The planet's biggest sporting goods manufacturer (Nike) is planning a massive restructuring of their sneaker manufacturing and marketing operations this year. However, this new drive is also going to lead to redundancies, and according to a report from Quartz, as much as 2% of the company's workforce might have to look for a new job soon.
Sneaker business overhaul
Modern-day consumers are always on the lookout for the latest sneakers on the market, and are prepared to buy them as soon as they hit that market. In such a scenario, it becomes necessary for a sneaker manufacturing giant like Nike to reduce its lead times and ensure that they can cash in on the ever-growing demand for new sneakers.
Additionally, Nike will also reorganize their retail structure and make a larger percentage of their sales themselves instead of through third parties. To that end, the company has decided to establish Nike Direct, a division of the company concerned solely with direct sales to customers. Nike's wholesale partners will also have full access to the range of new features that the company is going to introduce with the launch of Nike Direct.
Yesterday, Nike announced that they are going to put those plans into motion immediately. However, these measures will come at a cost, and it is estimated that there will be job losses to the tune of 2% of the entire workforce at Nike. The company employs 70,700 employees globally and once these new measures come into effect, around 1400 employees will need to start looking for new jobs.
The nature of the jobs that will be cut is unknown at this time. At the same time, it is hard to figure out how these new measures will be linked to the jobs that will be rendered obsolete.
A necessity or cost-cutting?
The proposed job cuts are surely going to be a big talking point. It is quite tough to link the new changes -- including the setting up of a new Nike Direct division -- with the job losses, hence, it is pertinent to ask whether the move is an attempt to cut costs or not.
Nike has been in the middle of a brutal fight for market share with Adidas for many years, while Adidas has steadily raised its Market Share.
At the same time, Nike's sales figures have not increased at a desirable rate, which is why many might think that the decision to let go of 2% of their workforce might actually be a move to balance the books somewhat. We will certainly know more as this story develops.
