The Swoosh is taking no prisoners in the face of a grim retail landscape and a looming $50 billion sales target by 2020.
At its 2017 Investor Day in Oregon, Nike held fast to an optimistic vision for the future, forecasting that sales would rise in the “high single digits” over the next five years and laying out a strategy for sustainable expansion.
“The consumer today expects a premium experience, with innovative product and services delivered faster and more personally,” said Mark Parker, Chairman, President and CEO of Nike, Inc. “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.”
With the explosion of athleisure, Nike has faced increased competition from companies like Adidas. Couple that with a challenging retail climate, poorly performing stock, and a round of layoffs, and it’s easy to see why Nike has set its sights on revolution.
“The company is going through a massive transformation,” Parker told CNBC. “The whole speed to market, the connection to the consumer, the direct connection we have to consumers, powered by digital and membership, is enormous. This is a massive change.”
What can fans expect from this brand new Nike?
Kiss the days of mediocre sneaker shopping goodbye. Nike plans to overhaul its retail experience with Nike.com exclusive products, same-day deliveries in certain major cities, and disconnection from “undifferentiated” retail outlets. The company will now focus on sales through Nike.com, Nike brick-and-mortar stores, and strategic wholesalers. Currently 40% of the brand’s wares are in what it calls “differentiated” spaces. It plans to bring that up to 80% over the next five years.
Strategic partnerships are an important part of Nike’s future. Execs at Investor Day highlighted partnerships with Foot Locker, Zalando, and Amazon, adding that Nike plans to launch more pilots with online marketplaces internationally in the coming months. The brand is also collaborating with WeChat to integrate its Nike+ membership program into the popular messaging platform.
Nike is feeling the need for speed. The company will accelerate its manufacturing process with a focus on near-shore production to serve North America and more manufacturing in regions such as Latin America, where automation is used to keep costs down and make products quickly. By the end of the fiscal year, the company will also have installed more than 1,200 new automated machines at the factories of its Asian suppliers. Nike is innovating on processes as well, such as developing a faster way to produce labour-intensive sneaker soles.
For once, it’s all about you. Nike’s action plan includes selling more directly to customers and allowing for greater personalisation. The company announced its new NikePlus membership program that will provide member-only access to products matched to each individual’s preferences and buying patterns. This unique access is designed serve consumers on their terms with first access to new products, exclusive access to personalised services and experiences, and reserved products for members only.
“We will lead with more distinct platforms, moving from seeding to scaling a lot faster,” Parker said of the planned innovations. “We’ll edit to amplify to give consumers better choices to match their preferences. And we’ll set a new expectation for style, creating a new aesthetic to wear in all moments of their lives. To the consumer, there is no trade-off between sport and style. We know that more than half of the athletic footwear and apparel is bought for nonsport activities, and we have even more room to grow in this market.”
The news proved to be music to investors’ ears. The company’s share price jumped following the Investor Day announcements. As for whether sneakerheads will feel the same excitement, and whether the $50-billion-by-2020 is achievable, that remains to be seen.