Nike has successfully navigated numerous transformations in it’s history to adapt and thrive in the ever-evolving market. The brand has come through glorious successes and challenges along the way. The latest challenge is the 19% plunge of the stock price in a single day. Nike, the iconic seller of athletic footwear and apparel in the world, evolves from a small startup to a giant. Its revenue is more than the revenue generated by Adidas, Puma, Reebok, and Under Armour combined. Reknown for its resilience, Nike’s transformation history is a valuable reading for entrepreneurers.

Nike’s Transformation History:

First Transformation: From Seller to Branding Company

• In 1964, Phil Knight and Bill Bowerman founded Blue Ribbon Sports, predecessor of Nike. The compony initially sell the Japanese running shoe brand Onitsuka Tiger in the United States. It rapidly reached sales of millions , after Waffle Trainer shoe’s success.
• In 1971, Nike introduced its new logo of “Swoosh,” along with the “Nike” brand name. The following year, the partnership with Onitsuka Tiger came to an end. This makes a pivotal shift from being a seller to become a branding company.
• In 1978, Nike signed its first endorsement deal with Steve Prefontaine, a distance runner. The deal become a cornerstone of the brand’s marketing strategy.
• Back ground: In the 1970s, there was a running boom, inspired by the Olympics and the New-York marathon.

2nd Transformation: From Product Oriented to Marketing Oriented

• The Nike IPO debuted in December 1980 at $10.50 per share.
• In 1984 , NIKE signed the 21-year-old basketball superstar Micheal Jordan and started the ever lasting successful legend. The iconic Air Jordan line was debuted in 1985.
• The iconic Nike JUST DO IT slogan launched in 1988. Nike’s brand identity was established as one focused on determination, perseverance, and athletic achievement.
• Back ground: Aerobics at home became popular worldwide in 1980s. Reebok had overtaken Nike as the number one athletics brand in the mid-’80s. Nike misjudged the aerobic market and resulted in a flat revenue result. It turned Nike from product-oriented to marketing-oriented. In 1992, Phil Wright engaged in a thought-provoking conversation with Harvard Business Review HBR. It highlighted the transformation and shaped the company’s business management practices until today.

When the formulas that got Nike up to $1 billion in sales—being good at innovation and production and being able to sign great athletes—stopped working and we faced a series of problems. For one thing, Reebok came out of nowhere to dominate the aerobics market, which we completely miscalculated. 

We were also having management problems at that time because we really hadn’t adjusted to being a big company. And on top of that, we made a disastrous move into casual shoes.

-Phil Wright

3rd Transformation: Direct to Consumer

• First of NikeTown opened in Portland in 1990. And more NikeTown in the following years,
• In 1999, Nike begins selling its products directly to consumers via its web site.
• In 2000’s, Nike reset his focus by selling subsidiaries. As of 2024 Fiscal Year, it only owns two subsidiaries of Air Jordan and Converse.
• Nike already expand the product lines among running, basketball, football, skate sports, and lifestyle.
• Back ground: Starting in the late 1990s, the popularity of sneakers and sportswear expanded across all demographics and sports disciplines. It’s largely inspired by the American basketball dream team’s performance at the 1992 Barcelona Olympics. During this period, Nike overtook Reebok. It is contributed to a combination of effective marketing strategies and a diversified distribution approach. In the late 1990s and early 2000s, a second running boom occurred in Europe and North America. There was notable increase in participation in organized races. Basketball sport has been the 2nd favorite sports in the US.

Nike’s Ongoing Transformation: Diversify The Distribution Network

• Nike’s stock price dropped about 19% through fiscal year 2016,and flatted during 2017.
• In 2018, Nike opened it’s first flagship store , The House of Innovation, in NewYork. It redefined the future of retail design, by plending the physical shopping and digital experience for consumers. The other two House of Innovation locations are in Shanghai and Paris. Nike’s comprehensive distribution network, which includes Nike Direct and wholesalers, is poised to provide strong support for its future growth.
• In spring 2018, Nike faced multiple lawsuits within the company. Employees filed lawsuits regarding gender discrimination and the corporate culture of the “boys club”. It resulted in a major shake-up in Nike’s management. The company fired at least 11 executives, including Trevor Edwards.
• John Donahoe took the helm after Mark Parker resigned the CEO in 2021.
• Nike is experiencing an unusual slowdown in 2024, with an expeted 10% decline of sales in the first quarter of the 2025 fiscal year.
• In 2024, A Nike Inc. shareholder has filed a securities class action in the District of Oregon’s Portland division. The lawsuit claims the company misled investors about the financial effects of prioritizing direct-to-consumer sales.
• Back Ground: Customers are shifting their behaviors for basics and experiences such as concerts and travel.

“I’d like to thank Trevor for the important role he has played for 25 years and for his significant contributions. He has helped us grow and strengthen our brand on a global scale. I am committed to stay in my role as chairman, president and CEO beyond 2020. Trevor has decided to retire,” Parker said in a statement. “We are fortunate to have a strong management team in place who is well suited to drive our next stage of growth and to steward and evolve our culture in the future.”

-Mark Parker

Further Resources to Study Nike

• “Shoe Dog: The Autobiography of Nike’s Founder Phil Knight”: This book was written by Phil Knight himself, detailing the entrepreneurial journey of Nike from “zero to one.” The book talks about his love for running, the establishment of the brand, the challenges faced, and teamwork. It not only records Nike’s development but also showcases Phil Knight’s personal growth and entrepreneurial spirit. It’s among one of Bill Gates’ My favorite books of 2016.
• “The Story of Dunk”: This is a documentary about the history of Nike Dunk sneakers led by nikesnkrs and released in 2020. It is divided into 6 parts of interviews with many fashion trendsetters. It tells the journey of the Dunk shoe model from its birth to becoming a classic, as well as its influence in different fields.
• “Air: Courting a Legend”: Released in 2023 and directed by Ben Affleck. It stars Matt Damon, Jason Bateman, Ben Affleck, Chris Messina, Viola Davis, and others. The film tells the story of Nike’s cooperation with rookie player Michael Jordan in the mid-1980s. It tells how they rewrote the sports world and popular culture with the Air Jordan series.
• “Breaking2”: Completed through the collaboration of National Geographic Studios and Nike. It records the process of three athletes, Eliud Kipchoge, Zersenay Tadese, and Lelisa Desisa, as they attempt to break the 2-hour mark in the marathon. It shows their training lives and the difficulties and perseverance during the challenge.

Conclusion

Nike’s transformation history is a remarkable journey characterized by innovation, sustainability, and cultural relevance. Throughout its history, Nike has consistently upheld its status as a frontrunner in the competitive sports industry. As the company continues to evolve, its commitment to pushing boundaries and inspiring athletes worldwide remains unwavering. Nike’s story serves as a powerful reminder of the importance of adaptability in an ever-changing landscape

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