Nike's Flyknit has a sustainable business story to tell

Nike's Flyknit technology may have cracked the code, marrying eco-friendly design with performance.

Nike's Flyknit technology may have cracked the code, marrying eco-friendly design with performance.

When Nike Inc. unveiled its new Flyknit shoe technology last month, it was hailed for doing all of the things Nike shoes are supposed to do.

The Flyknit Racer running shoe is lightweight, performance enhancing, sustainable and innovative — all pillars of the Nike brand.

But last week Nike executives were praising Flyknit for another feature: The ability to expand profit margins.

Nike CEO Mark Parker believes Flyknit can be applied across all of Nike’s footwear categories, and even apparel, depicting Flyknit as almost the perfect product on all fronts.

“There’s the leverage we get from a production standpoint, the sustainability story and then, of course, performance,” Parker told analysts on a conference call last week. He said, “We do see this as a way not only to create a higher performance, more sustainable product but one that actually will gives us significantly better margins as we scale this.”

Traditionally, shoes are made out of various types of material cut and stitched together, a somewhat labor intensive process that produces significant material waste.

With Flyknit, Nike has engineered a system using a specialized yarn knit together into a one-piece, sock-like upper, which covers the toes and top of the foot.

The process is also highly automated, reducing labor costs. Though Nike hasn’t released exact cost savings data from the manufacturing process, the company says the Flyknit Racer running shoe creates two-thirds less waste than typical running shoes.

The new production technique comes as Nike — and the footwear industry as a whole — feels the weight of increased costs impinging on profit margins.

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