Nike Inc. started cleaning its stats sheet last week and for the first time, the Cheap Jordans Shoes declined to report “future orders,” a crucial way of measuring wholesale demand from the galaxy of retailers who sell the famous kicks. Nike, No. 9 within 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 mix of EDI and e-commerce. While Nike reported its slowest quarterly sales growth since 2010, its performance being a retailer-instead of a wholesaler-was actually a relative highlight. Sales on Nike’s own online store were up 19% within the recent quarter, while its retail locations notched a 5% grow in same-store sales. 28% of sales are direct this coming year, compared with 4% five years ago. CEO Mark Parker said the company is obsessed at this time with making shopping more personal. “Retailers who don’t embrace distinction is going to be left behind,” he warned on a conference call Tuesday.
Still, that wasn’t enough to impress investors-at the very least, not. The overlooked attractiveness of bricks-and-mortar retail is the way well retail chains lend themselves to what economists call price segmentation. Shoemakers like Nike can simply target customers by sending the right shoes 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 such places as DSW Inc.
If done correctly, all this socioeconomic slotting moves just as much merchandise as you can with minimal fuss, without tarnishing the larger brand. Making no mistake: Nike will it correctly. On its face, the Swoosh is actually a design shop supercharged by the sort 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 every sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager with a giant spreadsheet, ensuring “Momofuku” Dunks aren’t too simple to find, ordering up a unique design for China, distributing its best-sellers for all the correct D.ick’s Sporting Goods Inc. outlets and dumping lots of Chuck Taylors at outlet malls.
Nike is currently 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 attempting to make a stop run around the basic 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 show that the bet seems to be 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 center of its lineup, meanwhile, sells on Nike.com as well as in its very own big box stores. With regards to cheaper, less-popular kicks, they quietly trickle in to the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even has a studio in New York City which makes customized shoes on-site in about one hour.
In a nutshell, the company is deemphasizing its ready-made network of retailers to create an even more precise targeting mechanism. Tuesday Parker said the conclusion goal is to buy in front of the consumer and offer “the most personal, digitally connected experiences” in the market. “While changing your approach is rarely easy, Nike has proven before that if we all do, it’s always kpelqt the next phase of growth for your company,” he explained.
Theoretically, Nike can know any given customer better-and their willingness to pay-by utilizing its own venues and platforms, particularly on its digital properties. The challenge will likely be building the mechanism to sort each of the data, and in doing so, the customers. In real life, they sort themselves: Our prime-end boutique isn’t right near the cut-rate discount outlet. Inside the virtual world, it’s not so easy.
For your record, Under Armour Inc. is slightly ahead of Nike Inc., with 31% of its sales coming straight from consumers; Cheap Jordans From China is slightly behind, with 23% of revenue from retail. At its current pace, Nike will be collecting one in three of their sales dollars directly from consumers. Its challenge is going to be ensuring that none get too good a deal.