Why the Revelation of Nike’s Supposed ‘Boys Club’ Culture Won’t Kill the Brand

Back to back departures of top executives and an exposé in a national news publication — detailing multiple incidences of misconduct against women — isn’t likely to take down Nike Inc., according to experts.

The firm has shouldered internal upheaval in recent weeks — starting with the highly publicized exit of brand president Trevor Edwards, who, by many accounts, was next in line to succeed chairman and CEO Mark Parker. That news preceded several unexpected and high-profile exits as well as multiple reports describing allegations of harassment, a toxic workplace environment (for women) and a quiet, female-led revolt.

Just today, the company confirmed that four more departures are no longer with the company: Steve Lesnard, VP and GM of running; Helen Kim, VP and GM of Nike East for North America; Simon Pestridge, global VP of marketing for performance categories; and Tommy Kain, Nike’s director of sports marketing.

But, a quick glance at both Wall Street and overall consumer sentiment shows hardly a sign that anything is amiss.

For the most part, analysts have avoided the subject of Nike’s internal issues, and the firm’s stock has remained relatively stable.

Meanwhile, consumers have not initiated a widespread boycott. Furthermore, a report by YouGov BrandIndex this month indicated Nike’s consumer brand perception has largely held steady over the past several weeks, following an initial sharp — but short-lived — drop in mid-March when stories of the brand’s corporate “boys club” first emerged.

And despite the fact that women were supposedly on the receiving end of the alleged mistreatment at the brand, YouGov found that women consistently had a more favorable view of Nike than men during the tumultuous period.

While it’s difficult to fully explain the public reaction — or lack thereof — at least one school of thought is that Nike’s relationship with women was fairly weak to begin with.

“What’s really intriguing is that Nike was a little late to the game in embracing women as a key market demographic. A lot of their early efforts seemed to miss the target in terms of bonding with women in a strong way,” explained Deb Gabor, CEO of Sol Marketing. “To some extent, they’re coming from a deficiency in terms of their commitment to women.”

In other words, since Nike is just beginning to build its relationship with women, there wasn’t much to lose in the first place and the brand could be better positioned to start over with this group. (The label had been stepping on the gas to target women recently, unveiling in February “Nike Unlaced” — a digital-first retail concept to bring female shoppers a dramatically expanded offering.)

When news of Nike’s internal misconduct initially cropped up in March, there was some chatter about a boycott among small cohorts on Twitter. But as B. Riley FBR analyst Jeff Van Sinderen pointed out, such reactions could remain subdued and short-lived if the brand reacts tactfully.

“At the end of the day, any lasting impact, positive or negative, will be determined by how any given company handles issues that arise,” Van Sinderen said. “In most cases, if a company does the right thing to course correct, that can actually have a positive impact longer-term and we need to keep that in mind.”

Several experts have suggested that Nike’s swift reaction — to oust the alleged troublemakers and their enablers and explicitly state its intention to prevent future infractions — set it up for a favorable long-term outcome. (For example, Nike recently promoted two women to higher-ranking roles. It named 13-year veteran Amy Montagne as the new VP and GM of global categories and Kellie Leonard as its first-ever chief diversity and inclusion officer.)

What’s more, with its roster of superstar athletes — including LeBron James and Serena Williams — and its broad spectrum of product lines and consumer touch points, Gabor posited that Nike is perhaps too omnipresent to make a boycott feasible.

“Nike is a highly diversified business,” Gabor said. “They have lots of different product lines; they have lots of different markets that they’re in; and they have a stable and strong brand that is consistent and delivers on its promises across categories, whether its golf, running, hockey or whatever.”

Then, there’s the brand equity component.

“The ultimate goal for brands is to create this condition of irrational loyalty,” Gabor said. “When that exists, even if the brand were to do something really horrible to you, you would still feel like you were cheating on it if you were to choose something else. And in many circles, Nike enjoys that level of loyalty among its customers.”

Not to mention — although The New York Times gleaned some potentially damaging details in its report this month — there remains a dearth of information, names and faces to put to the victims of supposed misconduct, giving consumers very little to get riled up about. (Nike CEO Mark Parker also reportedly told employees last week that departures stemming from its investigation into misconduct would conclude this week — which could quell additional headlines in the weeks to come.)

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