The goal is to generate 80% of its North American wholesale business through differentiated retailers in 2023, up from 40% in 2017. Implementing the NCX program will require a serious edit. However, over 60% of its North American business today comes through undifferentiated retailers. These undifferentiated retailers Trevor Edwards, president of Nike brand, describes as “mediocre,” and destined not to survive.
Nike calls these best-of-the-best partners “differentiated retailers,” as distinguished from undifferentiated retailers that don’t offer quality service or powerful storytelling in keeping with Nike’s expectations. To amplify sales through its wholesale distribution channels, Nike has identified only 40 retail partners, both online ecommerce players and physical retailers, that offer the best access to the customers it targets and who can deliver best-practices customer experience for the brand. While Nike is placing a heavy emphasis on direct-to-consumer channels through and its own retail stores, wholesale distribution still accounts for the lion’s share of sales, some 70% in 2018, though that share has decreased from 82% in 2014. Go with retail winners, forget the losers Nike has decided to proactively get out in front of those changes and be there whenever and wherever the customer wants to engage with them. Nor will product marketers wait for their retail partners either. Such dramatic strategies are not for the faint of heart, but absolutely critical to manage disruption in established businesses caused by demographic, geographic and psychographic shifts in the market.Įmpowered consumers won’t wait for brands to catch up. The report provides a case study in how big global brands and retailers must navigate in the future. Nike credits its Nike Customer Experience (NCX) platform as driving virtually 100% of growth in 2018, according to a new study of Nike’s distribution strategy by Euromonitor. In both quarters, the company reported double-digit growth internationally and in Nike Direct, as well as “strong momentum” in North America, its premier market. In fourth quarter 2018 Nike brand revenues grew 9% on a currency-neutral basis, followed by a 10% increase in first quarter 2019. With a little over a year of executing on the Triple Double Strategy, the results are starting to show. And of course, the company’s own Nike Direct retail platform, both online and offline, is where it can deliver all those at the highest level. That means Nike could potentially edit out a massive number of distribution partners from its current slate of 30,000 retailers to focus primarily on only 40 that offer superior customer experiences, quality service and storytelling that differentiates the brand. And it also includes streamlining distribution to only those that deliver the fastest, most profitable growth. In “Just Do It” fashion, Nike recognized it must “edit to amplify” growth, so it is putting 25% fewer styles into the market to make space in order to amplify sales.
It means we can amplify our brand message into a global conversation.” And in footwear, we hold the #1 market share in all markets and all major categories. We’re the largest athletic apparel brand at $9.6 billion. Michael Spillane, Nike president of products and categories, said at the company’s October 2017 Investor Day presentation, “We’re the largest footwear brand at $21 billion.
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