Never Bet Against Oprah

Oprah is at the forefront of a major re-launch of one of Nike’s best technologies in a decade – one that will finally get t he attention it deserves. Good for Nike. Great for FL.

Even though her show starts after the market closes, I do not watch Oprah. But 7.4 million (mostly female) American consumers do. Every year, thousands of products arrive at HARPO studios around the holidays for Oprah to pick her list of ‘Ultimate Favorite Things’. Last year she downplayed higher-priced items due to the recession. But this year the list is in full force. (ie, Oprah loves the iPad. Surprised? I didn’t think so…).

Two of the items caught our attention in particular.

Lululemon: The first item is a pair of Lululemon pants that offer more flexibility (in usage) that than the standard ‘Down Dawg’ and doubles as everyday ‘around town’ pants. Also, in Oprah’s words, “I’ve got to tell you, anything that cuts your but in half should be your favorite thing too.”  It’s also notable that the model wearing the pants was wearing a pair of Nike Free. That brings to the second item…

Nike Free is made the cut and is staging a big comeback. I mean REALLY big. This is a fairly old technology in that it came out around 6-years ago as a way for elite runners to practice running as if they were barefoot on grass. But for several reasons, Nike chose to hold off from stepping the accelerator. That was in part because Reebok and Adidas were hemorrhaging share in the US, and Nike didn’t have to do a lot to see its share go from 37% to 48% (while Adibok went from 18% down to 7%). Heck, maybe the timing was not right.

Now what?

  • “Toning” has become a $1bn+ category. Nike might play down this category in public. But internally, they’re livid – as any winner would be after losing a match to a seemingly lesser opponent.
  • Has anyone read ‘Born to Run?” A truly exceptional book documenting how a Mexican tribe absolutely dominates the sport of Ultra-marathoning, and no, they don’t wear Air Max 360s. They run barefoot. A great read…I’d recommend it.
  • Let’s not forget about UnderArmour’s FW product. This is the year they hit stride.

So all of a sudden, Nike has 2 stronger large competitors, mid-and small size competitors like New Balance and Newton running, plus some Asian imports like Anta and Li-Ning, and too top it off, they missed growth in a category that could and should own. Yeah… not good for job stability if you’re in charge of Running at Nike.

But does that mean that Nike will bow to the pressure and become more mainstream? No!!!

What you should expect is that Nike will go full force with its Free technology.  Will it be the same ol’ product as 5 years ago? Nope. They will do to the same thing to the e-reader that Apple did with iPad in the wake of Kindle/Amazon’s success. You can’t even mention Kindle and iPad in the same sentence without it sounding strange. That’s what Nike will do with Free. It will hit in spring en’ masse, and should start showing up in orders in full force by holiday. Most tools and molds are already amortized, so margins will be solid.

Yes, this helps Nike. But Retailers like FL should be the biggest winners.

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