MONEY BAGS

Nike’s multi-billion-dollar empire is built on air

Obsession
Fashion
Obsession
Fashion

One of the main pillars propping up the nearly $100 billion business of Nike—the world’s largest sneaker company and arguably its most valuable footwear and apparel brand—is air.

Encapsulated, pressurized, and housed in the sole of a shoe, Nike’s Air—which is really nitrogen, to be specific—creates a cushion that gives runners a soft, bouncy footfall. Since Nike’s first shoe with an air-sole unit, the Tailwind, went on sale in 1979, the Air platform has supported generations of different sneakers and billions in sales. But the most ingenious thing Nike ever did with it was 30 years ago this year, in 1987, when Nike first made its Air technology visible in the sole of a new running style, the Air Max 1.

shoes-pop-on

As Nike releases the latest version of Air Max, the much-anticipated Air VaporMax, that simple idea to show the technology remains powerful, even as the technology itself—essentially a polyurethane bubble inflated with gas—has lost its novelty. In its 30 years, the Air Max franchise has been one of the most successful in sneaker history, and helped propel running shoes into the realm of fashion. As much as any performance benefit it offers, Air Max’s success has been driven by how it looks.

Now, as Nike fights to keep its rival Adidas from further eroding its controlling marketshare in the US and beyond, it’s counting on Air Max, once again, to do its magic.

Nike Air VaporMax Flyknit
The VaporMax, Nike’s next generation of Air. (Nike)

The best ad is the product itself

Nike calls the VaporMax the pinnacle of Air, the culmination of decades of design evolution. And Air, says Kathy Gomez, Nike’s vice president of cushioning innovation, is “one of the foundational ideas at Nike that we’ve built on for footwear.”

The original idea, though, wasn’t Nike’s. An inventor named Frank Rudy brought the notion of putting small airbags in a shoe’s sole to the company in 1977, and Nike co-founder Phil Knight later took a sample pair of air-cushioned sneakers out for a run. Nike was sold. It steadily integrated the idea into its products over the years that followed, including the Air Force 1, the basketball shoe Michael Jordan wore before Nike launched his Air Jordan line in 1985.

It was evident even then that the concept of Air, and the way Nike could use it to evoke emotion in its marketing, would be of paramount importance to Nike. But the technology itself was hidden from view within the sole.

The idea to expose the innards of the sneaker was the brainchild of now-renowned designer Tinker Hatfield, who had begun his career as an architect. He was inspired by the Centre Pompidou, the modern-art museum in Paris whose creators left its interior architecture exposed to maximize the space inside and to show onlookers its different mechanical and structural systems. Hatfield adapted the notion to the Air platform, resulting in the Air Max 1.

General view of the Paris skyline, the Saint-Merri Church (front) and the Centre Pompidou modern art museum, also known as Beaubourg, on July 5, 2013.  REUTERS/Philippe Wojazer (FRANCE - Tags: SOCIETY TRAVEL) - RTX11DIC
The Centre Pompidou modern art museum, which inspired Nike designer Tinker Hatfield. (Reuters/Philippe Wojazer)

Hatfield’s visible airbag had two benefits, Gomez says: First, it allowed Nike to use a much larger bubble and less foam in the sole than previous sneakers, making the shoe lighter; second, it made the technology believable, and instantly communicated how it would feel to wear it. The story goes that the marketing side didn’t like the idea of a sneaker with a hole in its sole at first. But the design became as identifiably Nike’s as the brand’s trademark swoosh.

“Air went public, in a way,” says Yu-Ming Wu, founder of the rapidly growing sneaker convention, Sneakercon. “That really put them on this course to dominate sneakers.” He notes that the 1988 Air Jordan III followed Air Max’s lead and used the line’s first visible air bubble.

Unlike most running shoes before it, the Air Max 1 also featured bright red or blue accents that popped, even from a distance. It looked different than anything on the market.

Nike launched a campaign to convince the world that Air was a revolution in cushioning. Spurred by a resurgence in running, sales took off.

Over the years, the Air Max line has remained the most iconic embodiment of Nike Air, and the company has put out one update after another, modernizing the shape and look each time. In each new sneaker, the airbags in the soles have gotten larger, occupying more of the sole, while the foam portion has receded. In 2006, Nike got rid of the foam entirely with the Air Max 360, leaving a sole that was purely airbag.

The VaporMax continues down that path. The outsole is integrated directly into the airbag, which has been whittled to just the essential parts, leaving a series of semi-freestanding tubes. Much like the original Air Max 1, its appearance conveys its own story: The sole looks soft, bouncy, and flexible, which is how Nike wants it to feel.

“I would say fundamentally we want to build products that communicate to athletes without any help,” Gomez says. “And we feel like when we present Air in an intuitive way, when you can show it, when you can see it, then you intuitively know what it does.”

Nike VaporMax sole
A series of tubes. (Nike)

Performance sneakers, or something else?

“My dad used to run marathons when I was a kid, and he ran them in Air Maxes,” says Jordan Geller, who once held the Guinness record for the world’s largest sneaker collection: the open-to-the-public Shoezeum, which Geller has now mostly sold off. “The Air Max 180, which came out in 1991, was his favorite running shoe.”

In the years since, performance has arguably taken a backseat in the line’s appeal. Runner’s World, for instance, didn’t include any Air Max sneakers among its top running shoes of last year, and many runners have gravitated toward minimalist shoes that mimic the feel of barefoot running. (There are conflicting points of view on whether more cushion or less is better, but one scientific review of the research concluded you should ignore fancy technology, trust your body, and pick what feels most comfortable.)

