Competition Commission probes Nike after retailers’ replica Bok jersey scrum

Want to get into the spirit of the Rugby World Cup 2023 and need a fresh replica jersey? You might struggle to find an authentic Nike Springbok Rugby replica jersey because they are only available in limited quantities at a tiny selection of outlets.

Due to rights issues, only a small number of retailers are allowed to stock them and, in South Africa, that means the SA Rugby Shop, Total Sports, Studio 88 and Sportsmans Warehouse. 

Nike – the sole manufacturer and distributor of the official Springbok Rugby jersey – permits only selected outlets to stock the rugby replica goods. 

The Competition Commission has now launched an investigation into the global sportswear giant after independent retailers complained about Nike’s refusal to allow them to sell official Springbok Rugby replica jerseys.

The independent sportswear suppliers have not been named – apparently out of fear of victimisation – reported SABC Sport. 

They have accused Nike of violating the Competition Act by agreeing to exclusive distribution of the shirts with only certain retailers – a restrictive arrangement its predecessor, Asics, did not have during its partnership with SA Rugby. 

The commission’s Siya Makunga confirmed that they had launched an investigation, but could not comment further. The new complaint was lodged on 5 September.

Protecting the brand

Meanwhile, the South African Rugby Union (SARU) has moved to protect the Springbok brand. On 15 September, it secured an interim court order restraining Eskort’s “Springbox” marketing campaign.

SARU has also closed online retailers of counterfeit apparel, who have tried to cash in on Rugby World Cup fever.

Rian Oberholzer, CEO of SA Rugby, warned: “We will do what we have to do to protect our rights and those of our highly valued partners, who are being shamelessly ambushed right now.

“We cannot allow companies to flagrantly leverage their brand off the back of the Springboks brand when our real supporters in corporate South Africa – who enable us to put the Springbok rugby team on the field – are paying for the rights to use our IP.”

The new deal

Last year, after SA Rugby’s contract with Asics expired, the team announced it had signed a six-year contract with the American brand to supply the Boks playing kit and other apparel, including the "Nike hyper jade" away jersey.

The deal, which includes the 2023 and 2027 Rugby World Cups, will see the Nike “Swoosh” reappear on the Springbok jersey. Nike was the team’s apparel partner once before, between 1996 and 2003.

Read more: Visit our Rugby World Cup hub for the latest news, fixtures, pools and player stats

At the time, Jurie Roux, the CEO of SA Rugby, said: “We enjoyed a great relationship with Asics and really appreciate the contribution that the company made over the past eight years.

“It’s always sad to see a valued partner depart but we understand that business strategies shift over time and we wish Asics well in its continued journey in South Africa.”

The Nike-branded official Bok jerseys were revealed in July 2023. 

Independent retailer Dirk Klopper of Kloppers Sport – who is not involved in the latest complaint to the commission – lodged a complaint in 2019 after Nike sent independent stores like his a letter informing them that it would be closing their accounts because they didn’t fit the profile. 

“We were discontinued as a stockist of Nike products in 2019, after 30 years of stocking their product, growing their business and were suddenly informed that we don’t meet the criteria of Nike’s business strategy going forward and so we can’t stock Nike products,” Klopper explained, saying the decision to distribute only to larger stores was tantamount to bullying. 

In his case, the Competition Commission investigated but opted not to pursue the matter because Nike wasn’t viewed as “dominant” in the market as it had less than 35% market share.

Nike’s bet on a direct to consumer strategy, in which it owns the customer relationship, effectively meant cutting out the smaller, mostly specialised sports stores like Kloppers that previously stocked its goods.

Sold like hotcakes

On Tuesday, Klopper told Cape Talk that in the past, when Asics was the sponsor, they had no problem with stocking Springbok jerseys, and when the Boks won, there was a special vibe in the store. 

“I think the product was better … and it wasn’t as expensive as it is now.” 

This year, the hot ticket items at Kloppers Sport are locally manufactured Old School supporters’ jerseys, without the official Springbok branding.

But most customers just want the official jersey, Klopper said, which reflects poorly on his business. 

“Everybody asked me why can’t I sell Nike and when I try to explain it to them, they don’t understand.”

Klopper said all South Africans should have access to the national rugby team jersey at a reasonable and affordable price. His chain of sports stores has a reputation for selling quality products and would love to carry Nike, he says.

Focus on direct to consumer sales

In 2017, Nike slashed the number of global retail partners to better focus on direct to consumer sales. By September 2021, it had “exited about 50%” of its retail partners, Nike finance chief Matthew Friend told CNN, including Big 5 Sporting Goods, Dunham’s Sports, Urban Outfitters, and Dillard’s and Zappos in the US.

Modern Retail reports that Nike appears to be softening on some retailers in the US and Europe. In June this year, Macy’s announced that by October, its stores and websites would resume selling Nike apparel after the brand wound down its partnership with Macy’s in 2021.

It has also resumed its relationship with Foot Locker; the outlet announced in February 2022 that it expected its Nike inventory to “decline meaningfully” because of the focus on direct to consumer sales.

Nike’s Direct business — which includes its channels like its website, app and stores — is thriving, generating about $21.3-billion of revenue in the year ended 31 May 2023, reports Statista. Nike Direct also accounted for about 43.7% of the brand’s total revenue.

BMO analyst Simeon Siegel, quoted by Modern Retail, has suggested that Nike could benefit from “selectively re-embracing wholesalers”.

“We continue to believe that, contrary to popular belief, strategic wholesale has been a brand’s most powerful way to scale revenue and margins,” Siegel wrote in the report.

Nike failed to respond to repeated requests for comment. Emails went unanswered and the call centre was unhelpful. DM