As COVID-19 Pokes Holes in Nike's Supply Chain, Retailers Pay the Price
Though the COVID-19 pandemic irreparably altered the fashion industry, from in-person events to brick and mortar retail, it might seem like business as usual from a consumer standpoint: drops are still happening, collections are arriving in-store.
Behind the scenes, though, there's a dire supply chain crunch that we've only just barely begun to face head-on.
There's inflation across the board, for instance, as global trade continues bearing the brunt of pandemic-wrought squeezes. We haven't even really felt the full effects of the Suez Canal fiasco that happened earlier this year.
As such, everyone from Supreme to Nike is tightening their belts for imminent shortages and shipping delays leading to declining revenues in 2022.
Nike actually revealed initial concerns about supply chain issues in an earnings call a few months ago, so it shouldn't come as a surprise that there may be some abridged launches next year.
"We’ve already lost 10 weeks of production and that gap will continue," said Chief Financial Officer Matt Friend in the call, explaining that Nike expects to stabilize its inventory by 2023.
In the meantime, though, the sportswear giant's retail partners are apparently going to take it on the chin.
On November 23, Sole Collector General Manager Brendan Dunne tweeted a screenshot of a form letter than Nike sent out to one of its many stockists reporting cancellation of Nike Futures orders — basically, all of the forthcoming goods that the retailer ordered months ago — for Spring and Summer 2022, plus the remaining Holiday 2021 items.
Highsnobiety reached out to Nike for further clarification and Dunne, who confirmed the letter's veracity.
It's not clear which Nike tier this retailer belonged to — Even after it departed several mass market outlets, Nike still sells to a mix of large chain stores and exclusive boutiques — or if the product limitation will affect Nike's own stores.
I wouldn't expect an immediate shortage of Air Force 1s or a lack of DryFit tees but this could foretell a shortened supply of drops in coming months or perhaps even price hikes to justify a lack of supply.
Pure speculation, of course, but it's all likely to play into Nike's hands in the long run, even if retailers are more likely to feel the heat.
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