Welcome to the Money blog, a hub for personal finance and consumer news and tips. Read our weekend feature on the fortunes of Nike below and let us know your thoughts in the comments box. We’ll be back with live updates after the bank holiday.
Saturday 24 August 2024 12:28, UK
By Mark Wyatt, Money blog reporter
The trainer market is now more diverse and competitive than ever before, and its biggest player has felt the pinch.
While new brands have been popping up and taking market share, Nike suffered its biggest single day drop in share price on record in late June.
A whopping $28bn (£21.6bn) was shaved off in market capitalisation overnight after the company’s management reported an expected sale drop in early 2025.
But why has this happened?
Nike remains the largest sports retailer in the world and still has the biggest slice of market share. However, analysts say strategic decisions at boardroom level have contributed to a downturn in its fortunes – with consumer concerns and the emergence of new competition also in play.
Shift in strategy
John Donahoe became Nike’s new CEO in January 2020 and was tasked with updating the company’s online operation and bringing in more digital revenue.
Mr Donahoe arrived from one of the world’s biggest ecommerce companies, eBay, and quickly began shifting Nike’s focus towards its digital sales efforts and away from the high street.
Shortly after, the COVID pandemic hit, and the world’s shoppers were forced online whether they liked it or not.
With people not going into offices to work, there was no need to buy smart, formal footwear. Comfortable, everyday shoe sales rose, and Nike’s profits surged past projections.
Everything looked to be going well, so Mr Donahoe doubled down, accelerating the digital strategy and moving Nike out of hundreds of bricks-and-mortar stores.
Soon, Nike had severed a third of its relationships with sales partners.
“The consumer today is digitally grounded and simply will not revert back,” said Mr Donahoe on an earnings call in 2020.
Nike believed they were the ones best able to deliver their vision straight to consumers, and they didn’t need retailers like FootLocker and JD Sports diluting that as middle men.
But as lockdowns ended across the world, people returned to stores and online sales slowed, and the decisions that had been made started to be questioned.
“I think they underestimated the cultural aspect of brick-and-mortar shopping as part of the social life of young consumers,” Daniel Herval, who worked at Nike between 2017-20 on some of its biggest trainers including Air Max, Jordan and Air Force 1, told the Money blog.
“Nike thought people had shifted to online, and they’d left the brick-and-mortar experience behind.
“But as soon as things started reopening, the social aspect of shopping, the community bonding aspect of shopping, returned, and Nike weren’t really there.”
Competition and innovation
Nike’s rivals weren’t going to stand still while this was happening, and sure enough, retailers that had once had Nike shoes front and centre on their shelves looked for other brands to fill the space.
Newer brands like Asics, Deckers Outdoor’s HOKA and Roger Federer-backed On emerged, taking a steadily growing portion of the market share.
And those companies quickly began to show off new ideas, notably in a corner of the market that Nike has long dominated – performance running.
HOKA’s thick foam soles are a huge draw for runners, while On’s well-marketed (and now patented) cushioning system technology has proved popular for casuals and professionals alike.
Nike, it is perceived by some, has lagged behind in the sports lifestyle scene, too. Adidas’s Samba and Gazelle lines, and New Balance’s 990s, have grown in popularity – even then-Prime Minister Rishi Sunak owned a pair of Sambas…
So where has Nike’s innovation been during this time?
The air cushioning inside the soles of trainers – known as the Air Max bubble – debuted all the way back in 1978.
The last major innovation from Nike trainers, according to Mr Herval, was the introduction of their new signature material Flyknit back in 2012.
A survey of US teenagers by Piper Sandler earlier this year backed up the idea that while Nike remains the favourite, it has been losing “mindshare” to innovative brands like Hoka and On.
Nike appears to have acknowledged the problem, announcing a “multi-year innovation cycle” in April.
Two key complaints from the streets
To find out how consumers feel about Nike’s shoes in 2024, there are few better places to go searching than The Basement.
Launched on Facebook over a decade ago, the online group of streetwear fanatics has just over 150,000 members from across the globe and is a go-to authority on all things street fashion, including trainers.
Need to check if the hoodie you just bought on eBay really is a vintage Ralph Lauren? Ask The Basement. Want to launch your own line of bespoke sunglasses but need advice starting a small fashion business? Ask The Basement.
