Nike president: Undifferentiated, mediocre retailers won’t survive

Nike George Street Store_Ground Floor_lowSportswear giant Nike has a message for its thousands of retail partners around the world: shape up or ship out.

Speaking at an investor day in the US yesterday, Nike brand president Trevor Edwards outlined a step-change for the iconic business in the way it deals with its retail partners, saying that “undifferentiated, mediocre retailers won’t survive,” and committing Nike to “moving away from this over the next five years.”

Nike, which currently has 30,000 retail partners globally, plans to select around 40 “differentiated retailers”, such as Nordstrom, Footlocker and Amazon, for special collaborations and branded space in-stores.

No-names were mentioned in terms of who might be on the chopping block in the coming years, but the company is drastically stepping up its direct-to-consumer efforts as part of its plan to reach its $50 billion annual sales target by 2020 – a goal set in 2015 that investors have previously expressed scepticism about.

To service its ambitions Nike laid out a raft of new targets under a “triple double strategy” laid out by chairman, president and CEO Mark Parker.

“The consumer today expects a premium experience, with innovative product and services delivered faster and more personally,” Parker said. “Fueled by a transformation of our business, we are attacking growth opportunities through innovation, speed and digital to accelerate long-term, sustainable and profitable growth.”

Nike plans to double the revenue its currently generating from e-commerce, both owned and partnered, from 15 per cent in FY18 to more than 30 per cent over the next five years.

It will move to increase its speed-to-market in a bid to increase its product creation timeline by more than 50 per cent, which is expected to help drive its other goal, to generate over 50 per cent of revenue growth from new innovation platforms by 2022.

All-in-all Nike’s ‘triple double’ (a basketball term that describes accumulating a double-digit number total in three of five key stats during a game), will involve doubling the pace of innovation, speed to market and its direct-to-consumer efforts.

Nike also expects growth in Asia Pacific and Latin America (APLA) to grow in the high single-digit to low double-digit range on average over the next five years, relative to mid-single-digit expectations in the US and mid-to-high single digit growth in Europe, Middle East & Africa (EMEA).

Retail Prodigy Group, the licensee for Nike in Australia, has been contacted for comment.

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Comments

1 comment

  1. Brett Stevenson posted on October 30, 2017

    I would suggest this strategy may have some sense but I would suggest Nike is also displaying an enormous amount of arrogance with its approach to 'undifferentiated mediocre retailers'. That to me is shorthand for 'Nike approved' retailers, and if they don't see the danger signals in that then they perhaps need to ask I wonder where those 'undifferentiated mediocre retailers' will be buying their stock in the future. I would think Adidas and other Nike competitors will be licking their lips. Nike may think it is the 'top dog' in terms of sporting brand but I suggest the one lesson being learned from branding in this day and age is that brands generally do not have the same power (with a few exceptions) they did (think Goodman Fielders in FMCG, think the surf labels in surfwear, think Aldi in terms of home brands). If this is Nik'e strategy it smacks of arrogance and that to me is a surefire way to stuff a brand big time. That's where the board of directors need to think a little more carefully (I suggest) in allowing the CEO to adopt a relatively aggressive and short term strategy which has big downside risks in terms of the value of the brand. reply

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