Nike’s ‘direct-to-customer’ strategy is taking shape
Nike’s recent quarterly results may not have set the world alight, but hidden in their midst was perhaps the most important takeaway of Nike’s year so far: its plan to sell straight to customers is evolving. There are obvious benefits to cutting out the middlemen in Nike’s customer journey – control of brand perception, no need to share revenue – but there are risks too. Still, that hasn’t dented Nike’s enthusiasm, and last quarter, the company saw a 19% rise in sales made directly on its own web store. Its brick-and-mortar retail operation also rose by 5% during the quarter.
The company’s CEO Mark Parker said that he was obsessed with making shopping more personal, saying “retailers who don’t embrace distinction will be left behind.” To this end, Parker told investors on the earnings call Tuesday that Nike was planning to offer “the most personal, digitally connected experiences” in the industry.
“While changing your approach is never easy, Nike has proven before that when we do, it’s always ignited the next phase of growth for our company,” he added.
Still, Nike will be conscious of what it’s leaving behind: the benefit of using retail stores to sell your products is that it makes it really easy to pitch different things to different demographics. And Nike is an expert at this type of merchandising. It can send its expensive, limited edition sneakers somewhere upmarket, its low-end products to equally low-end stores, and fit everything else in somewhere round the middle. The company’s biggest challenge may be replicating this efficient system on its own. But, if it can get it right, the payoff could be enormous
Dominion holds Nike in its Global Trends Luxury Fund.
If you would you like to receive the Newsfeeds daily, please click here to sign up now!Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
- Click here to print this story: Print
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.