Nike Case Study: When Dropping a Limited Collection Makes You A Luxury Brand

In today’s fashion market, brands are developing new and innovative approaches to marketing their collections at the turn of every season. 

Fashion has always demanded creativity, but it’s not only expected from brands to be imaginative only in the development stage of their collections, they need to be trailblazers when it comes to their “go to market” strategies as well.

In this post, we’ll explore a new approach to marketing sports apparel that can help your streetwear brand gain the attributes which are often associated with luxury brands. Despite being cheaper products to manufacture, sneakers can be sold as luxury, timeless items if managed correctly. 

To see how this is done, let’s look at Nike. 

Nike has always been a visionary brand when it comes to communication, and more than that is has been spearheading a distribution strategy based on artificial scarcity and exclusive distribution. This made Nike sneakers the ultimate collection kick. 

Apparently, this seems to defy the principles of luxury management, but on the contrary, using exclusive distribution strategies can really influence your customer’s perception of value.

Let’s see in more detail how all of this makes sense.

How Streetwear Brands are Adopting Exclusive Distribution to Enhance the Brand’s Experience

Let’s start by clarifying the value that streetwear brands deliver to customers. 

It can be argued that traditionally, customers would be expected to purchase streetwear for two reasons: comfort, and technological features. These types of benefits would be normally associated with what in marketing we call “functional needs”. 

Functional needs simply suggest that customers are buying a product for its more tangible, physical features. Nothing wrong with that.

There’s only one problem. Fashion products that are sold only for functional needs often have the lowest profit margins. 

This is because the fashion industry is aspirational and ideally, customers want to buy fashion products for one of two reasons: fitting it or standing out

Fitting in means, showing belonging to a group, just like when you buy a tuxedo for a gala dinner. 

Standing out means the opposite, finding a way to differentiate yourself, by dressing in a glamorous or stylish way. It can also be both, with more understated looks that still convey class and belonging as in the case of conspicuous austerity

So how does Nike fit into this framework? 

Well, thanks to the “Just Do It” campaigns, we may want to buy Nike products to show our belonging to the category of great athletes or to celebrate sportsmanship. This message works great for our “fitting in” needs. 

On the other hand, however, what can the brand do to allow a little bit of standing out too? 

You guessed it. Limited edition collections. 

This makes a lot of sense, as in line with Jobs to Be Done Theory, there are two additional needs customers satisfy by buying products in the market: social needs and emotional needs. 

A limited-edition collection can help with both, as an exclusive collection drop can provide us with the social benefits connected with owning a pair of sneakers that are really hard to come by, therefore making us unique. 

But that’s not it. What if we were to also make the experience of purchasing the product meaningful and memorable. What if we could make the product acquisition experience challenging enough to test customer’s loyalty to the brand? 

There is a way and, yes, you guessed it, it involves limited edition collections. 

By overcoming some – manageable – hurdles the experience of purchasing snickers will provide an additional emotional reward and a story of pride and resilience to tell to your friends. 

This approach is textbook experiential branding and it can make your brand gain an edge beyond your competition.

According to our analysis, based on the application of the Jobs to Be Done framework, we can see how limited edition “collection drops” can be an interesting and innovative approach to tapping into new experiential dimensions of retail. 

If you’d like to read more about the “jobs” that customers are looking to get done by purchasing products and services, you may want to read up an article on “Jobs to Be Done Theory”.

Let’s now move forward to see how all of this fits into the models of a luxury brand. 

Artificial Scarcity Is Your Best Friend

Now that we’ve clarified how the Nike collection drops “check all the boxes” when it comes to fashion distribution models, we can progress to analyze other luxury dimensions that the brand is able to fulfill. 

In the previous paragraph, we explored the brand’s experiential dimension, we’ll now look into scarcity, timelessness, and investment value.  

Scarcity

Luxury is not for everyone, if something is for anyone then it can’t be luxurious. Nike’s ability to adopt luxury distribution strategies for its collection drops allows the brand to provide a sense of scarcity that can ignite customers’ desire to purchase. In this case, Nike is not using scarcity as luxury brands usually do, as the products are in a limited number only because of a business decision. Nonetheless, customers do feel that they get a once-in-a-lifetime opportunity to buy a unique product. 

Timeless Beauty

As these collections embody the spirit of the time, it’s very likely that they will retain a lot of value, as they will be sought after and chased down by brand-loyal customers. As a result, despite these products being connected to a short distribution window, they may end up becoming old-time classics for decades to come. This is an innovative dimension for sports apparel as sportswear is usually very trend-sensitive.

Investment Value

As the emotional drive to buy limited edition collections bypasses normal shopping behaviors, the price customer are prepared to pay is higher than average. Moreover, due to the fact that limited edition collections have high resale value, customers find it may be well worth it to spend some extra money to purchase items that are highly sought after in pre-owned and second-hand markets.

Conclusions: The Collection Drop as A Distribution Model

As a result of what we’ve been discussing in our post, we’ve seen how arguably, collection drops could very well become a fully-fledged distribution model capable of overcoming the Fall\Winter and Spring\Summer seasons. 

Launching new products under different distribution strategies and business models is a great way for a brand to enrich its collections with luxury associations and differentiate collections focused on different markets.  If you’d like to learn more about collection differentiation through the use of the business model portfolio, in this post we’re looking at a different case study focused on the Armani collections.

There you have it. In this post, we’ve looked into how Nike has been able to use limited-edition collection drops to promote luxury goods within its collection lineup. As we’ve seen from our analysis this distribution approach can be considered very innovative, as it is capable of influencing the sales of limited collection drops, as well as re-defying the overall distribution strategy of your fashion firm. 

If you’d like to explore further the dynamics of luxury and retail when it comes to streetwear brands, don’t hesitate to look into our blog, where you can find plenty of resources on fashion marketing. Enjoy!

Was This Helpful? 🤓 

Nike Case Study: When Dropping a Limited Collection Makes You A Luxury Brand Are collection drops the key to making your streetwear brand luxury? Let's look into the way Nike is able to use exclusive distribution to create timeless sneakers.
5 1 5 1

Sources and Further Research

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest

MORE ARTICLES FROM OUR BLOG