Nike (NYSE: NKE) 1,400 Layoffs and the Shifting Digital Economy

The sportswear giant, like other retailers, is adapting to rapid changes in how consumers shop (photo via PDX and Nike Inc.

Source: Nike (NYSE: NKE) announces 1,400 layoffs, new corporate structure – Portland Business Journal

Matthew Kish drop this story this morning explaining what was prefaced on the last Nike conference call as a Triple Double. Nike is cutting 2% of its global workforce. In a detailed report that is being updated by the minute as more information surfaces, this only speaks towards what I’ve been writing for the last two years.

Why Are Retailers Like Finishline And Mom and Pop Shops Going Out Of Business: The Nike Effect – YouTube

In the above article I was interviewed by my partner in AHN, Tayib of Housakicks. He was asking me why so many shops were closing. My dialogue discussed Memphis and the region and how a number of mom and pop shops lost their Jordan Brand accounts and then I presented that Nike was moving hard towards DTC and then I re-stated this over and over again on the site in a number of different discussions.

When Nike Wins, Who Loses? Part 1

This layoff by the brand is happening primarily in corporate, but this is something I’ve witnessed happening on a local level. Locally Nike stopped hiring a lot of “black” badge employees and began staffing the local warehouses (which is much bigger than you can comprehend) with Temporary workers. Memphis has 3 shipping and receiving facilities. The largest is the recent 301 Million dollar expansion in Frayser.

When I’m not working on the site, I’m driving Lyft and I pick up a lot of employees who are temps hoping to latch on with Nike full time. These are primarily high school graduates and college aged people, but the temp services also send older people to the job. The older people last maybe 1 month after working 7 days a week sorting, pulling, packing and shipping. As Nike has developed more DTC outlets (the company has grown the number of Factory and Clearance stores in the last few years, there hasn’t been an increase in hiring. Nike literally is utilizing factory and clearance stores as secondary warehousing making their retail employees not only sales reps but they are also taking on the responsibilities of warehousing more recent releases as opposed to those shoes being delivered to the mom and pop accounts that have dwindled since the brand began pushing more and more into DTC.

Does adidas’ growth have anything to do with this? I would say yes as Nike is losing market share which accelerates the need to move forward with what Nike introduced during the Q1 2017 conference call. “The company previously announced the basic strategy, which it refers to as a “Triple Double” of speed, on its last earnings call.” – Kish

Nike is showing cracks. In this post I wrote two days ago:

Debate This | Nike, KD & Why This Won’t Boost Sales But Is Still Smart 

I explained that Nike has been misfiring on marketing and product. It seems those misfires led to this tuneup, but I don’t see this adjustment helping as the brand continues to dump too much product onto the market. This is definitely a story to follow.

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Chris Burns
Chris Burns
Founder, Writer and Webmaster at ARCH & CBP
Chris B. is the founder of ARCH.

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