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Home / Business / Companies / Manufacturing

Nike nails it - a shoe with socks appeal

By Matt Townsend
Bloomberg·
23 Mar, 2012 04:30 PM6 mins to read

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The Flyknit's upper is knitted in one piece from synthetic yarn before being attached to the sole. Photo / Supplied

The Flyknit's upper is knitted in one piece from synthetic yarn before being attached to the sole. Photo / Supplied

Nike's latest running shoe got its start when designers tried to solve a longstanding request from athletes: make shoes as comfortable as socks.

"We think a lot about what-ifs," said Ben Shaffer, studio director of Nike's so-called innovation kitchen.

"This was a what-if. What if we made sock shoes?"

Nike had tried bringing sock attributes to shoes before, starting in the 1980s with a flimsy mesh sneaker called the Sock Racer.

More attempts followed, and while offering comfort, they were insufficiently durable for running and other sports.

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The world's largest sporting-goods maker now says it has the solution with Flyknit, a 5.6-ounce (158g) running shoe made from synthetic yarn woven together by a knitting machine.

Besides giving Nike an edge in the fast-growing lightweight running category, executives say the new weaving process could cut costs enough to move production outside Asia and one day allow anyone to personalise shoes to their exact specifications.

"This is a complete game changer," said Charlie Denson, president of the Nike brand, on the Flyknit's debut in New York last month.

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The process cuts costs so much "that eventually we could make these shoes anywhere in the world, which makes things very interesting."

Flyknit, which costs US$150 ($185) and hits US stores in July, is the latest product aimed at the minimalist running movement, whose devotees advocate lightweight shoes to reduce injuries.

The lightweight category accounted for 30 per cent of the US$6.5 billion US running shoe market last year and was responsible for all of its 14 per cent growth, according to SportsOneSource, a research firm based in Charlotte, North Carolina.

The lightweight Nike Free, originally a niche product when it appeared in 2004, is now the top-selling running shoe in the US, SportsOneSource said. It helped push Nike's North American footwear sales up 21 per cent to US$1.31 billion in the three months ended November 30.

Running is Nike's biggest category, generating US$2.8 billion in annual global sales, about 50 per cent more than basketball and soccer.

Those sales gains have coincided with a surge in Nike's shares, which have advanced 19 per cent in the past 12 months. Nike reached an all-time closing high of US$109.24 on March 5.

The sock shoe project started four years ago with a prototype of a sock attached to a foam bottom. The concept got early support when chief executive Mark Parker, who joined Nike as a shoe designer in 1979, made one of his regular visits to the innovation kitchen at Nike headquarters in Beaverton, Oregon, and saw the sock.

"I was going in to look at some other things, and it was sort of like, 'What's this?"' said Parker, whose design credits include a patent for Nike Air.

"We got into it, and it was like 'Wow, this has huge potential'."

The designers soon decided that in order to create a shoe that replicates a sock they had to mimic how a sock is made. Nike hired a team of computer programmers and engineers to take a machine used to knit sweaters and socks and re-engineer it to weave the upper part of a sneaker.

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Spools of coloured polyester yarn are fed into the 15-foot (4.5m) long machine, which weaves together the top of the shoe and creates a "second skin" with tiny synthetic cables knitted into the weave around the mid-foot for support.

In a process the company calls "micro-level precision engineering", in-house software instructs the machine to minutely alter a shoe's stability and aesthetics.

If the toe needs more stretch, the design can be digitally altered instantly to add Lycra-infused thread. For added strength in the heel, the computer can use multiple layers of yarn of varying thickness. Nike plans to patent the process.

Unlike Nike's other shoes, there is no cutting out pieces and assembling them.

The upper is made in one piece and then fastened to the sole. That makes production quicker with less labour and larger profit margins, Parker said.

The process also fits into Nike's sustainability push because the amount of material wasted weighs as much as a sheet of paper.

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"If you think about shoemaking, it largely hasn't changed for decades, arguably centuries, because it's cut material that is sewn together," Parker said.

"There is no more cutting and stitching with this. The most labour-intensive part of the footwear manufacturing process is gone from the picture."

The manual work needed to attach pieces is the main reason sneakers are made in Asia's cheaper labour markets, according to Matt Powell, an analyst for SportsOneSource. Without that step, Nike could reduce production time by making shoes in the US and other major markets. Nike makes 96 per cent of its shoes in Vietnam, China and Indonesia, according to a public filing.

"One of the critical issues our industry hasn't figured out is how to get products to market more quickly," said Powell.

"The biggest time in the life cycle of getting a shoe to the US is the time it spends on a boat from Asia. If you could eliminate that, that's a huge chunk out of the time line."

The flexibility created by cheaper, more automated shoemaking could eventually lead to a day when a person can visit a Nike store and have their foot scanned.

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The customer would be able to design the shoe by colour and style down to a single thread. The software would then use the information to make personalised shoes.

"The potential for this is almost infinite," said Denson, who started as a Nike store manager in 1979.

The impact of shoe weaving on Nike's bottom line will depend on whether it meets consumers' demands for performance and style, according to Sam Poser, an analyst for Sterne Agee & Leach in New York.

Flyknit is also just one shoe at a company with about US$23 billion in annual sales, he said.

Flyknit may help Nike boost gross margin, the percentage of sales left after costs of goods sold, which has narrowed for three straight quarters and is projected to decline for a fourth owing to rising labour and material costs.

"The margins can be great, but if it doesn't sell they've got a problem," said Poser.

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Second skin
* The Flyknit's upper is made as one piece and then fastened to the sole.
* Spools of coloured polyester yarn are fed into a machine, which weaves together the top of the shoe.
* Software instructs the machine to minutely alter a shoe's stability and aesthetics.
* The design can be digitally altered instantly to add more stretch or strengthen the heel.

- Bloomberg

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