Why Investors Should Pay Attention to Nike's SNKRS App

By Markets Fool.com

Image source: Nike.

Continue Reading Below

The beginning of February saw Nike's SNKRS app release on Android, and the mobile sneaker-store-meets-social-media-platform is worth a look even if you're not in the market for a new pair of kicks.

SNKRS, which launched on iOS in 2015, has reportedly seen an increase in bugs since the Android release, but the app looks like it will be a big asset for Nike if the company can get the platform optimized. Nike commands roughly 90% of American basketball shoe sales, and top marketing and branding have been instrumental in the company's ability to beat its rival Adidas on both volume and pricing strength, while fending off emerging competitors including Under Armour. The platform needs improvement on a number of technical levels, but when SNKRS is running smoothly, it's up there with some of Nike's best marketing.

SNKRS is more than an online shoe store
To the average shopper looking for a new pair of shoes, Nike's SNKRS app probably looks like a sleekly designed online store stocked with high-end basketball shoes. However, the app is much more closely targeted at the sneaker enthusiast, and its function extends beyond the digital storefront. While shoes are a consumer staple, Nike's success in footwear owes a great deal to the lifestyle brand and image that the company has cultivated, and there exists a sizable market of sneaker enthusiasts for whom the next big sneaker release is comparable to the launch of a new iPhone, while acquiring a prized pair of retro shoes is like finding a valuable collectible.

One of the driving forces behind the value of Nike's big basketball shoe releases and past classics is scarcity -- new releases in the Jordan line typically sell out in minutes, and retro shoes can be very hard to come by. A culture has developed around the products that places a premium on fashion and rarity, and the SNKRS app represents an attempt by Nike to further bridge sneaker culture into the social-media sphere. SNKRS allows users to check out the history of shoes and invite friends in addition to purchasing and pre-ordering new shoes and retro restocks, and it encourages the experience to be a communal affair through social-media postings.

Image source: Nike.

Continue Reading Below

The SNKRS app isn't being used to significantly reduce the scarcity of its popular basketball shoes -- instead, it gives users a chance (but not a guarantee) of nabbing desired shoes -- encouraging a degree of competitiveness among users, while also flaunting the demand for Nike's brand. When SNKRS is running properly, it perfectly represents the kind of customer-focused, retail, and marketing strategy that the company has been touting as a sales driver.

A digital-heavy focus has been a part of Nike's strategy for roughly a decade, and its early approach and heavy investment in digital and mobile look to give it an edge over Adidas, which has come to these strategies more recently.

Nike's big digital push could deliver growth in new and established markets alike
Nike has pointed to digital sales and advertising as a major part of its growth story, citing an ability to customize its offerings as a major opportunity, and the SNKRS app is an early indication of the promise in this approach. With its Nike.com main page, Nike+ app for athletics tracking, and special category apps such as SNKRS, the world's largest athletic-apparel company is building the global reach of its brand and products.

Last quarter saw Nike Brand'sonline sales increase roughly 49%on an annual basis, and the appeal of platforms including SNKRS, Nike+, and Nike.com looks like it will ultimately play a significant role in achieving the company's goal of building sales in China and other emerging markets.

The company is ahead of the digital marketing curve compared to Adidas, and this gives Nike added opportunity to wrestle North American and European footwear sales away from its rival, while also scaling to build strength in developing markets. Adidas has lost brand power in America, and Nike's coordinated digital push threatens Adidas's strength in its core soccer wear business. A SNKRS-style app for soccer shoes could be a natural fit for Europe and other markets and help Nike win more mind share in categories and markets where Adidas has a better stronghold.

Adidas isn't ignoring the importance of having a digital presence in attire sales, maintaining its own apps for athletic training and sneaker releases, and in fact, the company's Train&Run app has higher ratings than Nike+ on Google Play and the iOS store, but the overall packaging hasn't been as slick, and the company hasn't been as adept at promoting its digital offerings.

The digital sphere plays a big role in shaping what's cool, and attire companies that best cultivate "cool factor" have a major edge on the competition.

Watch what Nike does with SNKRS
Nike's basketball shoe app is worthy of attention precisely because it''s packed with potential but short on execution. The basic features and design of the app are smart, enticing, and representative of a potentially brilliant marketing evolution, however, bugs and slow load times prevent it from putting the brand's best foot forward.

If Nike can tighten the package and turn SNKRS into the digital center of sneaker culture, that's a very good sign. If not, it may indicate that the company's digital efforts aren't as advanced as it has indicated. A great idea is one thing -- getting it to run well is another.

The article Why Investors Should Pay Attention to Nike's SNKRS App originally appeared on Fool.com.

Keith Noonan has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.