Nike turns 50 selling lifestyle

Igor Morais still remembers the feeling when he received his 12th birthday present from his mother, Rosa. “I really wanted a Nike shoe, I was obsessed with the brand. But my mother, who had a newsstand in downtown São Paulo, only managed to give me a Nike imitation”, he says. Realizing her son’s disappointment, Dona Rosa was upset. But the boy quickly made a promise to clear his mother’s face: “Don’t call, Mom. I’m still going to own a store with a lot of Nike sneakers.”

Today, at 41, Igor runs the Kings Sneakers franchise chain, 102 multi-brand streetwear stores, in which Nike is the flagship. The brand gained space in the imagination of the poor boy, who lived with his parents and two brothers in a kitchenette near Cracolândia. “About 80% of my friends died or were arrested because of drugs,” he told Sheet. “But I wanted to beat it all.”

Even without realizing it, the businessman, who tells the story in a book (“Nothing comes easy”, Buzz Editora), personified the brand’s slogan, “Just Do It”. Founded in 1972 in the United States, Nike has spent the last 50 years inspiring consumers to test their limits — whether it’s a 200-meter sprint, a marathon, a massive weight loss, or a personal life adversity.

By propagating the idea that anyone can win on their own merit, something especially dear to American culture, Nike has turned a sporting symbol into a way of life.

The Michael Jordan phenomenon and the anti-racist flag

The brand is now the most valuable in the world in clothing: US$ 33.2 billion, according to the latest survey by consultancy Brand Finance, released in April. In fiscal 2022, ended May 31, Nike posted global sales of $46.7 billion, with net income of $6.04 billion — nearly double the sales of second-place German Adidas.

“Nike went far beyond sport and became an icon of behavior, embracing important causes in society, such as fighting racism,” says Solange Ricoy, partner at Grupo Alexandria, a branding, research and innovation consultancy. “The brand has transcended the sporting goods category to become a cultural icon of contemporary society.”

The first example of this disposition came with Michael Jordan in 1984. The then-promising University of North Carolina basketball player signed the company to a $500,000 sponsorship deal, plus a percentage of the profits. But Jordan didn’t like Nike shoes, which were made especially for running. The way was to develop a leather sneaker especially for the basketball wizard, the Air Jordan, in black, red and white, the same as Jordan’s team, the Chicago Bulls.

The debut was a success and the tennis caught the public’s attention. But there was a catch: the NBA, North America’s premier professional basketball league, required white tennis shoes on the court. Nike and Jordan decided to disobey the decision and the athlete continued playing in his custom-made sneakers, paying a fine of $ 5,000 per game.

All of a sudden, everyone wanted the Air Jordan. The boys started dreaming about the product, which perfectly matched Michael Jordan’s aerial style. The sneaker broke sales records and triggered a cultural phenomenon: it was “anti-establishment”, something that defied the rules.

At the same time, the Air Jordan helped change the image of black people in American society, inspiring a whole generation of young people who came to see themselves as winners.

Jordan himself comes from a story of overcoming: as a teenager, he wasn’t accepted on the varsity basketball team because he wasn’t tall enough. He dedicated himself to the junior team, becoming the star of the group. The following year, 10 centimeters taller, he was accepted and his career took off.

Filmmaker Spike Lee, who directed “Do the Right Thing” (1989), about American racial tension, went on to direct the basketball star’s commercials. It was the missing bit to guarantee the brand’s irreverence, elevated to a pop culture item. Not coincidentally, Jordan now accounts for more than $5 billion in annual Nike sales. His story is portrayed in the Netflix documentary “Final Pitch”.

“The brand has become a form of expression, a symbol of the tribe,” says Solange Ricoy.

“It is a brand that takes the risk and attracts the young contestant”, says Ivan Martinho, professor of sports marketing at ESPM (Escola Superior de Propaganda e Marketing).

For him, it’s hard to think of a stronger slogan than ‘Just Do It’. In this sense, the Nike and Jordan brands became horizontal. “That’s what explains a brand inspired by an American basketball player being on the jersey of a French football team: they are different worlds, united under the same name”, he says, referring to Jordan as a sponsor of the Paris Saint-Germain club. Germain.

