If NFTs are Passé, no one told Nike

This week, Nike completed its first public sale of non-fungible tokens under its own brand, showing that web3 may be down, but not out.

The sneaker giant never used the term “NFT” ahead of the launch, instead describing them as virtual creations. But NFTs, as in unique blockchain-based assets, are exactly what Nike’s new creations are. Based on publicly available blockchain data, Nike sold more than 97,000 of its tokens to nearly 53,000 members of its web3 platform, .Swoosh. That might not qualify as a blowout win. There were a little more than 106,000 boxes available. But it’s a debatable success at a time when the NFT market is still well below its late 2021 highs and many are questioning the future of the technology.

What shoppers bought were digital sneakers they can open in the near future to reveal a virtual shoe inspired by Nike’s Air Force 1, called Our Force 1. Each is priced at $19.82 — a reference to the year of the Air Force 1′s debut — Nike collected nearly $2 million in sales.

For a company that reported $12.4 billion in revenue last quarter alone, that’s barely enough to register. But the sale was just the start of a larger plan to expand Nike’s influence into new digital realms, and it illustrates how NFTs can still offer a way for brands to build and connect with a community — if they do it right.

Prior to the sale, Nike spent months building awareness and educating its customers about what the .Swoosh is, hosting sessions on the SNKRS app and live events in select cities around the US. It emphasized aspects such as co-creation opportunities and the inspiration behind its virtual shoes, leaving out the crypto jargon.

Not all brands may go to the same lengths, but when dealing with what is essentially a new product category unfamiliar to customers, taking the time and care to explain the benefits can make a difference. Nike, like others, uses the platform as a loyalty program where members will have access to special products and experiences, even indicating that their digital goods may be used in video games in the future.

The company seems to be trying to deliver on that last promise already. The day after the sale ended, Nike announced a partnership with EA Sports, publisher of wildly popular game franchises such as FIFA and Madden NFL, saying the tie-up will give .Swoosh members a new way to express their personal style, suggesting that they might be able to use Our Force 1s in EA’s titles somehow. Additional details will be revealed in the coming months, Nike said in a release.

Instead of targeting crypto faithful, as its subsidiary RTFKT has done, Nike went after its most loyal fans and made it easy for them to participate. Instead of letting them navigate the process of setting up a crypto wallet, Nike automatically created one for anyone who signed up for a .Swoosh account. It sold Our Force in dollars, not cryptocurrency, and at an affordable price too. When Adidas launched its NFTs in 2021, they cost the equivalent of around $800 at the time. Adidas brought in more money in the first place, but it also led some to treat NFTs as a speculative asset – something Nike explicitly said they wanted to avoid – and created expectations of rewards that could be difficult to satisfy.

Nike’s dive into NFTs was not flawless. An early access sale planned for May 8 had to be pushed back a week. When it was published, the page crashed, forcing Nike to extend its availability window. The general access sale that began on May 24 encountered its own technical difficulties. This type of wrinkle remains common in web3 and creates a frustrating customer experience. Brands still have work to do to even them out.

Meanwhile, Nike has company trying to keep the web3 dream alive. Rivals such as Adidas and Puma continue to invest in their web3 projects. In March, Gucci signed a multi-year partnership with Yuga Labs, the company behind web3 projects like Bored Ape Yacht Club, indicating a long-term commitment to the space. And Prada has just entered its second year of NFT drops as part of the Timecapsule range. (Outside of the fashion world, Starbucks continues to forge ahead with its own NFT loyalty program.)

Some of the shine may have come from these efforts as the crypto market has struggled and the tide in technology turns toward generative AI, but they reveal that companies still see value in web3 technology. For Nike, the hope seems to be that the .Swoosh will bring its members further into Nike’s ecosystem of products, online as much as offline, and help them develop new relationships through digital goods. Members tend to spend more, after all, and as virtual spaces like video games continue to attract more users, it can’t hurt to find ways for fans to bring Nike products into them.

THE NEWS IN BRIEF

FASHION, BUSINESS AND ECONOMY

Lululemon Beats Expectations, Raises Full Year Outlook. The activewear brand’s revenue rose 24 percent year-over-year to $2 billion, reflecting growth driven by China, new categories and a new loyalty program.

