Sneaker supply chain issues disrupt another NBA season — Andscape

0

As if hosting The ESPYS, Drake was tossing jokes to a crowd gathered at Nike’s sprawling campus in Beaverton, Oregon, for JDI Day, Nike’s employee-only “Just Do It” event.

“Nike, of course, is synonymous with so many incredible athletes,” the rapper-turned-host told the thousands gathered that September evening. “But in this family, it’s about the next generation of elite talent… That’s why I’m honored to have the privilege of unveiling the two new signature shoes, for Devin Booker and Ja Morant -“

As he lifted a white cloth from the two display podiums – both were empty.

“Supply chain issues,” deadpan Drake to a collective groan.

He was kidding, of course – the 23rd and 24th confirmed Nike signature basketball shoes won’t be unveiled and released until summer 2023 for the Ja 1 and 2024 for the DBook 1 – only he wasn’t.

Most shoe brands operate on a schedule where designs are drafted up to 18-24 months before a sneaker is released, marketing plans are locked in between 6-12 months, and manufacturing windows make up the remaining six months. of the calendar.

Due to factory closures and shipping delays caused by the coronavirus pandemic, the last 18 months have been characterized by an unpredictable product pipeline with ripple effects affecting all aspects of retail.

“You could say that in general, it’s been difficult in our industry to get the right things to the right place at the right time,” Patrik Frisk, then Under Armour’s CEO, said bluntly in the spring.

A year ago, Nike faced a conundrum of compounding problems. The seasons started piling up after the company released statements during earnings calls and privately to retailers in fall 2021 that it would cancel orders placed for the spring and summer quarters. 2022.

With factories closed in Vietnam over a 10-week period, 130 million units were not produced for Nike during that period. (The company then shifted production to China and manufactured up to 30 million units.) For Adidas, nearly 100 million items were not produced in Southeast Asia in the second half of 2021 , according to CFO Harm Ohlmeyer.

As the 2022 holiday season approaches, the situation has changed dramatically. While retailers had largely reopened for in-person customers to start the year, their shelves and warehouses at the start of 2022 remained relatively empty. Toward the middle of this year, delayed late 2021 orders began to arrive alongside rushed fulfillments of fall and holiday 2022 orders.

“As a result, we are faced with a new level of complexity,” Nike chief financial officer Matthew Friend said in a September 29 conference call with analysts.

“We effectively have a few seasons coming to market at the same time,” added Nike CEO John Donahoe.

Essentially, assortments from the Spring, Summer and Fall 2022 collections are hitting retailers at the same time as Holiday 2022 shipments. Nike said its inventory was up 65% in North America and 44% globally. While shoes are often interchangeable with the seasons, clothing merchandising doesn’t work that way. Friend referred to the late arrivals as “late season merchandise,” which forced Nike to start slashing their apparel.

Friend described it as “managing volatility”.

When shipping delays created a domino effect and ultimately affected multiple seasons at once, brands began looking for alternative short-term and long-term logistics solutions.

Shipping times for standard 40ft containers dropped from the usual 40 days to 80 days from Shanghai to the Port of Los Angeles, while costs increased dramatically.

Shipping containers wait to be unloaded at the Port of Long Beach on October 13 in California.

Tim Rue/Bloomberg via Getty Images

To deliver products to consumers in time for the 2021 Christmas season, for example, Beanie Babies’ parent company, Ty Inc., chartered private cargo flights from Asia to the United States at $1.5 million. dollars per flight.

Rather than the expensive charter option, most shoe brands have opted for “air freight” shipping, placing priority pairs on commercial planes at a cost still eight to 10 times higher than shipping. traditional by water across the Pacific, according to a brand source.

The cost of shipping shipping containers has also increased almost tenfold in extreme cases, from a pre-pandemic price of $1,500 per container to well over $10,000 per container at worst. Drewry Supply Chain Advisors, a research firm, compiles shipping price data in its Global Container Index, providing insight into the pressure.

Specifically, a container from Shanghai to Los Angeles would cost $3,283, while a route from Shanghai to New York costs around $7,278. The worst of factory shutdowns, product delays and port closures is potentially behind us, with Drewry noting that container shipping costs have fallen 10% each past week, marking 31 consecutive weekly declines and an overall decline 61% over last year’s prices. .

Under Armor reported flat year-over-year revenue for the first quarter of its fiscal 2023 calendar. The company said lower margins hurt gross profit, which was “primarily due to high freight expenses related to supply chain impacts of COVID-19”. Under Armor said its margins increased from 49.6% to 46.7%, which is not a small gap.

Some brands are considering moving production to handle unpredictable shipping costs. For example, earlier this year, New Balance opened its fifth US manufacturing facility, an 80,000 square foot space an hour north of its Boston headquarters, aiming to add 750,000 production pairs.

Brands are also changing release dates to make the most of ongoing delays.

Portland Trail Blazers star Damian Lillard played just 29 games in his 10th pro campaign last season. He last appeared on December 31, 2021, with lingering abdominal tension requiring surgery in January that would eventually sideline him for the rest of the season.

Due to factory and shipping delays, only two colorways of its Dame 8 sneaker were released during the 2021-22 season. These delays would have stalled Dame 9’s eventual launch, likely long after its comeback campaign.

Thus, the six-time All-Star, its representation Goodwin Sports and Adidas met last spring in Portland to change strategy. They would use Dame 8’s delayed inventory and position it as their signature sneaker for the upcoming season rather than continuing to be at the mercy of shipping and production delays.

Along with receiving a signature sneaker, one of the biggest accomplishments as an endorser is having a player appear on the cover of SLAM magazinethe annual print issue of KICKING which leads to each new season. When Lillard appeared on the 25the problem of KICKING a few weeks ago, the white and gold shoe he was brandishing stood out. It was the Dame 8, which Adidas officially unveiled on December 15, 2021.

Extending its eighth model’s schedule also allowed Lillard to add more storytelling for the upcoming season.

“I literally had this idea,” he said. SLAM early in the summer, alluding to this spring meeting. “It’s called ‘Shit Gina.’ I had a bunch of 90s themed ideas and it’s called ‘Damn Gina’ because I was a big fan of the show Martin. I was born in the 90s and I always made a shoe that was a nod to my mother.

In years past, the “Gina” theme took on a light mint hue, her mother’s favorite color. This season, the tribute to her mother will overlay triangles and squiggles seen in the show’s title font.

Portland Trail Blazers goaltender Damian Lillard wears the Adidas Dame 8 Big Mood during the game against the Sacramento Kings on Oct. 9.

Rocky Widner/NBAE via Getty Images

Adidas’ late 2022 retail plan includes summer inventory and additional colorways. These releases include Lillard’s Dame 8 sneaker in at least a dozen colorways, which will coincide with his return to the floor for the Blazers.

For now, brands are optimistic that the current NBA season will be the last to be affected by the pandemic-delayed schedule for nearly three years.

Friend said the company hopes inventory levels and production times can “stabilize” in 2023.

If so, Morant and Booker could reveal their eventual signature sneakers on time and on schedule.

Nick DePaula is a footwear industry and lifestyle writer at Andscape. The Sacramento, Calif. native has been based in Portland, Oregon for a decade, a primary hub for the sneaker company’s headquarters. He’ll often say that How To Lose a Guy in 10 Days is actually an underrated movie, largely because it’s the only time his Sacramento Kings have made it to the NBA Finals.

Share.

Comments are closed.