Nike's sneakers are killing culture, says CEO

High heat, hype is killing culture and consumers are migrating towards New Balance and smaller, independent brands. That was a line from an internal Nike NKE presentation last week lamenting the performance and perception of the company s shoe release software, SNKRS.

The internal meeting, whose contents were obtained by Complex, addressed problems that some Nike users have with SNKRS, like limited drops and lack of fairnesses for new releases.

During the meeting, our community is becoming disenfranchised by our low fairness numbers, SNKRS Global VP Ron Faris said according to Complex. They re near the mid 20 s, as they need to be in the 80 s. More: Brooklyn Nets decision to bench Kyrie Irving until he is vaccinated could cost the all-star guard $15 million.

Hundreds of thousands of would-be shoppers enter some of these shoe raffles on SNKRS, and most are unsuccessful. The lack of perceived fairness for shoe and apparel releases on SNKRS cannot simply be dismissed as disgruntled customers upset that they didn t secure a sought-after product — the odds actually are not in their favor.

According to the company, every user attempting to get a pair of sneakers on the release day does not have equal chances. Nike oftentimes gives exclusive access to highly sought-after shoes to Nike customers who use their app more.

During the earnings call in September, Nike said these are its most deserving shoppers.

This is important because shoes, such as the recent Nike Dunk Low Off-White x Nike on Price Up to $110 for example, can be purchased from Nike, but can be resold on the secondary market for hundreds more due to limited quantities.

See also: The ex-horseman sued Nike for $20 million to $200,000 over abuse allegations.

While rival brand Nike has seen an uptick in popularity in recent years with releases like the New Balance 550 and the New Balance 990 v3, it is still nowhere near as popular as New Balance. Nike does more than double New Balance’s profit margin in a single quarter.

Nike s first quarter revenues rose 16% to $12.2 billion, from $10.6 billion a year ago. The Nike stock rose 2.09% on Wednesday is up 22.22% over the past 12 months compared to the S&P 500 SPX, which is up 23.5% over the same period.