Farfetch shuffles new Guards Group, off-white leadership as co-founders leave. New Guards Group co-founders Davide De Giglio and Andrea Grilli are leaving the company, owner Farfetch announced Thursday.

LVMH hails plans for Rodeo Drive hotel after local opposition. While some votes remain to be counted, LVMH confirmed that two measures on the Cheval Blanc Beverly Hills project have fallen short by a “narrow margin”. The final results will be certified on June 2.

Capri cuts revenue forecasts as US demand falters. Michael Kors’ parent Capri Holdings Ltd cut its annual sales forecast on Wednesday as demand for handbags and shoes weakens in the United States, sending shares down nearly 9 percent in early trading.

Nordstrom Beats Quarterly Sales Estimates as Demand for Apparel Holds Up. Nordstrom Inc beat market estimates for first-quarter sales on Wednesday as demand from affluent shoppers moderated a broader, inflation-driven decline in spending on clothing and accessories.

Macy’s falls after cutting outlook as demand trends worsen. Macy’s Inc. said earnings will be weaker than previously expected for the full year, underscoring uncertainty surrounding U.S. consumer spending through the rest of 2023.

Retailer Asos falls after FTSE 250 drop. Asos, the British online fashion pioneer valued at more than £7 billion ($8.8 billion) just over two years ago, has been demoted from the FTSE 250 index of mid-sized companies, illustrating the sharp decline in its fortunes.

Walmart sticks with Pride merchandise despite Target controversy. “We have items that we sell throughout the year that support different groups,” Walmart sales manager Latriece Watkins told reporters Wednesday. “In this particular case, we have not changed anything in our range.”

Swiss watch exports to the US suffer their first decline in two years. Monthly exports of Swiss watches to the United States fell for the first time in more than two years, signaling a slowdown in demand from the biggest market for expensive watches.

British shop price growth hits a new record high. British retail price growth picked up this month, reaching the highest rate since industry records began in 2005, a survey showed on Tuesday.

The EU Parliament supports company checks of suppliers for human rights violations. Parliament voted 366 to 225, although an attempt to strengthen the commitment of company boards and directors to ensure compliance with the new law failed.

Turkey’s garment industry outlines the president’s post-election priorities. The country’s runoff election ended on May 28 with incumbent Recep Tayyip Erdogan securing a second term, prompting calls for economic stability from sector leaders in the fashion manufacturing hub.

Africa’s best clothing retailer reports a decline in earnings and a change in management. Pepkor Holdings Ltd. replaced the head of its Ackermans unit after Africa’s biggest clothing retailer suffered a slump in the first half of the year as it failed to get the summer fashion mix right.

Stop dumping your cast-offs on us, Ghanaian garment traders tell EU. With 100 tons of Western clothing thrown away every day in Accra, “fast fashion” brands must be forced to pay for the suffocating textile waste they create, environmentalists say.

The beauty business

Guerlain launches hair care range. It comes as the brand sees consumers investing more in hair products and scalp care, said Cecile Koenig, Guerlain’s director of international skincare marketing.

HUMAN BEINGS

Edward Enninful will step down from his role as British Vogue’s editor-in-chief next year. Enninful will transition to a new global advisory role, while “having the freedom to take on broader creative projects,” he said in a memo to employees.

Farfetch shuffles new Guards Group, off-white leadership as co-founders leave. New Guards Group co-founders Davide De Giglio and Andrea Grilli are leaving the company, owner Farfetch announced Thursday.

Ann Demeulemeester confirms Ludovic De Saint Sernin’s exit, and names new designer. The brand named Stefano Gallici as creative director after Ludovic de Saint Sernin left the brand over “different visions” with owner Claudio Antonioli.

Nike appoints Jared Carver as Converse CEO. The veteran executive, formerly vice president of the Nike-owned brand’s North American operations, will succeed Scott Uzzell as president and CEO, in the latest move in a broader leadership shakeup at Nike.

Bally design director Simone Bellotti was promoted to lead the studio. Bally is hiring from within following the departure of former creative director Rhuigi Villaseñor earlier in May.

MEDIA AND TECHNOLOGY

Vogue The world goes to London in September. Condé Nast will stage the second edition of Vogue World in London this autumn. The event will take place on September 14 at London’s Theater Royal Drury Lane, and will act as an unofficial kick-off to London Fashion Week.

Compiled by Sarah Elson.