Nike

Nike's digital sales fell 15% year-over-year in Q3 fiscal 2025, the fifth consecutive quarter of decline. Direct-to-consumer revenue dropped 12% to $4.7B, driven by both the digital collapse and a 2% decline in store sales. The company that spent years pushing DTC from 32% of revenue in 2019 to 44% in 2024 now faces the biological consequence of overspecialization. When you adapt too narrowly to a specific niche, environmental shifts become existential threats. Nike optimized its entire organism for DTC dominance, cutting wholesale partnerships and directing product allocation to owned channels. Then consumers shifted shopping behavior, wholesale partners lost patience, and competitors filled the abandoned retail space. The strategic mistake wasn't pursuing DTC. It was eliminating redundancy.

China reveals the compounding failure. Greater China revenue plunged 17% in Q3 fiscal 2025, with Nike Digital down 20% and Nike-owned stores down 6%. Local brands Anta and Li-Ning gained share (19% and 9% respectively in 2023) while Nike slipped from 25% to 24%. CEO Elliott Hill admitted "it's clear we need to reset our approach to the China marketplace." In biological terms, this is frequency-dependent selection failing. Nike's strategy assumed its brand strength would compound in China as it had elsewhere. Instead, nationalist sentiment and genuine product innovation from local competitors shifted the fitness landscape. Nike's adaptations, optimized for Western markets, became liabilities in an environment that values different traits.

The "Win Now" strategy launched in late 2024 attempts recovery by rebuilding wholesale relationships and diversifying beyond hero products. Hill targets three countries—USA, China, UK—and five cities with localized approaches. The Icon Studio in Shanghai will design "of China, for China" campaigns starting 2025. In North America, Nike wholesale grew 24% in Q2 fiscal 2026 as the company reversed its anti-wholesale stance. This is adaptive radiation in real-time: recognizing that a single strategy created vulnerability, Nike now pursues multiple approaches simultaneously. The biology: species that occupy many niches survive environmental shocks better than specialists. Nike forgot this in its DTC obsession. The question is whether wholesale partners will forgive fast enough, and whether China's Icon Studio can rebuild relevance before local brands complete their displacement.