At Nike, the Virtual is Reality

In maximizing new digital strategies with fresh storytelling surrounding archival product, Nike succeeded in 2021 by being a leader not just in sportswear, but on the cutting edge of big tech.

Rarely are giants subject to starring roles in stories of perseverance.

Strange as it seems, such was the trope for Nike’s triumphant 2021.

In a year where production problems and shipping delays stifled many and affected almost all, the sportswear continued to climb, announcing in May that its annual profits went up 196% compared to the same period in the last fiscal year.

So, how did the Swoosh turn 2021 into a massive success story?

The Beaverton brand born on the track showed more agility and endurance than any of its peers, navigating obstacles and seizing opportunities in worlds far beyond just the physical.

Another way of phrasing it: This was the year Nike officially became a tech company.

Hitting Hurdles

The pandemic put everyday life in limbo and businesses big and small in jeopardy or adjustment.

Issues surrounding COVID caught every company in 2021, including Nike. Famously, the brand lost 130 million units of product from facilities in Vietnam.

Not only did Nike have to leave lost money on the table, global production issues made it more difficult to supply a global fanbase of feverish consumers as well as vendors reliant on their apparel and sneakers.

Plus, shipping delays created chaos for both the internal brand release calendar and launch plans for its retail partners.

Virgil Abloh with Serena Williams via Nike, Inc

Pandemic problems aside, 2021 presented plenty of unforeseen challenges. The passing of Virgil Abloh leaves the world without one of its brightest creatives and the brand without its most touted collaborator.

Similarly, the expiration of Kobe Bryant’s contract places a void in their basketball business. Add in top-earning ambassadors such as Kyrie Irving and Travis Scott having their promotion or product on pause due to controversies and the struggles surrounding marketing plans and launch calendars persist.

For fans of the brand’s most sought-after product — often associated with the names listed above — the polarizing SNKRS app remained at the top of the sneaker conversation all year, but not always for the right reasons.

Infamously, the mobile madhouse for copping high heat had to withstand a bit of bad press, including the case of a high-ranking brand VP stepping down after the lid was blown off her son’s reselling empire.

But even while smaller sportswear brands gained ground on Nike in sectors such as lifestyle, fashion, and performance running, the company built by Bill Bowerman and Phil Knight nearly half a century ago had reason to react, but no need ultimately to sweat.

This was because they possessed a lengthy lead in all lanes.

Power Position

While the lingering effects of the pandemic presented plenty of problems, they also allowed opportunities for Nike to dive deeper into digital, explore Web3, and connect to consumers through smarter storytelling and evolving needs.

“Nike is doing what we always do, playing the offense,” CEO John Donahoe said in September. “We have gotten stronger from the pandemic and will be even stronger as we emerge from it.”

Call it resistance training, but the tumultuous year that was 2020 put Nike in peak shape when it came to 2021.

Nike announced $11.36 billion in revenue in a Q2 earnings call Monday, exceeding expectations by more than $100 million thanks to ecommerce and the metaverse.

✍️: @SprungOnSports https://t.co/QkxbfmANF3
— Boardroom (@boardroom) December 21, 2021

This December, Nike announced it had hit $11.36 billion in revenue on a Q2 earnings call, exceeding expectations set by Yahoo! and Bloomberg by over $100 million.

This was greatly due to a 12% uptick in digital sales. Additionally, the brand’s online excellence extended into entering the metaverse by way of launching NIKELAND in partnership with Roblox and acquiring Web3 innovator RTFKT.

By doubling down on digital, Nike was able to make up for wholesale loss and supply chain issues.

Through online sales and an array of mobile apps, Nike met consumers where they were, which was often home. Continued remote work rules put the demand for cozy athletic wear at a tremendous high, allowing Nike to outfit athletes of all shapes, sizes, and abilities in comfortable athleisure.

While SNKRS may have gotten itself panned by legions of enthusiasts due to the absolute chasm between consumer demand and brand supply, it was pivotal in keeping Nike in the conversation as the most chased producer of footwear and apparel. Much of this had to do with the hype around scarcity, but much of it also played off deep and strategic storytelling.

This was not lost on financial scribes, as Forbes named Nike’s leading man John Donahoe its 2021 CEO of the Year.

Equally impressive, the business publication also named Nike the Most Future-Ready Retail Brand.

By adapting to adversity and connecting with consumers in more modern ways, the Swoosh hit new highs and continued to lead the pack not just in sportswear, but in global business on the cutting edge.

Nike’s 2021 Highlight Reel

So, just where did Nike win in 2021 and how did they take home top honors from Forbes regarding their leadership?

There’s a slew of categories they crushed, but here is a highlight reel for where Nike, Inc. — which houses Nike, Jordan, Converse, and now RTFKT — led this past year.

