This article was updated on October 26, 2021.
It’s been a volatile year for many brands, the Nike brand among them. During the heat of pandemic shutdowns in the spring of 2020 (and beyond), Nike sales plummeted 38%. Wall Street was bracing for the worst as foot traffic to malls remained slow and, well, far too many adults and kids are still working and schooling at home…barefoot. But, surprise! The sneaker giant trampled both earnings and revenue estimates by the end of summer. As a result, its stock jumped 12% and is trading near all-time highs.
How did Nike master that feat? The company is thanking its digital strategy. Here are some of the lessons other brands may be able to glean.
1) They took (direct) control.
For the most part, the Nike brand and its early fall boost in revenue can be traced back to an 82% growth in online sales. It’s an area that the brand was already accelerating before the pandemic struck. In November 2019, the company decided to stop selling directly through Amazon. And while wholesalers—both online and off—are Nike’s largest revenue category, its importance to the brand decidedly began diminishing years ago. Wholesale represented 83% of revenue in fiscal year 2012 but only 68% in fiscal 2019.
It was a risk that many industry experts questioned, but so far, it’s paid off. As The Wall Street Journal reports, direct sales made up $3.7 billion of revenue in its rebound summer quarter. This is up 12% from 2019. The Nike commerce app alone has experienced an almost 200% growth in demand with triple-digit growth in monthly active users.
2) Their new CEO knows digital.
The bold digital moves made by Nike less than a year ago align with the hiring of John Donahue as its CEO. The man isn’t a runner or coach-turned-businessman. Dohahue is the former CEO of eBay. He’s on the Board at PayPal. And he’s a Silicon Valley regular who was considered a Nike outsider. But he knows digital. And right now, that means everything.
“We continue to take greater advantage of our vast digital opportunity as the shift in consumer shopping preferences accelerates,” he said in Nike’s FY21 earnings call early this month, adding that “this digital focus is guiding how we create the future of retail.”
3) They’re creating a brand lifestyle.
One reason Nike can cut itself off from playing the wholesale game and sell directly to customers is that it has brand loyalty at its fingertips. Nike people are Nike people, just like Apple people are Apple people. And Nike is capitalizing on that brand loyalty like never before. Think banking on a Nike Direct website and app with membership perks, specific lifestyle-oriented apps like Nike Run Club, Nike Training Club, and SNKRS (for collectible sneaker aficionados). And to keep Nike fans connected to Nike all day, every day, they’ve created partnerships with Apple watch and others. They’ve also launched a dedicated maternity collection called Nike M.
Even their brick-and-mortar store experiences are being bolstered by digital. Nike Live pilot stores opened in Long Beach and Tokyo in October 2020 to offer “a seamless blending of data science and premium personal service that delivered to local members’ exact needs…fueled by constant analysis of the online buying patterns, app usage, and engagement of members in the local neighborhoods.” In July of that year, Nike Rise opened in Guangzhou, China, to curate a 1:1 personalized shopping experience.
4) They forged ahead.
Nike’s commitment to rolling out these and other innovations—even during the pandemic—deserves emphasis. It’s been proven time and again: Brands that innovate during downturns are the ones who survive.
“Over the past three months, as most companies focus on just surviving, we are continuously bringing forward new compelling product to market,” Donahue said. “We’re getting stronger in the places that matter most. Even in the midst of disruption, we are on the offense.”
Along with the lifestyle rollouts mentioned earlier, Nike has paid exceptionally close attention to how and when to continue product rollouts.
“We re-energized the iconic Air Max 90 this year, and it was one of the quarter’s top growth drivers,” Donahue boasted. And if you noticed that Nike’s digital marketing has become momentarily female-centric, it’s not just due to a hunch. Donahue points out an acceleration of share gains in U.S. women’s apparel coinciding with other behaviors, like, for the first time ever, women completing more Nike Run Club runs than their male counterparts. Nike follows the data and adapts in real-time.
5) They were lucky.
“While many gyms have been closed, athletic apparel makers have reported strong demand for their clothing and more casual attire as more people work and exercise at home,” reports WSJ’s Khadeeja Safdar. For that reason, other similar brands saw an improvement in sales, too. Safdar adds that Adidas AG and Lululemon Athletica came back strong this summer for the same reason. Even Peloton, which suffered terrible PR turmoil and stock shock after an unfortunate 2019 holiday ad campaign, is rallying to impressive levels during the exercise-at-home surge.
Now with sports teams—both professional down to pre-school level—back on the fields, Nike footwear and gear is gaining back demand. And as women continue to trade in their stilettos for sneakers, sportswear makers like Nike can also credit luck: being in the right place at the right time for a comeback.
The Nike Swoosh isn’t just a logo. The shape is also reminiscent of what the shoe brand’s sales experienced during the pandemic. Many brands are still trapped near the bottom of that dip. And, sure, Nike has had immense resources, brand loyalty, and a little luck on its side. But it’s also been relying on dozens of digital marketing tactics that are available to all.
Read the full transcript of Donahue’s presentation to stakeholders here for more inspiration.
Image from Pixabay
Leave a Reply