Nike Inc. started cleaning up its stats sheet last week and for the first time, the Cheap Jordans Shoes declined to report “future orders,” a vital way of measuring wholesale demand from the galaxy of retailers who sell the famous kicks. Nike, No. 9 in 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-instead of a wholesaler-had been a relative highlight. Sales on Nike’s own online store were up 19% inside the recent quarter, while its retail locations notched a 5% grow in same-store sales. 28% of all sales are direct this season, compared with 4% five-years ago. CEO Mark Parker said the organization is obsessed today with making shopping more personal. “Retailers who don’t embrace distinction will be left behind,” he warned on the conference call Tuesday.
Still, that wasn’t enough to thrill investors-at least, not even. The overlooked attractiveness of bricks-and-mortar retail is the way well retail chains lend themselves from what economists call price segmentation. Shoemakers like Nike can certainly target customers by sending the right shoes off to the right sort of store (think: first-class vs. coach, iPhone X vs. iPhone 8, Banana Republic vs. Old Navy). In Nike’s case, it ships expensive, limited 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 in these places as DSW Inc.
If done correctly, all this socioeconomic slotting moves as much merchandise as you can with minimal fuss, while not tarnishing the greater brand. Making no mistake: Nike can it correctly. On its face, the Swoosh is really a design shop supercharged by the type 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 sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager having a giant spreadsheet, making certain “Momofuku” Dunks aren’t too simple to find, ordering up a unique design for China, distributing its best-sellers to all the correct D.ick’s Sporting Goods Inc. outlets and dumping plenty of Chuck Taylors at outlet malls.
Nike is now upsetting their 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 fundamental economics of price segmentation. The strategy-a bold move, due to the historical manufacturer-to-retail model being discarded-requires an abundance of swagger. But Nike Shoes Cheap numbers reveal that the bet is apparently working, primarily because Nike has become sharpening its digital game.
Sought-after sneakers now ship out via Nike’s own ecosystem of apps, including SNKRS, which it launched early last year. The heart of its lineup, meanwhile, sells on Nike.com as well as in their own big box stores. As for the cheaper, less-popular kicks, they quietly trickle into the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even features a studio in Ny that creates customized shoes on-site in about an hour.
In a nutshell, the business is deemphasizing its ready-made network of retailers to generate a more precise targeting mechanism. Tuesday Parker said the end goal is to get in front of the consumer and offer “the most personal, digitally connected experiences” in the industry. “While altering your approach is never easy, Nike has proven before that when perform, it’s always kpelqt another phase of growth for our company,” he explained.
Theoretically, Nike can know any given customer better-and her or his willingness to pay for-by using their own venues and platforms, particularly on its digital properties. The process is going to be building the mechanism to sort each of the data, and by doing this, the buyers. In the real world, they sort themselves: Our prime-end boutique isn’t right near the cut-rate discount outlet. Within the virtual world, it’s not easy.
For the record, Under Armour Inc. is slightly ahead of Nike Inc., with 31% of the sales coming right from consumers; Cheap Jordans From China is slightly behind, with 23% of revenue from retail. At its current pace, Nike will soon be collecting one out of three of the sales dollars straight from consumers. Its challenge will be making sure that none get too good a deal.