Nike Zoom AlphaFly Next Nature(photo via Nike, Inc)

An Increased Consciousness: The evolved consumer places more importance on maintaining the planet and uplifting people than generations prior. Nike knows this intimately, making and marketing products promoting these ideals.

On the environmental side, Nike continues on its “Move to Zero” path by putting out more sustainable sneakers in the worlds of lifestyle, basketball, and running. The brand also announced its Refurbished initiative which encourages consumers to recycle worn footwear for new uses.

Putting an emphasis on people, Nike, Inc brands such as Jordan and Converse were heavily involved in social justice and equal rights movements all year by way of pledges, donations, and inclusive lines. Additionally, Nike introduced the GO FlyEase model made with the ability to better assist athletes living with disabilities.

High Society Embraces the Sneakerheads. Throughout the year, rare Nike and Air Jordan sneakers appeared for special engagements at some of the world’s most prestigious auction houses, including Sotheby’s and Christie’s. Via the former, a private sale in April saw the prototype Yeezys Kanye West donned at the 2008 Grammy Awards go for $1.8 million, the highest sum on record ever paid for a single pair of sneakers.

NikeLand x @Roblox

Giannis has officially entered the metaverse. 🚀 pic.twitter.com/mBYcHYQCtk
— Boardroom (@boardroom) December 21, 2021

Entering the Metaverse. In 2019, Nike made a move into web3 by securing a patent for the blockchain-based CryptoKicks. By 2021, they went all-in by following Facebook into the metaverse through multiple moves.

This year, Nike acquired RTFKT and launched NIKELAND. This new world of web3 gives Nike the space to grow in gaming, combat counterfeit product, make virtual goods, tell stories in interactive ways, and leverage their history of hype for a bold new future.

Leaning into Lifestyle. Though Nike made its name as a performance sportswear innovator, the Swoosh and its umbrella of brands won by selling style.

The Swoosh’s fashion-forward collaborations positioned them as a leader in lifestyle and an aspirational yet accessible luxury brand.

This trickled to Converse which released collaborations with Kim Jones and Rick Owens, as well as Jordan Brand which often worked with Off-White and Fragment. This holistic lifestyle lens was more than just runway appeal, as Nike approached every consumer as an athlete, creating sportswear for all shapes and sizes that catered to an array of activities both aerobic and expressive.

Running Back the Hits. Innovation, performance, and technology have long been at the core of Nike. While moving the needle has kept the brand ahead of its peers, revisiting the classics has been a core revenue-driver

When considering the Nike, Inc umbrella, archival models like the Converse Chuck Taylor, Nike Air Force 1, Air Jordan 1, and Nike Dunk were all red-hot despite debuting decades ago. By saving money on research and development while investing in storytelling, Nike was able to make the old new to a mass audience.

Nike Dunk Low(photo via Nike, Inc)

Knowing What’s Next. Nostalgia can be a crutch and Nike knows this. While retro models make major money for the Swoosh, forecasting the future is where the brand truly thrives.

In 2021, Nike opened up the LeBron James Innovation Center on their beloved Beaverton campus as a place to create for the future. Performance technology drives their revered running category by way of their NEXT% line, while open-minded ideals see the Swoosh aligning with brand-adjacent Division Street, a leader in the emerging NIL space.

LeBron James Innovation Center (photo via Nike, Inc)

Meeting Consumers Where They Are. Even as much of the world opened back up, consumers spent much of their time at home and on their phones.

Because of this, Nike continued to lean into their direct-to-consumer strategy by way of their impressive online store and also their array of apps. In doing so, Nike was able to connect with their consumers quicker than years past while doing transactions with the tap of a screen.

The Next Lap

All signs point to Nike continuing to thrive in 2022 through new moves in the metaverse and the same symbiotic relationship between history and innovation that’s defined the sportswear company’s success in recent years.

The brand will look to course-correct issues with SNKRS, and seek to rectify production snafus while better looking out for their core customer.

“Our community is becoming disenfranchised by our low fairness numbers,” SNKRS global VP Ron Faris said in October. “Our fairness numbers are not where they should be. They’re at, like, the mid-20s; they need to be in the 80s.”

The issues presented by SNKRS provide a challenge and also an opportunity.

By doing even more of their business by digital means, Nike controls the messaging and assumed scarcity like never before. It’s said they aim to offer exclusivity at scale, further forecasting their attempt to appear aspirational while still being accessible.

Whether it’s placing pairs of FlyEase on the feet of those who truly need them or entering the metaverse in an organic way, Nike will need more than just strong storytelling to continue to connect with their wide range of consumers who are constantly being presented with independent alternatives.

Nevertheless, the brand built off introducing the new seems poised to take on all obstacles ahead.

“The competitive advantages of innovative products, brand strength fueled by compelling storytelling, and a roster of the world’s best athletes and digital experience will continue to create separation from competitors,” CEO John Donahoe said in 2021.

Such a recipe seems a winning formula for sustained success in 2022.