The opening: While some retailers, like Under Armour, have followed in Nike’s footsteps by expanding their D2C business, others, like Puma and Reebok, are doubling down on wholesale.
- Foot Locker’s CEO Dick Johnson said in February that the retailer expects its stock of Nike products to “decline meaningfully” going forward as the brand prioritizes D2C, which gives other sportswear companies an opportunity to fill the gap.
- Nike’s move away from Foot Locker opened up about $1 billion in sales, according to Matt Powell, The NPD Group’s senior industry advisor for sports.
- Brands have been quick to take up the slack: In addition to partnering with adidas, Foot Locker is deepening its relationship with Reebok with an expanded product assortment as well as exclusive items.
- Puma’s wholesale business grew by 23.3% YoY to €1.53 billion ($1.81 billion), generating nearly four times the sales of the brand’s D2C segment, per its Q1 earnings report.
Looking ahead: While D2C offers higher margins than wholesale, it also limits the number of channels that brands can sell on, which in turn can curb their overall reach.
- That leaves the door open for challenger brands like On Running and Allbirds, as well as more established companies, to steal market share.
- However, while Reebok and Puma are currently looking to wholesale to drive rapid growth after years spent languishing in Nike's and adidas’ shadows, they too could eventually decide to own distribution once they’ve built a large enough base of dedicated consumers.