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Nike pulling out of SearsNike chooses not to have

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Nike chooses not to have its shoes sold at Sears By Becky Yerak Tribune staff reporter Published May 4, 2005 Nike Inc. said Tuesday that it will stop selling its athletic shoes to Sears Holdings Corp., prompting speculation that the shoemaker does not want its brand sold in Kmart stores. The decision by Nike is a setback for Sears--which has long carried a wide array of both national and exclusive brands--as well as to Kmart. Sears Holdings was formed in March after the merger of Sears, Roebuck and Co. and Kmart Holding Corp. Nike will stop delivering its products to Sears stores in October, although the contract with Sears expired earlier this year. The Beaverton, Ore., company had sold its gear at Sears since 1999 after allowing the relationship to lapse through much of the 1990s. "We were surprised, and although we're disappointed we respect their brand decision," said Sears spokeswoman Lee Antonio. Nike called the move a "brand management decision" that was part of the "normal process of reviewing accounts." A Nike spokeswoman declined to elaborate. Nike decided to stop selling to Sears to prevent it from putting the brand in Kmart stores, according to a report in Brandweek magazine, citing anonymous sources. Retail observers had different opinions on why Nike, which of late has had success with its pricier sneakers, would opt out of selling to the nation's third-biggest retailer, with $55 billion in annual sales. "My guess is they don't want the products they sell to Sears to be distributed through Kmart because Kmart is not, at least in their view, consistent with what Nike means," said Edward Fox, marketing professor at Southern Methodist University. Indeed, J.C. Penney Co. has openly discussed how such brands as Ralph Lauren and Tommy Hilfiger have spurned them in the past, requiring Penneys to develop its own labels. Another possibility: "They're using this as an excuse to stop selling through Sears," Fox said. "They're using the affiliation with Kmart to say Sears is no longer consistent with the upbeat, youth-oriented image that Nike wants to maintain." Sears continues to sell such national shoe brands as New Balance, Reebok, Skechers and Adidas. And it's not giving up on Nike. "We plan to continue talking with Nike as our customers feel strongly about the Nike brand," Antonio said. When the merger was completed, Sears Holdings Chairman Edward Lampert was excited about the possibilities of extending the reach of various Sears brands, including into Kmart stores. "We don't have Craftsman, Lands' End, Kenmore, DieHard," said Lampert, referring to exclusive Sears brands. "Even brands like Champion, Adidas, Nike and Reebok." In March, Nike started selling shoes--without its famous swoosh logo--at Wal-Mart Stores Inc. Nike bought the Starter brand of sneakers last year to sell into lower-end retail stores. Another retail observer said Nike likely acted largely to keep the peace with specialty retailers such as Foot Locker. "They have thousands of stores in malls," said Howard Davidowitz, chairman of retail consulting firm Davidowitz & Associates. Selling to discount chains away from malls would cause a "riot," he said. While Kmart has been hoping to get its hands on some of Sears' brands, and in fact has put Kenmore appliances and Craftsman tools in some stores, plans also are under way to convert hundreds of Kmart stores into a new format called Sears Essentials. Sears Essentials will sell everything from appliances to milk. "When you go off the mall, if you pose as a discounter, you'll have a problem with brands," Davidowitz said. "Normally discounters don't care about brands because they're too expensive. If Sears goes off-mall and starts to discount Nike, it would be a catastrophe for Nike. "Nike and other brands have to tread carefully because it'll hurt the brand name with regular customers." ----------
post #2 of 3
Nike's actions are somewhat outdated.  The rules of retail have changed to the point that any store within reason is capable of selling any commodity brand in the customer's eye.   I think if I were Nike, I would have renegotiated Sears's account terms to state that Sears would explicitly not sell Nikes at Kmart stores, but I would have offered the company the Dunkman, Shaq, or Starter brands for Kmart, since Nike owns them all.
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Quote:
I would have offered the company the Dunkman, Shaq, or Starter brands for Kmart, since Nike owns them all.
They probably didn't want to tick off Wal-Mart.
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