Navigating Oversaturation: Nike's Move to Restrict Classic Sneaker Availability

Nike Air Force 1 and Nike Pegasus sneakers have saturated the market, posing a challenge for Nike. To address this, the company is reducing production of these iconic sneaker lines to avoid discounting and make room for its newer offerings.
Both the Air Force 1 and Pegasus hold significant positions in Nike's sneaker lineup as enduring classics. However, their growth has slowed, leading to increased promotions in stores to clear excess inventory.
This situation jeopardizes Nike's premium brand image, as it aims to maintain higher pricing and minimize heavy discounting. To counter this, Nike plans to reduce the supply of Air Force 1 and Pegasus sneakers, hoping to stimulate demand and sell them at full price. Simultaneously, Nike aims to direct consumers towards its newer, higher-priced Air Max and updated Pegasus models.
Matthew Friend, Nike's finance chief, outlined this strategic shift during an earnings call, emphasizing a transition towards newer product lines by decreasing the availability of classic models like the Air Force 1 and Pegasus. Consequently, consumers may find it more challenging to locate traditional white Air Force 1 sneakers and older Pegasus versions in stores.
Although this move might affect sales, loyal Nike customers are expected to pivot towards other Nike shoes, according to Christopher Burns, a sneaker industry analyst. Additionally, sneaker enthusiasts like Burns, who focus on limited-edition and collaborative lines, are unlikely to be significantly impacted by these changes.

However, there needs to be more clarity regarding how well consumers will embrace Nike's new styles. Randal Konik, a retail analyst at Jefferies, views this strategy as appropriate in the long term but questions the resonance of the latest offerings.

Nike's decision to reduce supply coincides with broader challenges in the consumer landscape, including a slowdown in discretionary spending and increased competition from emerging running brands like Hoka and On. To address these challenges, Nike has slashed its revenue outlook and initiated cost-saving measures, including workforce reductions.

Moreover, Nike faces heightened competition from brands like Hoka, which has gained traction even among mainstream consumers. This competition underscores the shifting dynamics within the athletic footwear market.
In response, Nike has adjusted its distribution strategy, prioritizing direct sales through its online platform and physical stores over traditional retail partners. By focusing on a select group of retail partners, Nike aims to maximize profitability and better control its brand image.