Why the Nike-Amazon Deal May Hurt Sportswear Retailers

Syndicated from The Business of Fashion

Foot Locker Geschäft in Darmstadt
  (Photo credit: Wikipedia)

NEW YORK, United States — Nike’s pilot program to sell certain products on Amazon and Instagram is a precursor to it forging a deeper relationship with online retailers, and could hit sales at sporting goods retailers such as Foot Locker Inc .

The sporting goods market is already in deep trouble, with several retailers already filing for bankruptcy, and Nike’s deal could push existing retailers to shut more stores, analysts say.

Sporting goods retailers, which rely on Nike for a substantial part of their wholesale revenue, would be hit further in case Nike’s partnership with Amazon expands beyond the current pilot program.

The deal — which is expected to help Nike Inc weed out counterfeit products sold through unlicensed dealers online and give it more control over its distribution — lifted the company’s shares to a more than three-month high on Friday.

Since then shares of sporting goods retailer have fallen — Foot Locker Inc by nearly 2 percent, Hibbett Sports Inc by 6.8 percent and Big 5 Sporting Goods Inc by 5.3 percent.

Nike, whose products are already sold on Amazon through third-party and unlicensed dealers, could build an additional $300 million to $500 million of revenue in the United States or 1 percent of its global sales through its expansion as a dealer on Amazon, Goldman Sachs said in a client note.



Source: The Business of Fashion

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