Looking for consumers to tell you why fewer people are buying Nike trainers in 2024? You get the picture.
When we asked The Basement’s members for their thoughts on Nike, there were two issues that came back with almost every response.
The first of those is the price point, which is now largely unaffordable for the exact demographic who historically have bought Nike’s trainers in droves.
Have a look on Nike’s website, and you’d be hard-pressed to find a new-release trainer costing less than £120. Most of the “hotly anticipated” shoes sit between the £150-£200 mark.
For the classic products, like the Air Max 95, a new pair starts at £174.99. Some traditionally cheaper options, like the Air Jordan 1s, are now around £130 on retailers including JD Sports, Size? and ASOS.
“£200 isn’t an accessible price point,” said one member of The Basement. “People have got older and smarter.”
“I worked for a footwear retailer for four years,” said another. “Nike’s biggest killer was easily their price hikes.
“When I started collecting Jordan they were £105, within 10 years the same model is £190 – you can’t justify that!”
The testimonies go on and on. As do those raising consumers’ second-biggest gripe with Nike trainers – quality control.
Anecdotal reports of botched products are not hard to find, with many buyers frustrated that, after spending a lot of money on new shoes, they’ve received trainers covered in glue stains, with mismatched logos, missing patterns, misshaped heels and more among the complaints.
Quality control is a hands-on process that involves both manual and automated procedures, and as such it is not foolproof.
But the sheer number of reports of errors indicates this is not just a few faulty Air Forces.
There are tens of millions of hits on TikTok for the term “Nike quality control” and – spoiler alert – most videos aren’t of people sharing how delighted they are with their new trainer purchases.
“Why would I spend £200 on a pair of Nike trainers that will probably arrive covered in glue stains and break after a month, when I could get a perfect pair of New Balance for £150?” asks a member of The Basement.
“Quality has taken a dive. Anyone who has ever worked for somewhere stocking Nike knows that glue smell off the pallet far too well,” says another.
Bouncing back via Paris
But it’s not all doom and gloom for Nike. There was a golden marketing ace up its sleeve this summer – Paris 2024.
The world’s biggest brands see the Olympics as an opportunity to get in front of a global audience, and Nike is no different. Good publicity and brand image can instil customer confidence and improve share price – getting things right in Paris was key.
The sportswear giant announced prior to the Games that it would be spending more on it than it had for any previous edition.
“This will be the most investment and the biggest moment for Nike in years,” Heidi O’Neill, Nike’s president of consumer, product and brand, told Reuters in April.
Nike secured itself as an official sponsor for Team USA, meaning so long as the athletes performed as expected, the swoosh would be on top of the podium.
And so it was. Simone Biles won three golds in gymnastics, Noah Lyles took 100m glory and swimmer Katie Ledecky featured on the podium four times.
Lifetime Nike endorser LeBron James laced up some very on-the-nose metallic gold style trainers from his own custom LeBron 22 signature line on his way to a gold medal.
And it’s not just while competing that the Nike tick gets its moment. Every US athlete received a special package containing 50 items of apparel, footwear and accessories, including “interview wear” and “village wear” to keep branding visible at every moment possible in Paris.
That was important, because Paris 2024 broke records for its worldwide audience. In the UK, BBC Sport’s coverage of the games was streamed 218 million times, more than double the number recorded in Tokyo.
Across the pond, NBCUniversal’s multi-platform coverage drew in record advertising money and averaged 30.6 million daily viewers.
What did that all mean for Nike? In the opening week of the Olympics, from 26 July to 1 August, it managed to increase visits to its websites, while its direct rival Adidas saw its visits decline compared with the week prior.
Importantly, data from Similarweb also showed that Nike was able to convert a lot of visits to its website into sales. And it did that more than its rivals.
“(Nike is) still a struggling brand overall,” said Drew Haines, the merchandising director at retailer StockX.
“But the Olympics, it definitely drives interest in these things. Nike is the one that’s really winning there.”
Where now?
The marketing boost provided by the Olympics won’t suddenly end all Nike’s perceived and real problems, but it’s clearly a step in the right direction.
Even now, the share price has slowly started to recover, gaining around 14% in the last month following recent investment from US billionaire hedge fund manager Bill Ackman.
“Nike’s ability to just go beyond the pure product conversation, the ability to connect to consumers, is second to none,” says Mr Herval.
