[Insight & Opinion] Sneaker Innovation and Nike's Crisis

Stock Price Plummets Amid Innovation and Marketing Failures
Emergence of New Powerhouses Like HOKA and On Running

Domestic sneaker brands such as Le Coq and Prospecs, which enjoyed their heyday in the 1980s, declined along with the '1997 Asian Financial Crisis,' and foreign sneakers like Nike and Adidas became dominant. Shoe companies that grew through Original Equipment Manufacturing (OEM), such as Kookje Sangsa and Hwasung, challenged themselves to become comprehensive sports brands with their own labels, but this was a chapter of failure in history.

The world's largest sports brand, Nike, is reportedly facing a crisis as its stock price plummets. John Donahoe, recruited as CEO from eBay, is analyzed to have made a misstep by reducing traditional wholesale and retail channels and shifting focus to the website and direct stores. The strategy to increase profits through direct sales and secure customer data was not accepted by the market.

Nike is a marketing textbook example of a company symbolizing innovation and challenge. Since its founding in 1964, it amazed the world with innovations such as the 'Air Zoom Carbon Fiber Plate,' and overwhelmed competitors with the 'Just Do It' slogan, symbolizing challenge, led by stars like Michael Jordan and Tiger Woods. However, Nike has recently failed to show clear innovation and is falling behind in the sports market. At the 2019 World Athletics Championships, 17 athletes wearing Nike shoes won, dominating 5 athletes from other brands, but last year, only 10 athletes won compared to 12 from other brands. The failure in innovation and marketing is reflected in the stock price, causing it to lag behind.

New Balance, founded in 1906, remains strong with over 100 years of history. The '922 Grey' model is a sneaker favored by enthusiasts because Steve Jobs frequently wore it. It is said that Jobs preferred it because it best embodied the perfection and simplicity he pursued. While all shoe brands use OEM strategies based on cheap labor, New Balance uses 'MADE IN USA' as a brand and actually manufactures in the United States. The shoes are made through 80 processes involving 72 parts, and unlike most shoes that measure size only by length, they offer 4 to 5 different width sizes for comfort. They use a high-price, scarcity strategy by producing limited quantities, requiring buyers to compete for purchases.

Skechers, established in 1992, is an American sports brand well known for comfortable wear and stylish design in both sports and casual shoes. The SLIP INS model, recently popularized because Samsung Electronics Chairman Lee Jae-yong wore them, looks as if a sturdy shoehorn is attached to the heel, making it easy for the foot to slip into the shoe while standing. Since you don’t have to bend down to put them on, they are perfect for elderly people or those with a protruding belly. Skechers leads marketing through collaborations with celebrities.

Sneakers are basically designed to fit snugly on the foot by tying laces. However, tying laces is bothersome, they come undone, and size adjustment is not precise. In 2001, Gary Hammerslag from the U.S. developed the BoA fit system for snowboard boots. It allows precise adjustment of fit by turning a dial to tighten wires or cords. It is applied to ski equipment, golf shoes, hiking boots, helmets, and more.

The BoA logo is prominently displayed on the dial attached to all equipment and shoes where this system is applied, representing an innovative idea.

Continuous innovation is occurring even in the sneaker industry with over 100 years of history. While the largest sports company Nike hesitates in innovation, emerging strong players like HOKA and On Running are appearing. Innovation is the only way to survive.

Kim Hong-jin, CEO of Work Innovation Lab