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A New Player in the Game: Nike’s Major Campaign with Dick’s Sporting Goods Shakes Things Up

Nike, a titan in the world of sports apparel, is known for making strategic moves on the field and in business. Historically, the brand has maintained a close relationship with Foot Locker, a leading global retailer of athletic shoes and apparel. This dynamic is now set to shift, as Nike unveils its latest marketing play.

For years, Nike products have dominated Foot Locker’s sales, accounting for an astounding 70% of the retailer’s total revenue last year. However, this number has been decreasing as Nike shifts its focus towards direct-to-consumer sales. Mary Dillon, CEO of Foot Locker, has had to juggle this change in business strategy whilst striving to maintain a strong relationship with the brand.

Under the “Lace Up” strategic plan, Dillon aims to “revitalize” this relationship with Nike, even as Foot Locker intends to decrease Nike’s share of annual sales to around 55% to 60% by 2026. Despite these attempts at diversification, Nike would still represent more than half of the company’s annual sales.

For Foot Locker, Nike’s decision to partner with Dick’s Sporting Goods for a major marketing campaign feels like a shift in allegiance. This new campaign, aptly named “Sports Change Lives,” could have a significant impact on Foot Locker’s fortunes. The campaign, including online video, social media, and television commercials, will feature top Nike and Jordan Brand athletes, promising to further elevate Nike’s already towering stature.

Burt Flickinger, managing director of Strategic Resources Group, noted that the campaign could be devastating for Foot Locker, which has played a significant role in helping Nike generate record earnings and profits for decades.

Interestingly, Dick’s, unlike Foot Locker, offers a broader range of products in its stores, including guns and ammunition. However, Flickinger believes that Foot Locker still has an edge over Dick’s due to its prime real estate portfolio, including stores located near iconic basketball courts like Rucker Park in New York’s Harlem and Jackson Park in Chicago.

Not all industry observers view the Dick’s/Nike campaign as a complete repudiation of Foot Locker. Carol Spieckerman, president of Spieckerman Retail consulting firm, noted that Nike has indicated it wants to reestablish closer relationships with retailers, citing Nike’s decision to resume selling merchandise through Macy’s and DSW.

However, this doesn’t downplay the fact that Nike is choosing to invest a significant amount of its marketing budget in a campaign with Dick’s, as opposed to Foot Locker. Spieckerman believes this decision underscores a significant drawback with Foot Locker: the lack of a top-tier digital operation.

Foot Locker trails behind Dick’s when it comes to omnichannel retailing, with only 7% of its customers shopping both online and in-store, compared to Dick’s 65%. As a result, Nike likely saw Dick’s digital platforms as better suited for their high-profile campaign.

Furthermore, Dick’s ScoreCard loyalty program far outpaces Foot Locker’s FLX program. With 25 million enrolled customers representing 70% of overall sales, Dick’s loyalty program clearly overshadows Foot Locker’s. The new campaign even includes exclusive content, deals, and promotions for customers who connect their Nike and Dick’s loyalty accounts.

However, DeAnn Campbell, a retail consultant, sees a silver lining for Foot Locker. She believes the retailer could emerge stronger by reducing its dependence on Nike and developing promising private label brands to diversify its product offerings. In the meantime, Foot Locker is likely to endure some growing pains as it watches Nike, a long-time ally, flex its marketing muscles with a new partner.