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Home » Fitness » Be your own Amazon! Nike’s new fitness program depends on more focused online-to-offline retail integration – and its own digital marketplace -…

Back in March, as COVID-19 was making its presence felt in Western economies, Nike CEO John Donahoe pointed to the firms experiences in China to provide an omni-channel playbook on how retailers could recover from lockdown.

Flash forward to today and after having 90% of its non-China stores shuttered for most of the past three months, resulting in a $790 million loss, the talk now is of an accelerated strategic shift to a different digital model than the one in place at the start of the year:

We're seeing a true step function change in our digital transformation. This has been an area of investment over the past few years as we build our digital advantage, butCOVID-19 has accelerated the paceNike is in a position to emerge from theCOVID-19 pandemic even stronger due to our Consumer Direct offensive. The global pandemic has made it clear that consumer behavior is changing rapidly, providing the opportunity for us to accelerate the pace of our transformationCOVID-19 has shown that our strategy is sound.

Its time to move into a new digitally-empowered phase, he adds:

We aren't settling for our current leadership position with consumers or in digital, we're pursuing even further separation. We're transforming Nike faster to define the marketplace of the future. Now is the time to act.

But is the strategy sound? On the face of it, digital business remains a strength for Nike, currently running at a 79% year-on-year growth rate. Consumer engagement is also up, with locked-down users causing demand for workouts on the Nike training app to triple, peaking in April at 5 million a week, while the Nike commerce app has been downloaded more than 8 million times since February. The goal now is to get digital use up to a level where it accounts for half of total business, up from just under a third where it currently stands.

The first fruit of this ambition will be what Donahoe calls a marketplace of the future, more closely aligned with what consumers want. Being your own Amazon is a development signposted long before COVID-19 when last year Nike broke off a pilot relationship with the real thing to sell selected items via its marketplace. At the time, the firm said it wanted to focus on elevating consumer experiences through more direct, personal relationships. That will be part of the role of its own marketplace offering, confirms Donahoe:

As we look at opportunities to build deeper and more meaningful relationships with consumers, our vision is to create a clear and connected digital marketplace to match. Consumers want modern, seamless experiences, online-to-offline. So we're accelerating our approach. Our OneNike marketplace strategy leads with Nike Digital in our own stores and embraces a small number of strategic partners who share our vision to provide a consistent premium shopping experience. Connected data, inventory and membership will give consumers greater access to the best of Nike with more speed and convenience than ever. We've talked about membership as a growth driver and differentiator before, but now will align our business to make it central to everything we do.

And theres going to be an increased focus on building out the firms underlying technology foundations, including spend on enhanced digital commerce analytics, marketing technology for better consumer targeting and segmentation, those online-to-offline marketplace capabilities as well as enhanced inventory pricing and supply management tools. Donahoe explains:

Simply put, we will more aggressively leveragetechnologyto make Nike better. This single integratedtechnologystrategy across our business will accelerate how we serve consumers. Specifically, we'll speed up the unifier investments across demand sensing, insight gathering, inventory management and more. This simplified approach will unlock more efficiency for the business, while driving speed and responsiveness as we serve consumers globally.

That all sounds good, but is it enough to get the brand back on track in the post-pandemic era? Some 90% of Nike stores in the US have now re-opened, but even as this has occurred, digital demand has continued to accelerate. With that in mind, Consumer Direct acceleration isnt just pitched as a holding action, but rather as an active growth strategy. Donahoe says:

It's the spark that will ignite and empower our entire company to serve consumers, our business and our teams better. As we shift our operating model to fuel this strategy, Nike's leadership position will become even stronger in the future as sports continues to resonate with consumers amid a global shift toward health and wellness.

And new stores are part of that vision, he adds, including smaller format, digitally-enabled mono brand stores with integrated online to offline capabilities. Donahoe says:

In a funny way, I would characterize this investment in these new doors as a continued investment in our digital future. We look at everything through the eyes of the consumer. Consumers are becoming accustomed to getting what they want, when they want it, how they want it. This pandemic really demonstrates a shift toward digital being at the center of everything they do.

But they want modern and seamless experiences. They don't necessarily just want to buy digitally and have it shipped to home. Youre seeing during the pandemic - and we believe it will continue - [that] they want to buy on their digital device and go pick it up in the store. Or with soft goods, like apparel, they may want to reserve it online and try it on in the store. They may want to be in a store and buy something that is not in the store because of inventory, and the associate uses a digital device to buy it and get shipped home.

So consumers increasingly want a consistent, seamless physical and digital experience. That's what we're committed to providing and we're committed to providing those through, first and foremost, our own digital capabilities as well as our own physical stores, factories and direct.

Over the past few months, we have navigated unprecedented conditions. But our purposeful actions will allow us to emerge from its stronger and better than ever before. The strength of our brand, our deep connections to consumers and our unmatched product innovation give us an advantage to create and define our future fuelled by the Consumer Direct acceleration, Nike will shape the marketplace and extend our brand leadership for years to come.

Donahoe certainly knows how to spin a confident vision of fitness in the future, even if the present is considerably more out of shape. The integrated digital strategy is a sound enough one and Nike has made solid investments in the past on this front, but the reality is that only 30% of revenue has come in from digital sales during the pandemic period to date. Admittedly that means that Nike has hit, two years early, a target it had set itself to achieve in fiscal 2023. But with 90% of physical stores closed for most of the last three months, a larger shift to online sales might have been expected.

It seems that Nikes customer base enjoys the trip to the store and checking out the product in person, an experience that cant be replicated on an iPad. With the pandemic not over that has implications for Nike moving forward. A tranche of the tech investment moving forward might usefully go on the sort of experiential tools espoused by Galeries Lafayette in that retail giants strategic vision.Whats happened over the past few months has been a timely reminder, not just for Nike, that even the most digitally-savvy of omni-channel retailers remains dependent on the physical side of the market. Making the in-store aspect as digitally-integrated as possible is going to become a critical retail competitive differentiator in the so-called new normal. But then, thats the kind of challenge that Nike brought in a digital champion as CEO to solve.

Originally posted here:
Be your own Amazon! Nike's new fitness program depends on more focused online-to-offline retail integration - and its own digital marketplace -...

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Home » Fitness » Be your own Amazon! Nike’s new fitness program depends on more focused online-to-offline retail integration – and its own digital marketplace -…