Nike Buys Converse

I don't understand this deal. There are three possibilities. First, that Nike wants better access to discount retailers. This is stupid because they have a great brand name and good margins, and you don't want to tarnish a high-end image by selling your shoes at WalMart. The second option is revenge. Converse sell well at FootLocker, which hasn't been on the best terms with Nike lately. This would give Nike more leverage in the relationship, but vendettas typically make poor business practices.

The final possibility is that Nike wants to improve Converse shoes and sell higher volumes through discount retailers, instead of tarnishing the Nike image by selling low end Nikes. This is a good idea, since it allows Nike to stay with a business they know, but tap into new markets, while keeping the high end status of most Nike shoes. Let's hope their thinking is along these lines, since the first two options are recipies for business failure.

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