In the country of football, competition is much fiercer

Compared to its main rival, Adidas, Nike is looking to focus less of its sponsorship resources on football, according to Martinho. “Football is the most important sport for both, but Nike contributes 50% of the funds to the teams, while Adidas dedicates 73%”, says the expert, citing KPMG research data from 2020.

According to the survey, of the total sponsorship budget, Nike reserves 21% for basketball, 12% for American football, 8% for college teams, 6% for baseball and 4% for golf. Adidas dedicates 8% to college teams, 7% to futsal, 5% to ice hockey, 4% to beach soccer and 3% to basketball.

“Nike is a powerhouse. Even though it’s much younger than Adidas [criada em 1949]it dominates the American market, has invaded European and Asian markets”, says Amir Somoggi, partner of sports marketing consultancy Sports Value. “Brand building, storytelling, sponsorships and its involvement in engaging campaigns have put mark on top.”

So much so that Nike owns more than 90% of the basketball shoe market in the United States, he says.

According to Amir Somoggi, however, in the country of football the story is different. “Nike is not all-powerful here,” he says. The brand that leads in sales of sneakers, he says, is the Brazilian Olympikus – made by Vulcabras, which also owns the rights in Brazil of the Japanese Mizuno and the American Under Armour. Other big names in the domestic market are Penalty (Cambucci), Topper (BR Sports), and the Germans Puma and Adidas.

“It is a very difficult market, so much so that the brand abandoned the business: in 2020 it sold the operation to the SBF group, owner of Centauro, which was already its partner in the stores”, says Somoggi. “It was a move away from Latin America, which represents very little for the company,” he says, noting that the multinational remains responsible for sponsoring the Brazilian National Team and Corinthians.

According to the latest balance, the Latin America and Asia Pacific regions together represent 13% of Nike’s global revenue. North America accounts for 42% of sales, the region that encompasses Europe, the Middle East and Africa accounts for 28% and China for 17%.

In 2021, Fisia, of the SBF group, Nike’s official distributor in Brazil, recorded net revenue of R$ 2.5 billion. “In the first quarter of the year, the indicator reached R$ 734.5 million, an increase of 88% over the same period of the previous year, which shows that the integration to the SBF group helped to leverage the brand’s sales in the country”, says Karsten Koehler, director general of Fisia.

Regarding the lower representation of the brand in Brazil, the executive says that the American market is still much more developed than the Brazilian one. “The United States has a more robust sports ecosystem, from the initial phase of athletes in high school, through universities to the most globalized leagues on the planet, such as the NFL, NBA and NHL”, he says.

The company has 22 Nike stores in the country and should end the year with 35 points. “We are implementing two new store concepts, where we will offer a complete brand experience,” he says, without elaborating. The executive expects an increase in sales, driven by the Qatar World Cup, the new stores and digital channels.

Brand got involved with slave labor and was the target of CPI

Even without dominating the Brazilian market, Nike has already been the subject of a CPI (Parliamentary Commission of Inquiry) in the country. In 1998, after the World Cup in France, in which Brazil lost the final to the host, Nike’s sponsorship of the Brazilian team led to the opening of a parliamentary investigation.

The “Nike CPI” debated the relationships between the CBF (Brazilian Football Confederation) and the multinational. When the CPI was closed in 2001, the then president of the CBF, Ricardo Teixeira, was accused of several crimes and the contract with Nike had to be revised.

Another controversy that marked the company was the hiring of suppliers who used slave and child labor. After a 1996 photo of a 12-year-old Pakistani man sewing a soccer ball went viral in Life magazine, Nike faced boycotts.

In response, the company has sought to do its homework by releasing social impact reports and supplier code of conduct, most of which are still concentrated in Asia.

Born in 1964 as Blue Ribbon Sports – founded by Phil Knight, a former Oregon track athlete, and Bill Bowerman, his track coach – the multinational has never had a single factory.

X-ray

Foundation – 1964 (as Blue Ribbon Shorts)

Thirst – Beaverton, Oregon (USA)

brands – Nike, Jordan and Converse

Employees – 73,000

Own stores – About 1,000

outsourced factories – 469 in 38 countries, employing 1.2 million people

Invoicing* – $46.7 billion

Profit* – US$ 6.04 billion

*Fiscal year 2022 ended May 31

Source: Nike