On a recent Friday morning, a select group of Nike’s biggest fans got an alert. A new, limited-edition version of the brand’s Cortez running shoe–an old-school nylon sneaker originally released in 1972–was about to drop


The release was happening during the NBA All-Star Weekend in Los Angeles, and the shoes–red, white, and black, with the words “don’t trip” emblazoned across the laces–were made in partnership with rapper Kendrick Lamar, a local legend.

Customers received the notification through an app called Snkrs, which Nike has been refining over the past year as a way of connecting superfans with desirable pairs of, you know, sneakers. It is distinct from the regular Nike app, where you go to get a pair of performance shoes.

Snkrs sticks to the kinds of limited-edition runs–interesting colorways, unusual styles, partnerships with performing artists or fashion designers such as Riccardo Tisci – that are so popular they often end up being resold, concert-ticket-style, on the secondary market.

Fans who collect rare sneakers (and streetwear by culty brands like Supreme) are known as hypebeasts, and they are accustomed to waiting in endless, scrumlike lines at high-end boutiques with no guarantee of even getting a pair by the time they reach the front.

Nike was trying something different for its $100 Cortez Kenny II, nicknamed “Kung Fu Kennys” after Lamar’s alter ego. (An earlier version, the Cortez Kenny I, sold out in January and already goes for more than $400 a pair on the open market.)

Nike used geofencing to ping only L.A.-based Snkrs users about the release. Fans who wanted a pair reserved them on the app and were directed to an address in downtown L.A. the following day.

When they arrived, they found themselves inside the company’s highly Instagrammable All-Star headquarters, which were swarmed throughout the weekend with stars such as Kobe Bryant, Bella Hadid, and Spike Lee. Lamar was on hand for a live Q&A. Some of the most engaged Snkrs users received wristbands for his VIP performance that night.

For Nike, the experience was about much more than selling limited-edition sneakers. It was an experiment that could one day be applied throughout the company

Until last year, Nike primarily saw itself as a wholesaler creating product for retail partners at various levels: hypebeast boutiques at the high end, chains like Foot Locker in the middle, and discount outlets like DSW at the bottom.

But after decades of outpacing its sneaker rivals, the once indomitable athletic-wear company has been losing ground–and buzz–to No. 2 Adidas.

In the U.S., Adidas’s market share surged from 6.8% in 2016 to 10.3% last year, according to the NPD Group. During the same period, Nike’s share dropped from 34.5% to 32.9%. Meanwhile, the shoemaker’s longtime brick-and-mortar partners have floundered as the retail landscape changes.

“We realized that the market was moving fast, and consumers were moving fast,” says Adam Sussman, who became Nike’s first chief digital officer in 2016. “Mobile was becoming the main way that people were connecting with brands and shopping.”

In response, Nike CEO Mark Parker announced a plan last summer to overhaul the way the company reaches customers: Though it still works with some 30,000 retailers worldwide, Nike began focusing its efforts on just 40 of them, including Foot Locker and Nordstrom. (It also began working with Amazon.)

Even more important, it prioritized selling directly to customers through its own channels, which include physical shops and, increasingly, digital storefronts such as Nike.com, the Nike app, and Snkrs. Parker dubbed the effort Nike Direct.

“When a brand wants to fully control how a consumer perceives it,” says NPD adviser Matt Powell, the leading authority on the sneaker business, “the best way to do that is to become its own retailer”

Parker has described the moves as “a massive transformation,” streamlining the company’s process from design to manufacturing and refining its sales experience using the data it has on more than 100 million “members” (Nike parlance for anyone who uses its training apps or makes a purchase through digital channels).

He tapped Sussman, along with Heidi O’Neill, president of the new Nike Direct division, to oversee the efforts. Sussman is focused on using Nike’s own channels to offer richer and more personalized shopping experiences–and to deliver them on a vast scale.

To that end, he’s been rolling out a slew of experiments across all of the company’s digital properties, which also include the Nike Run Club and Nike Training Club apps.

But these days, the company’s boldest–and perhaps most impactful–experiences are playing out on Snkrs.

