Nike Inc. started clearing up its stats sheet a week ago and the first time, the sneaker empire declined to report “future orders,” a critical measure of wholesale demand from your galaxy of retailers who sell the famous kicks. Nike, No. 9 inside the B2B E-Commerce 300, says the metric doesn’t matter much anymore, because now it’s focused on working directly with consumers and cutting out the middleman.
Nike sells to retailers through a mixture of EDI and e-commerce. While Nike reported its slowest quarterly sales growth since 2010, its performance being a retailer-as opposed to a wholesaler-was a relative highlight. Sales on Nike’s own online store were up 19% within the recent quarter, while its retail locations notched a 5% gain in same-store sales. 28% of sales are direct this coming year, in comparison with 4% 5 years ago. CEO Mark Parker said the organization is obsessed right now with making shopping more personal. “Retailers who don’t embrace distinction will likely be left behind,” he warned on a conference call Tuesday.
Still, that wasn’t enough to impress investors-at the very least, not yet. The overlooked beauty of bricks-and-mortar retail is how well retail chains lend themselves to what economists call price segmentation. Shoemakers including Nike can easily target customers by sending the cheap nike shoes china to the right kind of store (think: first-class vs. coach, iPhone X vs. iPhone 8, Banana Republic vs. Old Navy). In Nike’s case, it ships expensive, exclusive edition sneakers to high-end boutiques, routes its stock Jordans to chains like Foot Locker Retail Inc., and dumps its low-end product and off-key colorways such places as DSW Inc.
If done properly, all of this socioeconomic slotting moves the maximum amount of merchandise as possible with minimal fuss, without tarnishing the larger brand. And make no mistake: Nike can it correctly. On its face, the Swoosh is actually a design shop supercharged by the kind of storytelling its TV commercials, billboards and magazine ads are famous for. But Nike’s real genius isn’t marketing, it’s merchandising: knowing exactly what to ship where. For each and every sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager using a giant spreadsheet, making certain “Momofuku” Dunks aren’t too readily available, ordering up nike shoes wholesale for China, distributing its best-sellers for all the correct Di,ck’s Sporting Goods Inc. outlets and dumping a lot of Chuck Taylors at outlet malls.
Nike is now upsetting its own well-oiled applecart. In giving traditional retail the stiff arm, which Nike made official in June, the Oregon empire is tearing up that playbook and working to make an end run around the basic economics of price segmentation. The strategy-a bold move, given the historical manufacturer-to-retail model being discarded-requires no shortage of swagger. But Nike’s numbers reveal that the bet appears to be working, primarily because Nike has been sharpening its digital game.
Sought-after sneakers now ship out via Nike’s own ecosystem of apps, including SNKRS, which it launched early a year ago. The center of their lineup, meanwhile, sells on Nike.com as well as in their own big box stores. When it comes to cheaper, less-popular kicks, they quietly trickle into the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even has a studio in Ny that makes cheap nike shoes free shipping in about an hour.
In short, the organization is deemphasizing its ready-made network wemjjs retailers to generate an even more precise targeting mechanism. Tuesday Parker said the conclusion goal is to buy in front of the consumer and provide “the most personal, digitally connected experiences” in the business. “While switching your approach is never easy, Nike has proven before that if perform, it’s always ignited the following phase of growth for our company,” he explained.
In principle, Nike can know virtually any customer better-and his or her willingness to pay-by making use of its own venues and platforms, particularly on its digital properties. The task will be building the mechanism to sort all the data, and in doing so, the shoppers. In the real world, they sort themselves: The high-end boutique isn’t right near the cut-rate discount outlet. Within the virtual world, it’s not too easy.
For that record, Under Armour Inc. is slightly in front of Nike Inc., with 31% of its sales coming right from consumers; Adidas AG is slightly behind, with 23% of revenue from retail. At its current pace, Nike will soon be collecting one in three of their sales dollars straight from consumers. Its challenge will be ensuring that none get too good an arrangement.