Nike are reducing international retailers from 300k to just 40
Nike are making some unprecedented moves to stop the bleeding.
Nike are looking to shift their focus next year from a widespread reach to contain their falling share prices. Yesterday Nike CEO Mark Parker addressed over 100 analysts and investors at Investor Day, stating that Nike will look at shrinking their global retail partnerships that currently stand at 300,000 to just 40.
Mark Parker says that this proposed shift will turn it around, suggesting steady single-digit revenue growth over and that the company remains on track to reach its goal of $50 billion in sales by 2020, a target set at Nike’s 2015 Investor Day.
“Whether that’s redefining our approach to the retail landscape or accelerating our international momentum, we’ve mobilized our priorities and we’re driving growth in new ways.” – Nike CEO, Mark Parker
Parker also said that 50 percent of the growth will come from footwear innovations like FlyKnit and VaporMax, while digital revenue will grow from 15 percent to more than 30 percent of the company’s sales. Another three-quarters of growth will come from sales outside the U.S.
Nike’s Proposed “Triple-Double” strategy (inspired by Jordan Brand athlete Russell Westbrook, surely) is aimed to focus on boosting the speed of product creation, manufacturing and delivery across all areas of the business, from product to mobile customer experience. But the biggest shift is the focus on direct-to-consumer retail by cutting out stockists and renewing their profit margins. Nike are banking heavily on digital retail, with the aforementioned 40 global partners remaining able to stock the product in physical stores.
Their ”consumer direct offense,” is their strategy for increasing online sales. They propose to triple their Nike membership base to 300 million, as those who have created accounts at Nike.com or on one of its apps spend around three times more than guest checkouts. And with more than a third of nike offerings being exclusive to to Nike.com members, it will pay to sign up.
Apart from the changes to their retail and online front, their excess stock problem will be combatted with 25 percent fewer styles to market starting in January. This move, called “edit to amplify,” will allow the company to focus more on its most popular and successful styles, as well as speed-up production.
We’re editing to amplify on the power products that consumers love,” said Michael Spillane, president of categories and product. “Editing out the noise amplifies our greatest strengths.”
These “great strengths” include the Jordan brand, Nike Air and the VaporMax technology. Nike is also bringing manufacturing closer to North American market, and by doing so, Nike aim to take products from design to the retail shelf within six months — the industry average is around 18 months – and in even less time for existing silhouettes like Jordan and Air Max retros.
Will the move pay off for Nike? Only time will tell.