limited model with no guaranteed release schedule or pattern is not justifiable. But making modest renovations to keep your general account is more feasible. Honestly, I would be in their working a 3rd shift with a hammer and nails, while weighing my overall options because once you sink money into this location you still risk the chance of loosing the account. 

trust me a sneaker store selling kicks at double retail has enough money for a one time renovation, just they dont want to shell out the money to do so.

 

[deltadogman1]

trust me a sneaker store selling kicks at double retail has enough money for a one time renovation, just they dont want to shell out the money to do so.

I doubt it in most cases, unless Nike sending them 75-100 pair of each shoe. Retros that is. 80 grand is alot for a small business!

 

[fahqu001]

I'm from there... Went to LeFlore I'm in VA now tho

Cool. DeMarcus Cousins fame, huh? Lol. What part of VA are you in now?

 

[svpremehype]

This sucks for the people who relied on them, I'm from South Carolina though so there are no Mom/Pop stores down here in the first place. 

 

[svpremehype]

Damn 100 over sticker in NYC.. I always heard it costs to live there...glad I live In the south with all the dope boys rocking jays

Aha, yep down here all the dope boys have the latest kicks