Nike needs India’s sneaker heads. But do they need Nike?

Rachel Varghese (0:01)

In 1984 and 85, legendary basketball player Micheal Jordan was playing his rookie season with the Chicago Bulls. He had just signed a deal with Nike for his signature shoe line of his own. But when he wore a black and red pair on court, the NBA or the National Basketball Association sent Nike a letter because the shoe broke the league's uniform rule. So Nike turned that letter into an ad. In its commercial with Jordan, the shoes had black sensor bars on them and a message that said, the league threw them out of the game. Fortunately, the league can't stop you from wearing them.

That is pretty much how the Air Jordan once took off. And even though the details of the story are still debated, it doesn't really matter. The ad worked, and sneakers stopped being just sports gear. It became a symbol of personal style and rebellion, and pretty much kicked off sneaker culture.

For Indians, the sneaker hype took much longer to travel. Growing up, I'm sure sneakers for us were just those white, peaty shoes, probably from Bata. But then, around 2016, stores like Wedge Non-Veg started bringing shoe drops from international brands to India. And by say 2020, people were building their outfits around their Jordans and Sambas. So, when Nike said last week that it's setting up a new campus in Bangalore with employees moving in from around mid-2027, it sounded like a bet on India's sneaker heads. A report from ET quoted the company as saying that the idea is to bring its teams closer to local consumers, and that it sees India both as a growth market and manufacturing hub.

Yet, on its most recent earnings call, the campus was referred to as a capability center. The announcement there centered more on consolidating global operations than deepening its position in India. And of course, there is real growth to chase in India. A business standard report this year puts India's sneaker market at roughly $4 billion according to industry estimates.

A fraction of the $100 billion global industry, yes, but that also means that there is huge potential for growth. Potential that Nike's global peers like Puma, Decathlon, Adidas, and Sketchers have already made the most of. And now, there's homegrown brands like Comet, Gully Labs, and Ten x You that are moving into the market with real success so far. And Nike could really use the kind of growth its peers saw. Last quarter, its revenue fell by 4% to $11.2 billion.

One of the major reasons for the dip was the company's falling position in China, which makes up about 15% of Nike's sales. Also, the company expects a high single-digit dip this fiscal year. So Nike needs a new growth story. And India's still-young sneaker culture could be the answer. And yet, Nike has pulled back from India at least twice before. It closed a good chunk of its India stores in 2016 and canceled plans for a new back office in 2020

Then, this year, it handed its online store over to Nike for operations. And so far, it hasn't announced a single move to design, price or sales specifically for India. Right now, it does look more like it's following other MNCs and treating India as yet another back office. And let's assume that Nike's new campus was all about trying to go deeper into the Indian market. But the thing is, Indian sneakerheads no longer need a Nike the way they used to. Local brands that position themselves as made for India, in India and by Indians are crowding around consumers. And they are using the same tactics that has kept Nike successful for years. Shoes with stories and limited drops. And people are actually lining up. So, if Nike did want to fight for this market, what would it take for it to win?

Welcome to Daybreak, a business podcast from The Ken. I'm your host, Rachel Varghese, and every day of the week, my co-host, Snigdha Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Wednesday, the 7th of October.

In August last year, 200 people lined up outside a store in Bangalore at 8 a.m. on a Saturday. This was Comet's own Nike movement. The line was for its own black and red shoes that it had created with Naaru Noodle Bar, a popular Bangalore ramen spot that's notoriously hard to get reservations at. The shoes also featured a chopstick attached to each side. Utkarsh Gupta, the co-founder, told the print that Comet sold all 450 pairs of the shoe in basically 45 seconds. This, by the way, when the product wasn't even discounted and was sold at a price of 6,000 rupees. In fact, he even shared that the line went by the Apple Store next to Comet's. And when the Apple manager came out and said that there was no launch that day, Gupta told him that the line was not for Apple. That's what sneaker culture has grown to be in India over just a few years. In 2016, when Veg Non-Veg was launched in India by Anand Huja, whom you may know as Sonam Kapoor's husband, it was one of the first multi-brand sneaker boutiques in India. People would actually line up outside the store for exclusive drops. But the premium pieces here were still priced quite high, like the Jordan 1s. For context, the Air Jordan 1 Retro Low OG Band, as it's still called, is priced at almost 15,000 on Veg Non-Veg. Another variant called the Air Jordan 1 Retro High is priced at almost 17,000 on Nike Fashion.