The Kicks You Wear, Vol. 310 — A slowdown is coming 💰
People are closing their wallets and the brands are about to feel it
Goooood morning, family. Welcome back to the Kicks You Wear. Thank you so much for rocking with me this morning. I appreciate you.
Hope you had a fantastic weekend and have a great week ahead of you. It’s kind of trash that weekends are only two days, isn’t it? We deserve more down time. Sigh.
Anyway. Let’s jump in.
Priorities, priorities…
We’re entering the fourth quarter of the year and, normally, this is when people start spending big. The holidays are coming. Big sales are coming. The new calendar year is here.
What’s happening: That’s probably not the case this year. People’s wallets are going to be tight at the end of 2023.
The Federal Reserve released an economic report last Wednesday, according to CNN, indicating that post-pandemic consumer spending was finally beginning to slow down.
The why: A few factors are at play here.
Student loan spending is coming back. For the first time since 2020, student loan borrowers (including myself!) have payments due. And, in many cases, they aren’t cheap.
Plus, there’s still the factor of inflation. Rates across the country are still pretty high. August’s 3.7 percent rate in 2023 is far lower than the 8.3% in the same month last year. But it’s also much higher than it was in, say, 2019.
On top of that, the social safety nets the pandemic created that allowed people to save money have been removed. Now, most Americans outside of the wealthiest 20 percent of the country have less cash than they did when the pandemic started, per Bloomberg. People’s savings have depleted.
So now what: The spending stop will stop for most people. When that happens, the brands are going to feel it.
Every brand won’t be impacted in the same way. People will always find ways to shop with their personal favorite brands like Nike, Adidas and the like.
But fringe brands will suffer. People will forgo that cool pair from their second or third favorite company. The “others” that we always talk about like Hoka, Asics, New Balance and more might see thinner profits because of it.
The big picture: People have to do what they have to do, though. The belt tightens a bit more. People are having to make choices — do I pay these bills or go on vacation? Do I have enough for this pair of sneakers or is this grocery money?
That’s real life for a lot of people out there. Folks have to prioritize given the state of our economy where regular people can’t just have nice things.
It was fun while it lasted. What a shame.
Speaking of Nike…
It looks like a slowdown in consumer spending won’t impact much of what the swoosh is doing at all.
The state of play: Nike held its first quarter earnings call on Thursday and things were looking up. Nike missed revenue expectations but still painted a positive picture through the rest of the year.
The brand cut down on another 10 percent of its inventory, further thinning the glut of products it’s been sitting on over the last couple of years.
On top of that, it’s business overseas in China is booming. Sales in the country increased by another 5 percent. This builds on the 16 percent in China from the previous quarter.
Plus, Nike is linking back up with some of its retail partners as it peels back on direct-to-consumer.
The big picture: This is what I meant by every brand not being impacted in the same way. Nike’s outlook here as the leader in the sneaker world is going to be different from, say, a New Balance because of its already established dominance in the industry.
Consumers will always go back to what they know when its time to tighten the belt. You’re going to trust the brand you’ve leaned on for years way before you trust the one you just started trying out.
Because of that simple fact, the net Nike casts becomes so far-reaching, that it should theoretically be able to offset most slowdowns.
But…We’ll see how long this rose-colored picture keeps its shimmer. While investors do love it when brands put on these strong fronts, we still have to see how all of this plays out.
North America is still Nike’s biggest market by far. If there is a major slowdown in spending from the North American consumer, that impact will be immense.
What destroying your brand looks like
This is what it looks like when your entire brand has to change because you decided to wild out.
What happened: Ja Morant is suspended for the first 25 games of the NBA season because of his gun play.
Remember, he was caught twice in the span of just a few months brandishing a couple of firearms that led to this suspension.
It led to speculation about the future of his signature shoe line and whether it could potentially be taken away.
The sneaker didn’t get taken away, but the vibe is definitely different now. The bravado and brashness it once sold are now being erased.
His latest shoe coming out this week previously included the phrase “we ain’t ducking no smoke,” which doesn’t sound too menacing in a vacuum. It basically means “We’re not scared of anything.” It’s common in sports especially.
Buuuut… given Morant’s previous transgressions, Nike opted to remove the language from the shoe and replace it with a logo.
It’s kind of a shame this has to happen because it feels like it takes a bit away from the sneaker. When you’ve made the mistakes Morant did, though, this is what happens.
Canelo Alvarez’s sweet custom boxing boots
One of my favorite things over the last few months has been looking at the boots that boxers wear in the ring. Some of them are so fly.
That’s the case with Canelo Alvarez’s custom joints that we wore in his fight against Jermell Charlo. Here’s a look, via Nice Kicks.
Yeah, man. After looking at these joints it’s pretty clear Charlo never stood a chance.
What’s droppin’, bruh?
New Balance 990v4 MiUSA “Black & Grey” — Tuesday, October 3
Concepts x New Balance 998 “C-Note” — Thursday, October 5
AMBUSH x Nike Air More Uptempo “Lilac” — Friday, October 6
Puma MB.03 “LaFrance” — Friday, October 6
Air Jordan 6 “Aqua” — Saturday, October 7
Thank you so much for rocking with me today, folks! I appreciate you. And, also, thank you for referrals! I appreciate that you guys love the Kicks You Wear so much.
Let’s chat again on Friday. Until then, folks. Peace and love. Be safe. Be easy. Be kind. And we out.
-Sykes💯
Just a note, inflation didn't rise 3.7% in august, that's the overall inflation rate for the past 12 months ending this august. In August inflation was 0.6%. And if you look at the CPI minus energy and food prices (which they do because those prices are volatile and will change significantly independent of inflation), it was 0.3%, which is the same as it was in august of 2019.