Even Kung Fu Kenny needs Nike to better position its sneaker for success.
This is part two of a three-part series on the footwear industry in hip-hop.
Part one: Timberland Showed Up Late to the Cookout
There’s only one sneaker that can say its been with Nike since the company was shootin’ in the gym. Nike experienced a turning point when several Team USA athletes debuted the sneaker at the 1972 Summer Olympics. Company sales increased 100% from the prior year and immediately took off. At the time, the Cortez was Nike’s best selling sneaker. Nike’s annual revenue jumped from $28.7 million in 1973 to $867 million in 1983. Thanks to celebrities like Eazy-E, Farrah Fawcett, and Whitney Houston, the sneaker’s image transitioned from marathon runners to fashionable trendsetters—especially on the west coast. Sneakerheads say that the Cortez is the Nike Air Force 1 of Los Angeles.
Nike relaunched the longstanding shoe in May 2017 for its 45th anniversary. A few months later, Kendrick Lamar announced that he left his partnership with Reebok to join Team Nike. Lamar, a Compton native who loves the Cortez sneakers, seemed like the perfect frontman. Nostalgia fashion was extremely popular in 2017, so the timing was ripe for the Cortez to rise in popularity once again.
Unfortunately, the comeback has been lackluster at best. “Cortez sales this year have been ‘very minor,’” according to several retailers and analysts. We learned about the power of hip-hop partnerships with Timberland. Why hasn’t k.dot moved the needle for the Cortez? How should Nike steer the ship?
A few difficult tasks
Nike has released several Cortez styles since the relaunch. The first was the classic red, white, and blue sneaker with supermodel Bella Hadid. The company followed suit with “Compton” and “Long Beach” designed styles, Kendrick Lamar’s Cortez Kenny 1s and 2s, and most recently, tennis star Maria Sharapova’s LA Cortez. Looking at this stable of releases, I’m not sure if I should look for a pair of Cortez at a swap meet in Crenshaw or outside of a lululemon store in Beverly Hills.
The answer is both, and that’s part of the problem. This past year was rough for Nike. The company has lost 2% of its sneaker market share in the past 18 months, while adidas’ share has grown 11.3% in that same time frame. Adidas’ growth has been driven by the Superstar (the best selling sneaker of 2016), the Stan Smith, and the Tubulars series (the ones that look like Yeezys but don’t cost your whole paycheck. Adidas was smart to make its own “Chrysler 300” to the Yeezy’s “Bentley”).
These three adidas sneakers are thriving because they are part of the athleisure movement—the $46 billion market that is expected to double by 2020. The Nike Tanjun, the best selling sneaker of 2017, is Nike’s gateway into athleisure wear. It seems like Nike is tepidly testing out the Cortez as an athleisure shoe as well, but it hasn’t caught on.
Matt Powell, a sneaker analyst at NPD Group Inc., was skeptical when I spoke with him about the 30-year-old rapper’s impact on the Cortez. “The Cortez wasn’t the right wave to capture,” says Powell. “Kendrick may drive popularity on the social media side, but not necessarily in merchandise sales. Celebrities are more impactful endorsing an existing wave, not a wave the company tries to create itself.”
Another potential challenge for the Cortez is Kendrick Lamar’s marketability. Despite his top dog status in hip-hop, he has never been a fashion icon or trendsetter in the culture. During Lamar’s deal with Reebok, both Complex and Business Insider questioned whether his deal could save the company.
The “Humble” rapper intentionally set his Reebok Ventilators at a retail price of $74.99 to make the shoe more affordable and accessible. “We throw the high cost on shoes and clothes and try to distract it from the kids, but they make the culture,” Lamar said in a 2016 interview with Fashionista. Lamar’s “Starbury-esque” approach to selling shoes was commendable, but it conflicts with the economics of today’s sneaker market. For better or worse, Yeezys ($220+), Nike Air Jordans ($185+), and many other sneakers have thrived from their lack of accessibility and affordability.
Kendrick’s only other major partnership deal is with American Express, which is primarily a vehicle to give fans early ticket access and exclusive performances. He’s never been a big endorsement guy and frankly, he’s never tried to be. “I ain’t rockin’ no more designer shit, white tees and Nike Cortez,” is the often quoted line from his 2013 song “Control”. This puts Nike in a more difficult spot. Can they rely on a celebrity who wears the sneaker to avoid the baggage that often comes with sneaker deals?
A better approach for Nike
If Nike wants the Cortez to succeed, it will take more than just Kendrick. It needs to do better customer journey mapping and clarify who it wants the primary customer to be. The Cortez may have thrived historically as a versatile shoe that all sorts of people wear, but it needs to be targeted if it wants to compete against the adidas Superstar or Stan Smith.
FILA and Timberland both repositioned their brands and saw sales increase. Matt Rubel, former CEO of Collective Brands Inc, used a similar strategy a few years ago to relaunch several dormant footwear brands, including Sperry and Keds:
“We instituted a brand re-invigoration process aimed at developing a new brand personality that makes the old new again. It draws out the brands legacy strength and combines it with a contemporary, modern and fresh position.”
Nike needs to determine if the Cortez is for the athleisure weekend stroller running errands or the neighborhood OG. Does the customer live in Santa Monica or Compton? Will the customer resonate more with Bella Hadid or Kendrick Lamar? Maria Sharapova or Serena Williams? (for the record, Serena is a Compton native who wore Cortez walking down the aisle at her wedding! And she Crip-walked at Wimbledon! Can’t get more LA than that.)
Sure, Nike has sold out both the limited releases of Sharapova and Kendrick’s exclusives lines (Kendrick’s retail price was $100), but that does not mean they should keep selling both. Merchandise sales drive revenue and market share growth, extremely limited exclusive releases do not. Exclusives can influence mass merchandise sales though, as Yeezys have done for the adidas Tubular series. Plus, the Tubular is clearly positioned to keep performing well. The Cortez can consider similar strategies in order to be successful.
If FILA—a company that hasn’t been relevant since Grant Hill wore those turquoise Detroit Pistons jerseys—can capture the nostalgia wave and succeed in 2018, then Nike can do the same with the Cortez. The Compton sneakerheads are still convinced Kendrick himself has made the sneakers more popular. The opportunity is still there, now it’s on Nike reset the stage and see what happens.
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