Are Nike and Adidas too dominant?
Mike Ashley calls for investigation into sportswear giants' supremacy
The dominance of sportswear giants Nike and Adidas has been put under the spotlight after Sports Direct called for a Europe-wide investigation into the two firms’ high-handed practices towards retailers.
In a statement, Mike Ashley’s retailer said: “The sports industry has long been dominated by the ‘must-have’ brands such as Adidas.”
These brands “hold an extremely strong bargaining position” with retailers and their supply networks, the statement said, accusing them of using their market power “to implement market wide practices aimed at controlling the supply and, ultimately, the pricing of their products”.
Sports Direct said it objected to practices such as “segmentation policies” that “restrict the range of products available to retailers”, the withdrawal of the supply of products and “in most cases, an outright refusal to supply”.
The statement said Sports Direct “believes that the industry as a whole would benefit from a wide market review by the appropriate authorities in both the UK and Europe”.
The statement came after a report that Nike has warned independent retailers that it will stop supplying them within two years because their sales methods were “no longer aligned” with the US company’s own strategy.
The Sunday Times said the move has “thrown the future of dozens of independent retailers into doubt”. A source told the newspaper: “All those companies that built a business on the back of Nike and Adidas are toast - there’s no way they can replace that [business]”.
Nike and Adidas jointly raked in about £50bn of sales worldwide last year. However, their tight control of the distribution of top-tier products is set to come under scrutiny from the Competition and Markets Authority, as part of its review in to JD Sports’ acquisition of smaller rival Footasylum, The Times reports.
A Nike spokesperson told the BBC that the company “continually evaluates the marketplace and competitive landscape to understand how we can best serve consumers”.
It adds that: “As part of this, from time to time we do make adjustments to our sales channels, in order to optimize distribution.” Adidas has yet to comment.
–––––––––––––––––––––––––––––––For a round-up of the most important stories from around the world - and a concise, refreshing and balanced take on the week’s news agenda - try The Week magazine. Get your first six issues for £6–––––––––––––––––––––––––––––––