“It’s going to take a couple of years. But I truly, firmly believe that the brand is still able to rebound.”
Nike did not respond to a request to participate in this article.
By Jimmy Rice, Money blog editor
A lot of people have been scratching their chins and wondering whether the new government might be overstating the economic mess left by the previous regime.
The accusation, from the right, is that a narrative is being built to justify tax rises motivated not by necessity but ideology.
Data that’s trickled in over the weeks since Rachel Reeves stepped into Number 11 – GDP growth, inflation remaining low – hasn’t always helped the Labour story.
But this week, in the words of data and economics editor Ed Conway, “we had the latest public finances numbers and here the picture is considerably closer to the Reeves version than those other bits of data”.
Government borrowing for July overshot expectations – and the consequences for public services and the tax burden in the October budget now look “grim”, Conway wrote.
He discussed all of this in an episode of the Daily podcast, which you can listen to here or wherever you enjoy podcasts…
Despite warning about the budget, Conway’s sources suggest another route is still being considered by the chancellor, one that involves changing how the public finances are measured and judged. You can read about this here…
We also learned this week of the timeline for new EU visa rules.
UK citizens will need to pay a €7 visa-waiver charge to travel to Europe from next year. The additional charge, which is similar to the US ESTA, is part of a series of new border checks and entry requirements the EU is bringing in.
They’ll apply when entering the Schengen area, which includes EU member states, plus Iceland, Liechtenstein, Norway and Switzerland.
People under 18 or over 70 will be exempt from the charge – as will those travelling to Ireland or Cyprus.
The waiver will last for three years or until your passport expires.
Its official title is the European Travel Information and Authorisation System (ETIAS), and its implementation will follow the introduction of the EU Entry/Exit System (EES). The latter will require people to have their fingerprints registered and their pictures taken on arrival to airports.
Addressing the rollout, EU home affairs commissioner Ylva Johansson said the EES will enter into operation on 10 November while the ETIAS will follow shortly after that in 2025 – likely May.
However, it is thought there could be a six-month grace period before the visas become compulsory – taking it to November next year.
On Friday morning, it was confirmed that the energy price cap would rise in October, with another hike expected in January.
“Unfortunately, a volatile wholesale market, and a country heavily reliant on imported energy has created a perfect storm for fluctuating household bills,” said Dr Craig Lowrey, principal consultant at Cornwall Insight.
He argued that there may be a case for re-examining the price cap system given it’s not protecting households from global energy trends.
A typical annual bill will now be £1,717 from the autumn, with £45 forecast to be added to that in the new year.
Here in Money, we examined football shirt prices as the new Premier League season got under way…
For a fuller understanding of this story, watch this explainer put together by our digital video team…
Three more essential reads from Money that are worth checking out are…
We’re signing out of regular updates now until after the bank holiday weekend – but do check out our weekend read from 8am on Saturday. This week we’re examining whether the Nike trainers bubble has burst.
Lots of stories we’ve covered in Money over the last week or so prompted a flurry of comments. We’ll start with the multiple updates we’ve done on Gail’s…
Some readers were on board with the backlash but more couldn’t see what the fuss was about…
Surprised the faux posh in Walthamstow ‘village’ would baulk at pricey offerings from Gail’s. They already seem quite happy to pay up market prices at their existing Spar store without complaint. Pack of sausages with la-de-da ingredients nearly 6-quid. I ask you!
Keith
Most places would be thrilled to have Gail’s opening. Their food and bread is excellent as is their coffee, they have very attractive décor and bring a touch of class to any high street.
Petalin
We also had a fair few who wondered why we were covering this story at all…
Who or what is Gail?
Alangillie
When did Walthamstow become a ‘leafy suburb’. Thought it was home to East17? And why does this constitute national news? Shops open and close all the time in areas all over the country. Does one of your editors live there and opposes it? I don’t see how this is news at all.
City boy
Sometimes our posts prompt questions rather than comments – such as the one below following our feature on Section 75 consumer rights…
I want to buy a car for £7,000 from a dealership. Have I got credit card consumer protection if I pay half cash and half on a credit card?
Clive Blackpool
The answer is that, yes, you would be protected – even if you just pay 1p of it on credit card. Everything you need to know is here…
Lots of you got in touch following our Saturday feature on how couples split their finances…
Readers shared how they and their partners split things…
We divide all bills more or less equally. He earns a lot more than I do and keeps his money/savings to himself after 50 years of being together. I have absolutely no idea how much in savings he has and he won’t share anything. Yes you are reading this correctly!
