Why Nike’s Least Comfortable Shoes Could Be Its Most Profitable

Nike Follows Form

Brands are racing towards the metaverse, but how many are actually doing their homework? Chris Ward is Draw & Code’s creative production designer and he argues that Nike is set up well to embrace this emerging and evolving trend.

Form follows function. This is an axiom you probably have heard of. The term coined by Louis Sullivan was derived to state that an object should work correctly before its aesthetics should be considered. 

Everyday objects embody this completely. Your front door, which you walk out of everyday, may be gilded in gold or simply carved from timber but whatever its looks it still lets you out of the house whenever you need to. This ideal can undoubtedly be seen in the rise of Nike. Their sportswear has continually pushed itself to be on the cutting edge of performance technology. From the original waffle sole to the Vaporfly Next% which allowed Eliud Kipchoge to break the two hour marathon barrier; Nike pushes the boundaries. 

Therefore it is no surprise that Nike’s next foray is to transition its sportswear into the virtual world via the ‘metaverse’. The metaverse, in its current iteration of the term, is an all encompassing notion for what comes next for the internet, but could be thought of as explorable worlds all interconnected, much like a persistent video game. 

This doesn’t initially appear as a space in which a sportswear company can thrive but this isn’t Nike’s first foray into the digital domain. Even as early as 2004, their collaboration with Gran Turismo 4 on a virtual car for the game highlighted Nike’s interest in the virtual realm and when analysing what was recently filed by Nike at the US patent and trademark office it starts to shed some light on how they want to further these previous ideas.

‘Downloadable virtual goods’ and ‘non-downloadable virtual footwear and clothing for use in virtual environments’ are amongst the terms being used by the sports giant. This isn’t the concept of the metaverse as a marketing piece, filing patents around these concepts appears to signify an intent to develop a monetised presence in virtual worlds.

From these filings it is clear to see that Nike has its eyes firmly fixed on the digital domain being the next field to attract customers into its fold of brands that includes Jordan, Converse and Hurley. Being able to sell virtual goods such as sneakers and clothing to the consumers of the metaverse.

The idea of selling virtual clothing within games is not a new one, most recently Balenciaga had a crossover with Fortnite where you could buy real copies of the digital clothes that were designed for the game. Interestingly the clothing within the game differed from the real items that could be purchased; Balenciaga’s virtual designs must not have been functional in the real world to sell to consumers. So in this case, the virtual world allows for function to follow form and it’s in this idea where Nike can capitalise.   

The Air Jordan 1 is probably the most recognizable shoe in the world. The iconic Nike tick which sits upon that familiar colour blocking has remained fairly untouched since 1985. Yet, arguably, the silhouette is as popular today as it ever has been with the Jordan brand achieving a record revenue of $3.6 Billion in 2020. However, as the sneaker has remained fairly untouched since, it is uncomfortable in respect to today’s comparable alternatives. And people are still buying the item in their masses. Its form has outlived its function.

Nike has achieved something with its branding and design whereby the need for function is irrelevant in comparison to what the sneaker says about the person wearing it. Just in this shoe alone, Nike can see that their brand is strong enough to convince people that a shoe from the eighties can be more desirable than anything else on today’s market. It isn’t the function that has sold it, it is the form.

As with the apparent unproducible Balenciaga X Fortnite collection, in the virtual world the function doesn’t matter, only the form. Expect savvy metaverse studios to be courting all the high-end fashion brands with their presentation decks being hastily updated to reflect the Balenciaga and Fortnite collab.

Nike and the Metaverse

Form therefore will become the main selling point within the metaverse as these shoes do not need to be in any way comfortable. This lends itself nicely to the existing back catalogue that Nike has, as previously explored with the Air Jordan 1. Not only this, it will allow Nike to push into new frontiers of aesthetic design, just as it previously had done so with its function, by creating sneakers that couldn’t exist within the real world. An example of this can be seen in the work of Buffalo London and The Fabricant, where they created a flaming shoe that could be worn only in instagram posts for €25 per post. 

From the outside, this seems like a huge price to pay for something that isn’t tangible. Yet this idea is found across video games from Fifa to Fortnite; in-game purchases of customisable items are commonplace. On this wavelength, Nike knows how to sell desirability in the physical world better than most other companies.

By creating more demand than supply, the perception of their shoes is that they are unobtainable. This is named ‘manufactured demand” and is the ideal of creating wanting for what you cannot have. Where this desirability can be bridged between the real and virtual is through NFTs or non-fungible tokens, which is a way to track digital ownership, albeit a polarising one. 

Nike have expressed their interest in using NFTs as far back as 2019 when they filed for the ‘Cryptokicks’ patent. This allowed them to track sneaker authenticity with the use of blockchain systems. With Nike already having an understanding of how this field works, it is not unreasonable to assume that they could intertwine this technology with the virtual objects they have recently filed patents for. If they were to do so this would open up an entirely new market to them; the aftermarket.

As previously stated, Nike has created a strategy around finely balancing supply and demand to keep consumers wanting their products. This has in turn created a secondary market where sneakers are resold at vastly higher prices than their recommended retail price.

However, this is simply a market that Nike makes no money from, it only causes it to exist. NFTs would offer Nike a slice of this pie, by tracking ownership of an individual item whether that be physical or virtual, it allows the owner to take a cut of further sales. For one artist this allowed them to make an extra 10% of their yearly earnings due to other people selling the item. Therefore if the sportswear giant employs the same strategy for selling virtual sneakers and preserves the scarcity, they will not only profit off the initial sales but also from the secondary market. 

As a company in a capitalist society, profit is the driving factor and there is one large rationale of Nike moving into the market of the metaverse that has been omitted so far; manufacturing. With the traditional way of selling physical goods, these need to be designed, then materials sourced, then manufactured, then shipped to the shops and finally they may end up in the hands of the consumer. That is probably missing quite a few steps in that condensed sequence as well.

Yet in the realm of the virtual the item needs to be designed and then uploaded, reducing the costs massively. Nike can remove the need to create thousands of sneakers, when they could design one and just sell that. This in turn, would have a positive effect on the environment and society, reducing the need for the processing of materials, the use of questionable labour practices and the shipping of goods themselves.

Whether this would be an actual strategy of turning to the metaverse or just a happy coincidence is something that should be questioned. And how that all plays with the NFT world’s struggle with sustainability is also another question to be asked.

Nikes shift towards the metaverse is a shrewd one. By moving into the virtual realm, they will be able to create a lineup of products that can rely on its strong brand history and progress its design strategy without being hindered by reality or being concerned about function. The ability to instantly upload designs to consumers will remove its manufacturing costs, while serendipitously creating a net positive for the environment.

Lastly, through the integration of NFT technology, Nike will finally be able to create a secondary market that it can still profit from long after the initial sale while maintaining the scarcity and hype around its goods that are seen today. Consequently, this new market will put Nike in a position where their least comfortable shoes will be their most profitable.

And if Nike are going to the trouble of filing patents and developing metaverse-based concepts, you can be sure their rivals and many other consumer brands working with metaverse studios are pursuing the same aims. 

https://www.linkedin.com/in/christian-ward-architecture/

Phil

Phil

I’m the resident head of comms and partnerships here at Draw & Code. I work on strategy, sales, marketing and other vital areas at a studio that was founded on a dream and has spent the intervening decade trying to make that dream come true. I believe that immersive and interactive technologies are impacting on our lives and being in the epicentre of this industry makes every day a thrill.
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