In many ways, the world of sports has been somewhat shielded from the massive economic meltdown affecting the rest of the world. Sure, the Yankees are having trouble getting people to the ballpark, but with an average ticket price of $230 and a sub-.500 record, those seats would be a tough sell in the best of times.
(No, it’s not.)
Other tough sells in a down economy are things like $250 basketball shoes and $100-plus basketball jerseys. That, however, is what Nike has continued to foist on the world’s sports fans despite the worst recession in generations. Today, this flawed business plan has come back to bite Nike in the rear of their overpriced athletics short as the sporting goods giant announced massive layoffs. Just do it, indeed.
According to the HOUSTON CHRONICLE:
Nike says it will cut about 1,750 jobs worldwide. That represents 5 percent of the global work force at the shoe and apparel company. About 500 of the jobs lost will be at Nike’s world headquarters in Oregon.
For all of Nike founder Phil Knight’s supposed business genius, it’s amazing he or anyone else didn’t foresee the whole “economy in the crapper” thing doing some damage to their business model. Sure, they have fairly low overhead since all their gear is produced in sweatshops, by toddlers, but in a world where vast amounts of jobs and money has disappeared forever, overpriced fashion statements are one of the first things to suffer.
Interestingly, Nike’s main competitor in the athletic apparel world, adidas, has been largely unaffected by the sluggish economy. For the past several years, they have been investing in emerging markets like China, Brazil, and India with reasonably-priced goods marketed under their Reebok label. For a company like Nike, which changed the sports world with seemingly endless amounts of innovation, it’s somewhat surprising that they haven’t been able to adapt to the changing global markets. Only time will tell whether cuts like these are sufficient to allow Nike to keep its position atop the sports world.