CP
100% all money going into one account for bills, disposable income etc – we manage it all on one spreadsheet! Never had a disagreement ever after 13 years and we’re only 30! Can’t ever imagine going for dinner and someone saying ‘I’ll get this’ – how do people do it?
abbie s
My partner and I are discussing purchasing a property together. Our rule will be 50% of the mortgage each regardless of income as we are both 50% owners of the asset. Other bills we’ll just decide based on income.
Adam
I earn a lot more than my partner, so once our relationship was mature enough I put the difference into shared savings. Since having a child all money goes into a joint account except for a small allowance each. Financial equality is so important for a happy relationship.
Linda
It’s simple. I do not know what my wife earns, she does not know what I earn, we have separate [accounts]. We buy what we need and want, when we go out she pays one time I pay next, we do not even look at the bill. That way you have no problems.
Cozy Powell
My partner earns around £60k more than me per year and we split our bills down the middle, however, he buys all the food for us and the pets and generally pays when we go out. I couldn’t ask him for extra, I manage just fine with the current arrangement.
LHam
All outgoing were paid from a joint bank account which we paid into from our personal accounts, salary split at the start was roughly 60/40 so I would pay 60% of the total and my wife 40% (plus 10%), any money left in our individual accounts was our own.
58mprl
The post that led to the most consternation this week concerned the hiking of fines for parents taking kids out of school…
You said…
Why are the government not looking at the travel agents? My partner and I both work in a school. We have no children at school but we have to pay extortionate prices for our time away as we have to go in school holidays.
Tony
If I choose to take my children out of school to go on holiday, because let’s face it parents can save a lot of money when the holiday season is over. I am a single parent with two kids, I’m holding down two jobs.
Andy Henderson
As a teacher, I understand the frustration many parents feel about the extortionate prices of holidays. It’s disheartening to see families AND teaching staff not being able to afford a holiday. I also understand how difficult it is for a child to catch up on missed work.
Mikki
Highly disagree with the term time holiday penalty. There are countries where parents can authorise up to five days of leave per year. A long weekend here and there, or a week-long trip once a year is not going to hinder a child’s prospect!
TermTimeTravel
Starbucks’ incoming chief executive, Brian Niccol, is under fire over the company’s offer for him to commute around 1,000 miles by private jet.
Social media users were quick to criticise the world’s biggest coffee shop chain over the move in light of its sustainability efforts elsewhere, such as banning plastic straws.
Mr Niccol’s job offer said he will not have to relocate to the company’s headquarters in Seattle, Washington, from his family home in Newport Beach, California, when he takes up his new role on 9 September.
Read more here…
Storm Lilian is causing disruption to travellers and festival-goers ahead of the bank holiday weekend.
Two stages at Leeds Festival have closed for the day, the BBC Radio 1 Stage and Aux Stage.
British Airways has cancelled 14 flights from Heathrow and delayed others, while two flights from Leeds Bradford Airport were cancelled and three morning arrivals diverted to Liverpool.
The energy price cap increase has led to renewed calls for a winter fuel payment U-turn.
The government plans to means test the payment for pensioners, making it available only to those receiving pension credit.
But Caroline Abrahams, charity director at Age UK, said this was “reckless and wrong” and “spells disaster for pensioners on low and modest incomes” after the latest bad news for energy costs.
Shein found two cases of child labour in its supply chain last year, the fast fashion retailer has said.
The company’s 2023 sustainability report, published yesterday, said it suspended orders from the suppliers that had employed children under 16.
Both cases had been “resolved swiftly”, it said, with remediation steps including ending underage employees’ contracts, arranging medical check-ups, and facilitating repatriation to parents or guardians as necessary.
“We remain vigilant in guarding against such violations going forward, and in line with current policies, will terminate any non-compliant suppliers,” Shein said in the report.
Shein has stepped up audits of manufacturers in China to assuage criticisms of its low-cost business model ahead of a planned flotation.
It tightened its supplier policy last October after the child labour cases were found, so that any severe breaches – called “Immediate Termination Violations” – would result in ending the relationship with the supplier immediately.