Though limited-edition drops aren’t an especially big part of Nike’s business (according to NPD’s Powell, they make up less than 5% of the entire sneaker industry), sneakerheads are highly coveted customers–and their enthusiasm has a halo effect.

(Adidas’s relationships with the likes of Kanye West and Raf Simons, for example, have dramatically changed perceptions of its brand.)

What’s more, by tapping into its most obsessed customers, Nike is gaining insights on how to develop and activate a community, ideas that it can use in the sneaker wars to come.

Home for the Snkrs squad is a gritty Manhattan office space known as S23NYC–named for its street address and Michael Jordan’s number.

While the teams responsible for Nike’s other digital properties are located at the company’s Beaverton, Oregon, headquarters, Snkrs’s graffiti-filled outpost operates more like a startup.

Until it was acquired by Nike in 2016, it was a startup, albeit one backed by Richard Branson, called Virgin Mega.

When Nike bought Virgin Mega, it tasked Faris, an affable Brooklyn dad who favors flannel shirts and old-school Jordan sneakers, with turning Nike’s then-new Snkrs app into a test bed for the company’s digital efforts.

“The idea,” says Sussman, “is that we’ll build for one product and reuse what we’ve built across the entire [Nike] portfolio.”

At the same time, Nike had to repair its relationship with sneakerheads.

The company, fans say, had been rolling out an excess of putatively “exclusive” product, tarnishing the desirability of even top lines like Jordans.

“They alienated a lot of customers by releasing [too many pairs of] shoes that had traditionally been limited, to a point where those shoes were sitting on shelves,” says Yu-Ming Wu, founder of the annual rare-shoe expo Sneakercon.

Adidas’s Kanye West–designed Yeezy shoes, meanwhile, were all the more irresistible for their elusiveness.

Faris needed to make Nike’s limited-edition runs feel more rare–while making the shopping experience for them more satisfying.

In slightly more than a year, S23NYC has developed a suite of tools that allow for a wide variety of Snkrs experiences–and gather data about Nike’s most passionate fans.

The Snkrs team’s most audacious experiment took place last summer, around the release of a shoe unlike any in Nike’s history. When the brand paired up with Momofuku chef–owner David Chang to make a signature version of the classic Dunk sneaker, nobody knew whether there would be much crossover between sneakerheads and foodie culture.

To get a pair, fans had to snap a photo of a Momofuku menu using the Snkrs app–which unlocked an augmented-reality moment where the shoe appeared to be floating above the menu.

Not only did the shoe sell out, but it converted Chang fans into Nike ones. Faris’s team followed the Chang shoppers on the Snkrs app for four weeks after the shoe’s release.

“They entered 30% more drops and spent twice as much money as normal consumers,” Faris says. “We won foodies into the sneaker-culture tribe.”

Beyond the cool factor that these initiatives cultivate, there are the APIs, which can be plugged into other Nike apps.

Faris envisions being able to allow runners who use the Nike Run Club app, for instance, to unlock a limited-edition performance shoe by completing certain tasks. Nike’s digital ecosystem isn’t yet stitched together as closely as it needs to be to pull this off.

But Sussman says it is getting there. “It’s great to have different product teams dedicated to each of these experiences,” he says of Nike’s various apps, “because they all come up with such different ideas.”

The company is also using data to identify underserved demographic groups and address them in new ways.

One cohort Nike has recently begun targeting is female sneakerheads.

During All-Star Weekend, the company debuted several lines of limited-edition women’s shoes, including reinvented versions of classic Jordan models, which sold out immediately. A week later, the company announced Nike Unlaced, a retail experience for female sneaker fans that launched online at the end of March and will roll out to physical stores this fall.

Members of the platform will get same-day delivery on street-style collaborations and the chance to make one-on-one appointments with guest stylists. “There’s the style-obsessed female, and then there are women in the sneaker-fan community,” Sussman says. “We’ve found opportunities to serve both.”

Nike’s retail reorientation is showing results: The company’s direct-to-consumer sales grew 16% last year–compared with 6% for the entire Nike brand.

The company is now thinking about further steps. Because once you start learning what your customers want, why not feed that information into the very beginning of the Nike process–the creation of the shoe itself?