At this point, however, most of the people buying Air Max sneakers probably aren’t running in them anyway. Particularly in the US, everyday clothing continues to take more influence from sport, and as Hatfield himself admitted recently to W Magazine, most people buy Nike products “just to look cool.”

Nike was already leaning into the fashion appeal of its sneakers in the late 1980s, after it launched Air Max. Hard as it is to believe now, it was Reebok that actually dominated the global sneaker market for much of that decade. Within a few years of entering the important US market, the UK-based brand was besting Nike at selling to the “leisure sportsperson,” according to a 2013 report by Samsung Economic Research Institute, which charted the rising and falling fortunes of the world’s sneaker makers through the decades.

The history of the sneaker market
Nike retook the top spot in the global market in the late 1980s and hasn’t relinquished it since. ("Athletic Footwear Warfare: Surviving in an Oligopoly," by Samsung Economic Research Institute)

What helped Nike turn its business around were the Air Jordan and performance-driven shoes, such as the Air Max 1, mixed with a keen understanding of how to sell its products as fashion. In a 1989 story about Nike reclaiming the top position in sneakers from Reebok, the New York Times credited the addition of “fashion-based marketing to the advertising mix,” and noted that Nike was releasing new Air-soled sneakers every few months that changed only in color and cosmetic elements.

The look of Air Max helped propel athletic shoes into mainstream fashion. “The impact of the Air Max line has been huge, and not just for running shoes, but for really all sneakers,” Geller says. “Before Nike started making bright shoes with the Air Max and with the Air Jordans, athletic shoes were very simple and plain, and they looked similar,” he says. “They didn’t have these real bright, vibrant colors that popped and got your attention the same way that they did after the Air Max came around.”

The Air Max display at Shoezeum
The history of Air Max Geller housed at his Shoezeum. It’s chronological, running right to left and top to bottom. (Jordan Geller)

Give the customer what they want

That emphasis on style as well as performance remains critical at Nike, and the new VaporMax reflects it. Nike developed it as a running shoe. It’s meant to take the cushioning and resilience of Air Max but remove the bulk, stiffness, and weight from previous models to deliver a lighter, bouncier package.

But the shoe is also definitely meant to look good, as both CEO Mark Parker and brand president Trevor Edwards emphasized on a recent earnings call with investors. Nike even debuted a laceless version on the runway at Paris Fashion Week in October 2016 that it created in collaboration with innovative Japanese fashion label Comme des Garçons, suggesting the VaporMax can fit with high fashion as much as it does with gym clothes.

PARIS, FRANCE - OCTOBER 1: A model walks the runway during the Comme des Garcons designed by Rei Kawacubo show as part of the Paris Fashion Week Womenswear Spring/Summer 2017 on October 1, 2016 in Paris, France. (Photo by Estrop/Getty Images)
The debut of the VaporMax on the runway in Paris in October 2016. (Getty Images/Estrop)

Nike has obsessed over the color choice of the debut model for every new version of Air Max. Each serves as a “reset” of the franchise, according to Andreas Harlow, vice president and global creative director of Nike running, and becomes a defining signature of the style. These updates have kept the series fresh and in demand, long after the idea of visible air ceased to be feel new.

“Think of the Air Max 90 with the infrared, or the 95 with the grey tones and the green,” Harlow says. “Even the 97, which is metallic silver.”

The Air Max 180, 95, and 97
The Air Max 180, 95, and 97. (Nike)

Yu-Ming Wu cites that infrared color as one of the most influential Nike has ever launched. “The Silver,” meanwhile, became the unofficial name of the 97 in Italy. Riccardo Tisci, an Italian native and the recently departed creative director of Givenchy, as well as a Nike collaborator, recently told WWD (paywall), “If you didn’t have them, you were considered a loser.”

Whether consumers recognize it consciously or not, those colors are meant to communicate as well. In the platinum that the VaporMax will debut in, Harlow says everything is meant to appear fluid and transitional, without any hard contrasts. “We did it on purpose to make sure the shoe looks smooth and kind of cloud-like and airy,” he says.

But Nike is already teeing up launches of other colors. Fashion requires options, after all. People may buy the shoe for running, or they may buy it for running errands. For it to be a success in 2017, it needs to work for both.

Nike and its shareholders are hoping the VaporMax will breathe some life into Nike’s sales. In the last year, Adidas has outperformed it in the US, Nike’s home turf and the largest, most important sneaker market in the world. The German company has won largely with new products, such as its Boost platform, and by delivering on the all-important fashion aspect. Performance sneakers are in a soft patch at the moment—especially basketball, one of Nike’s core categories.

Nike's recent product innovations
Nike is ready for a refresh. (Screen capture from Credit Suisse's note to investors)

VaporMax will be Nike’s first big product innovation in five years, and Credit Suisse noted in a note to investors that Nike’s new product lines emphasizing technology “serve as powerful vehicles to inspire consumer refreshes (especially when combined with Nike’s $3.5B annual marketing budget).”

More than advertising, or celebrity or athlete endorsements, what sells sneakers is a great product, and that’s what Nike needs to deliver for the VaporMax to be a hit. Today, that means a shoe that takes technology a step further, but that also fits the lifestyles of shoppers.

“In this current era of running shoe design, the notion of transitioning from one activity to another is more prevalent than it has been in the past, when sneakers were primarily just for running and they weren’t used for lifestyle,” says Harlow. “Now it’s just part of the zeitgeist, part of culture.”

The Air Max helped launch that current era.

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