Deal Between Nike and Amazon Scares Sporting Goods Chains
On Wednesday, Goldman Sachs said it believed this deal would give Nike more exposure to the huge customer base and retail channel of Amazon, especially millennials.
Products made by Nike can be found already on Amazon’s subsidiary Zappos.com while its shoes as well as apparel are found across sellers who are third parties on the Amazon site.
Goldman believes this deal will give Nike more control over its brands presentation.
However, investors were more interested in the pull of Amazon, which helped to send shares of Big 5 Sporting Goods, Dick’s Sporting Goods, Finish Line, Hibbett Sports and Foot Locker all plummeting between 5% and 7% in Wednesday trading.
It is the third sector in under a week that has been hit over fears that Amazon would become a disruptive force in the near future.
Amazon announced last Friday it was acquiring Whole Foods which helped to pummel shares of many grocers such as Kroger.
Retail clothing businesses, already being hurt by the shift of consumers to shop online, took a big hit on Tuesday when the online e-commerce behemoth unveiled its Amazon Wardrobe program for members of its Prime subscription plan.
Wardrobe creates an at home dressing room, allowing Prime customers to make orders online with no money in advance, keep the product one week and send back what they do not want in a postage-paid, re-sealable box.
The hurt in other sectors has spread into sporting goods chains on Wednesday on the report by Goldman Sachs.
Not much is needed to spook investors when it comes to sporting goods. The years from 2008 forward following the Great Recession have not been good.
MC Sports, Sports Authority, Eastern Outfitters and Sports Chalet all have filed for bankruptcy protection since that time.
Those remaining in the industry hope some of the competition will be eased through a sector wide consolidation.
The sale of goods made by Nike, the footwear and sporting goods giant, on Amazon will not likely make it any easier for other sports footwear and apparel retailers across the industry.
This could be just the start of other big names joining forces with Amazon as the online giant continues to grow and grow.