Previously, suppliers such as those that employed minors had 30 days to resolve the issue, failing which Shein would cut ties.
It’s time to check if you have any Tesco Clubcard vouchers close to expiring, as £14m worth are due to run out on Saturday.
Vouchers are only valid for two years from the date they were issued, so it’s worth making sure you don’t have any hidden away in your account.
To check online, go to the Tesco Clubcard website and select “Clubcard account” and then “Vouchers”.
You should then be able to see a table listing your available vouchers and their expiry dates.
If you’re using the Tesco app, open it up, go to “Clubcard” and then to the “Vouchers” section.
What to do with your vouchers?
You can spend your hard-earned vouchers either online or in person.
Alternatively, you can double the value of your vouchers by spending them at Tesco’s reward partners, including Disney+, RAC and Zizzi.
By James Sillars, business reporter
It’s a tentative start to the day’s trading on financial markets with the focus firmly on the United States. Jackson Hole in Wyoming, to be exact.
That is where the chair of the US central bank will make an eagerly anticipated speech in which he is widely expected to signal that the first interest rate cut by the Federal Reserve will come next month.
Jay Powell is, however, expected to temper market expectations for several rate cuts by the end of the year.
That could hamper recent progress against the US currency by the pound, which is currently trading at one-year highs versus the dollar at $1.31.
It could also hurt a rate-sensitive stock market, which is desperate for lower borrowing costs.
As such, the FTSE 100 is trading 0.2% up in early deals at 8,304.
Miners and energy stocks are leading the way on upticks in prices.
Brent crude oil stands at $77 a barrel.
The energy price cap limits what utility companies can charge customers for a daily standing charge and each kilowatt-hour of gas and electricity they use.
Regulator Ofgem releases the cap quarterly and estimates how much the average household would typically pay over a year at the new unit price.
This figure, £1,717, assumes a household with 2.4 people living in it consuming 2,700 kWh for electricity and 11,500 kWh for gas.
The real annual cost per customer will be different depending on how much energy you actually use. If you use more gas and electric than £1,717 buys, you will pay more.
With prices fluctuating significantly at each quarterly release over the last four years, the use of a yearly figure is also quite an imperfect basis for medium-term household budgeting.
Here’s what is actually capped:
Ofgem’s price cap only applies to people in England, Scotland and Wales on standard variable or default tariffs.
This is most households, whether you pay by direct debit or a prepayment meter.
It doesn’t apply to the small numbers of people still on fixed-rate tariffs.
Another quarter, another energy price fluctuation to contend with – another change to make to your household budget.
But there are fixed deals available cheaper than the new price cap, according to Uswitch.
The average household can save £125 against October’s price cap with the cheapest 12-month fixed tariff, said Richard Neudegg, director of regulation at Uswitch.
At £1,592 typically per anum, it would also stave off another small increase expected in January, he said.
It is worth pointing out that it is in Uswitch’s favour for people to move, and a fixed tariff could always end up costing you more if the price cap were to drop below that fixed rate in April and June next year.
“Customers staring down the barrel of winter might question whether the current price cap system is really the best way to put real pricing pressure on suppliers,” said Mr Neudegg.
“It’s important for households looking for certainty to run a comparison to see what’s available to them and see personalised prices based on how much energy they are likely to use.”
Here are the top 10 fixed energy-only tariffs that could help you beat the price rise, according to Uswitch:
Pensioners are being urged to check if they are eligible for the winter fuel allowance after universal payments were scrapped by new Chancellor Rachel Reeves last month.
Previously, the money was available to everyone above state pension age, but now it will be limited to people over state pension age who are receiving pension credit or other means-tested support.
It means the number of people entitled to the money will drop from 11.4 million to just 1.5 million.
The payment is £200 for households where the recipients are all under 80, and £300 where they are over 80.
While around 1.4 million pensioners are already receiving pension credit, there are up to an estimated 880,000 households eligible for the support who are yet to claim, the Department for Work and Pensions says.
The government’s awareness drive will help identify households not claiming the benefit, and encourage pensioners to apply by 21 December – the last date for making a backdated claim for pension credit in order to receive the Winter Fuel Payment.
It will focus on “myths” that may stop people applying, such as how having savings, a pension or owning a home are not necessarily barriers to receiving pension credit.
More information on applying for pension credit can be found on the government’s How to Claim page.
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