Why Is Nike Falling Behind? Don't Trust the Easy Answers

The U.S. running shoe market was valued at $12.9 billion last year, and athletic footwear sales grew 13% in the first half of 2026. Yet Nike failed to capitalize on that growth the way rivals like On, Hoka, and Brooks did — Brooks' revenue grew 14% in the first half of this year. Meanwhile, Nike's stock hit a 12-year low, partly following a downgrade from a JPMorgan analyst.

Nike's decline has become a convenient explanatory device within marketing circles: some pin it on a failed direct-to-consumer (DTC) strategy, others on weak product development or underinvestment in brand advertising. But all of these explanations overlook fierce competition in China, longstanding supply-chain problems, and a growing field of competitors in local markets. "There's more at play here than one element of a simple marketing formula," says Shane O'Leary, former chief strategy officer at Droga5 and GroupM. "This is just a small piece of the bigger picture."

The "Consumer Direct Offense" strategy launched by former Nike CEO John Donahoe — a sharp pivot toward direct sales, followed by a retreat back to second-tier wholesale retailers — consumed so much of the company's time and resources that, per JPMorgan's estimate, it will continue to weigh Nike down for at least another two years. "It's hard to overstate how much infrastructure, time, and attention it takes to point an entire company at building a DTC business, and then swing back the other way to a hybrid model," says Justin Cox, chief strategy officer at ad agency MSQ North America.

The pivot to DTC also pushed Nike away from the partners who had been converting brand strength into actual sales. According to Platform13 founder Leyla Fataar, those relationships were more than commercial arrangements — they functioned as part of Nike's "cultural intelligence system": "When you remove the people and places closest to culture, you lose not just distribution but the ability to see what's actually happening."

At the same time, the way brands engage with sports stars has fundamentally changed: superstars now run their own media operations, and cultural influence increasingly forms within tight-knit communities with their own influencers. "Nike built its brand on star athletes and powerful creative storytelling — back then, athletes needed both the brand and the advertising," Cox says. "Now [athletes] don't need Nike to tell their story."

Interestingly, the 2018 decision to back Colin Kaepernick, while it did cost Nike some goodwill among certain consumers — a Morning Consult survey found positive sentiment toward the brand among Republican voters dropped to 73% in September 2018, with purchase intent falling to 54.8% — had fully recovered by March 2025. So Nike's core problem clearly isn't that political episode.

The real cause is the expanding range of choices in front of shoppers, and where they're now buying. As the team led by Hill works to rebuild the brand's shelf presence, Nike's share of the running shoe market fell to 22.9% last year — with new competitors that entered the market earlier in the decade proving far quicker than Nike to adapt to centers of cultural influence, including running clubs. "We drastically overestimate the real power of advertising," O'Leary says. "It's not called 'soft power' for nothing."