Inside Retail - October 11th, 2019

Inside Retail (Oct 11th, 2019)

China/Hong Kong protests deep dive: Nike, Vans, NBA / Victoria’s Secret inclusivity / ‘Jesus Shoes’

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Happy Friday Retail readers.

I'm taking some time today to explain how the unrest in Hong Kong is impacting retailers.

We know China has been an important market for some time in retail, but its value and volatility could cause some serious retail issues.

I devoted the first four items to the Hong Kong protests and its impact on retail.

I to hear from you how the U.S. relations with China have affected your business. Hit reply and let me know.

– Cassidy

1. Nike store managers in China were reportedly sent a memo that told them to remove all Houston Rockets apparel and footwear from their stores in the wake of an anti-government tweet from the general manager of the NBA team. In a now deleted tweet, Rockets GM Daryl Morley said, "Fight for freedom. Stand with Hong Kong." NBA commissioner Adam Silver stood with Morley's right to free speech. Alibaba and have also removed NBA products, as have some of China's largest online sneaker marketplaces. CNBC reported Nike did more than $6.2 billion in sales in Greater China last year. Reuters estimates Nike's NBA business alone in China to be worth $4 billion. As one sneaker reseller told Reuters, "As long as the bosses of Nike and Adidas don’t come out and say something stupid and get banned by China’s central government, I think sneaker resales in China will remain pretty profitable." The NBA held a pre-season game in China between the Lakers and Nets last night. Players were banned from speaking with the media and the game was not broadcast on Chinese tv. - REUTERS

2. Vans removed pro-Hong Kong sneaker design submissions made online as part of a custom sneaker art competition. One Facebook user posted on Vans page that "although sensitive designs may not be accepted, this design was already on your website for voting, not to mention it already got more than 100,000 votes. Vans, an American brand, claimed 'off the wall' but what you are doing now is to suppress the freedom of design and expression, shame on you!" Vans was facing a boycott by the Chinese government if it did not remove the shoe. While Vans are now being pulled from stores in Hong Kong, one Weibo user in mainland China posted, "Please everyone let’s support Vans this time. The Hong Kong losers are starting to boycott Vans, but the mainland market will lift it up." Tiffany & Co. also removed a campaign photo that showed a model holding her hand over one eye which has become a symbol of the protest after a woman was tear-gassed earlier this year. Tiffany reportedly shot the image before the protests. - CNN

3. Chinese brands Anta & Li-Ning ended their sponsorship deals with NBA athletes and people don't seem upset about it. Anta sponsors Klay Thompson of the Warriors and posted on Weibo in Chinese, "we are as shocked and dissatisfied as the Chinese NBA fans! Anta firmly opposes and resists all acts that harm the interests of the motherland, and we will immediately stop renewing negotiations with NBA companies." Li-Ning, who sponsors CJ McCollum of the Trail Blazers, also ended its affiliation with the NBA. One user tweeted that signing with the Chinese companies is akin to "asking their sponsored athletes to become Chinese from a freedom of expression standpoint." Another user was more fired up and added, "we don’t wanna see it on our NBA players!!" - FN

4. Fitbit is pulling manufacturing out of China in January to avoid increased tariffs. Fitbit's CFO said "we have made changes to our supply chain," and that "wearables and smartwatches... will not be of Chinese origin" amid uncertainty over tariffs. The company did not share where it is moving manufacturing, but business has been moving out of China and into Southeast Asia. Countries in the region are cheaper to manufacture in than the U.S. - CNN

5. Victoria's Secret may be legitimately staging a comeback with new inclusive in-store imagery that features both transgender and plus-size models. CEO John Mehas said the new imagery reflects the company's thought process of "how do we evolve [the brand]? And how do we quickly move forward to all the things that we know it needs to be for her?" Mehas did not comment on whether the photos are a one-time campaign or whether it is indicative of a longer-term strategy. VS fell behind inclusive lingerie brands like ThirdLove and even Target, which began marketing to real women with extended sizes. VS hired its first openly transgender model in August and recently announced its first size 14 model with inclusivity-minded British lingerie brand Bluebella. Also, the head of stores at Victoria's Secret announced her resignation. - WWD

6. Over $2.2 million in counterfeit Nike sneakers were seized in the Port of Los Angeles this week. Customs and Border Patrol issued a statement that explained, "The shoes, which arrived in two containers, were misdeclared as “napkins” in a clear attempt to disguise the illicit cargo." The shipment included almost 15,000 pairs of fake Air Jordan 1 Off-Whites, Air Jordan 12s, AJ1s and Air Max '97s among others. Authentic versions of the shoes resell for $1,500-$2,000. CBP was able to catch the shoes because they failed visual inspection and looked janky: Swooshes were falling off and they had poor quality decals using "AIR" trademarks. - CBS

7. LVMH architect Peter Marino partnered with architect Frank Gehry to design a new flagship Louis Vuitton store in Korea. "What struck me when I first visited Seoul nearly 25 years ago was the relationship between the architecture and the natural landscape," said Gehry. The store is in the same location as the original Vuitton and will feature exhibition space upstairs. The store opens October 30 and will showcase eight sculptures by Alberto Giacometti for the opening. - WWD

8. Levi's is struggling with wholesale and is going to open 100 new stores to focus on its direct-to-consumer business. CEO Chip Bergh told investors on a call that whoesale has fallen because of "the overall softness in U.S. department stores and chains primarily due to the well-publicized traffic trends there." Wholesale business accounts for only 30 percent of Levi's total business, compared with eight years ago when it accounted for about half the company's business. - RETAIL DIVE

9. Bed Bath & Beyond hired Target's former executive vice president and chief merchandising officer, Mark Tritton, to be its new president and CEO. Tritton's retail experince includes Nike, Nordstrom, and VF Corp.'s Timberland. He led merchandising at Target for the past three years through the launch of many private labels as well as exclusive designer collaborations. Bed Bath & Beyond is struggling and just recently announced it was closing 60 stores. Tritton's work is cut out for him as the retailer has been unable to compete with Amazon, Walmart, and Target. - CNBC

10. A Brooklyn-based company named MSCHF made $1,500 "Jesus Shoes" and they sold out within hours. MSCHF's head of commerce told the NY Post that "we wanted to make a statement about how absurd collab culture has gotten.” The company took holy water from the Jordan River which was then blessed by a priest and injected the water into the air bubbles in Nike Air Max 97s. The company sent six pairs to influencers and then posted them on StockX, where they received a high bid of over $4,000. - VICE

Written and curated by Cassidy Mantor, a brand storyteller with a decade of retail marketing experience including in-house at Nike and Oakley. Occasionally she writes a “think piece” about fashion law for the American Bar Association. She is happy to be based in coastal Virginia except when there’s a hurricane. She can be found on LinkedIn.

Editor: Bobby Cherry (senior editor at Inside, who’s always on social media).

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