PRE-INTERNET SNEAKER GAME: Sneakers Expire in 30 Days
Supply and Demand is one of the most fundamental concepts of economics. You never want to produce more product than you have viable consumers for. In the Sneaker Game it is especially important as Brands have a relentless flow of product being introduced in the market on a monthly basis, and if product does not sell thru in at least a 10% weekly rate, it is deemed a failure. This hiccup typically results in either sneakers being marked down or the brand taking returns from the retailer. Brands then also find other ways to redistribute the unsold product, which may include brand outlet stores and discount retailers; when they get really grimy, The BLACK Market takes the overflow and sells it at a tremendous discount.
In the mid to late 90’s when I was Footwear Product Director for NIKE Limited Edition (LE), today known as NIKE Sportswear, we changed the game as it relates to raising the standards, monitoring product sell-thru and allocating product to retailers for success. As I shared in my first entry: PRE-INTERNET SNEAKER GAME: Music Artist x Signature Sneakers, the LE Team was as minimal as it gets. In our infancy we had one assigned Developer, Scott Cates, who works in Product Merchandising for Nike today. Scott made sure the factories delivered on the specs we deemed best for the product; he did not receive much fanfare in those days, but served as a vital player in LE’s success. My true partner in crime was Jerry Allocco, a former Nike Foot Locker Sales Executive, hot tempered Italian, Jersey kid (my birthplace) + Scorpio like myself — who was so far different then the LE consumer. If you saw him walking down the street you would never identify him with making contributions in the Sneaker Game. Jerry is passionate, has a PHD in the sneaker business, and like most sales reps — he does not understand the concept of “No”. Jerry knew how to work the halls at Nike and had a father-son relationship with Sam Siegel, the GodFather of the NYC Sneaker business. Sam owned the independent sales agency that sold, built, and managed Nike in NYC; including Foot Locker before Nike brought his agency in-house at a price. Mr. Siegel would later lead the Nike sales force team assigned to manage Foot Locker, while renting office space he owned to Nike; so gangsta! He then got hired by Phil Knight himself, and still works to this day as a consultant and has access to everybody and everything NIKE. Sam was our internal advocate, our big business card to get stuff done. Respectfully, Sam was a hard nose leader who was known for his one liners, like:
“You don’t Know; what you don’t Know”
“If you’re not Up, you’re Down. It is that simple”
“Pay Peanuts, you get Monkeys”
“If Footlocker shits on the floor, you Clean it up”
This was the LE Team and we were an odd group to say the least!
As we set out to build LE as a business, managing the product was key to our success. Digging into Nike’s archives and tapping into its greatest footwear designs typically lead to sales reps and outside accounts overbooking product, which resulted in them not supporting inline product and/or the ideal sell thru of LE product. Allocating maximum orders was vital for the success of the business. Like dessert is to dinner, we wanted to compliment our inline footwear to keep a healthy balance and insure optimal sell thru. Once our product reached the sales rack it lost its luster. A valuable lesson I learned during this time was; that even when you’re on the same team, people have their own agendas. There were times the Nike sales reps would try to work around the system and not respect the policies + requirements we set, especially when we were producing DOPE SHIT! To be frank, it was TEAM NIKE LE vs EVERYBODY, including leadership at times!
We had to constantly manage, monitor and educate our process internally. The standards we set for sell-thru were 80% in 30 days, which was unheard of within the industry. So basically if a retailer did not hit this mark with a particular style, they over bought the product and the next season’s allocations needed to be adjusted. We treated LE Footwear like Milk and viewed it as spoiled if the “Eighty Percent” sell thru was not met. As you can expect we were not a popular team, and having Sam’s muscle to insure our mandates were respected internally was of great value. We even went as far as changing the policy that let Foot Locker buy as many Nike Air Force 1’s as they desired, including the fabulous White/White. They were not happy and most believed our strategy was ludicrous — who walks away from business? Nike LE Just Did It!
In fact, the policies we set were one of the components of the 2002/03 Sneaker War between Foot Locker and Nike. In an attempt to get back at Nike for not giving them the quantities of signature and coveted products including Nike LE, Foot Locker pushed full throttle on BOGOing (Buy One, Get One) — a sales tactic used by retailers to drive business away from its competitors. However, the Swoosh would counter Foot Locker’s move and pulled all of its key models from their stores reducing them to a secondary option for the leading consumer in the Mall + Greater Market. Eventually Foot Locker came crawling back and got with the program — respecting the pricing requirements and appreciating the allocations on the key models they were granted.
Nobody said it would be easy but Brands must PROTECT THE MILK!
For the sake of contrast; to my surprise during my quick cup of coffee at Ralph Lauren as the Global — Senior Director of Merchandising over the Men’s Footwear division, they had the opposite mentality of Nike LE. Although the Greater RL Brand is positioned as THE Quintessential American Luxury Brand, the leadership in the footwear division treated their product like footwear with a price tag attached to it. Average Design + Low Pricing + Leaning on the Horseman Logo = Mass Bookings. A large percent of their business was conducted at outlet stores and secondary footwear channels — sadly Ralph Lauren Footwear was all about the “SPOILED MILK.”
The big mistake Brands make is focusing on sell-in but the real test is sell-thru. Most brands take the “Peanut Butter Approach” and attempt to spread the same product across all channels (retail lanes), and nobody wins in the long term when respectable sell-thru is not achieved. Instead brands should take the “All Right Approach” — Place the Right Amount of Product for the Right Consumer in the Right Channel at the Right Price and the Right Time, with the Right Support (Storytelling) in order to achieve the big win. …I won’t charge you for this Science Lesson, that’s on me!
The big question is: Are you building a Brand or a Commodity?
The discipline and strategy set by team Nike LE changed the game and has allowed Nike Sportswear to evolve into the Multi-Billion dollar business it is today. Our strategy is also an industry standard particularly when speaking of coveted, launch, and signature products in 2016!
Standing up for what is right can be lonely and confrontational at times, but fear is not a part of the game of change!
We were a Team of Three plus the GodFather who took on Nike and the Industry, but the business has never been better because of our efforts.
Never let your Milk Spoil, Manage Your Brand + Products!
Many try to take the credit today, but much like Columbus we all know he didn’t discover America!