Nike sells millions of shoes and shirts in a variety of retail stores ranging from Foot Locker to J.C. Penney, but the company is rapidly boosting its direct-to consumer business, bypassing retail stores. This forward integration strategy has hundreds of retails stores upset with Nike, as the firm’s business on the Nike.com website rises 50 percent in many quarters. By 2020, Nike projects that its direct sales to consumers will exceed $16 billion annually and account for one third of the company’s revenue. Many sportswear chains, such as City Sports based in Boston, are enduring declining sales and profits, largely due to manufacturers such as Nike increasingly selling direct to consumers. The three largest publicly traded U.S. athletic retailers, Finish Line, Foot Locker, and Dick’s Sporting Goods, the percent of their merchandise that comes from Nike is 73, 73, and 19 percent respectively – making even large firms critically vulnerable to Nike’s new strategy.

Based on: Sara Germano, “Stores Race to Reach Consumers,” Wall Street Journal, December 28, 2015, B7.