Nike Inc. started clearing up its stats sheet last week and for the first time, the Cheap Nike 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 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 mixture of EDI and e-commerce. While Nike reported its slowest quarterly sales growth since 2010, its performance as a retailer-as opposed to a wholesaler-was actually a relative highlight. Sales on Nike’s own web store were up 19% in the recent quarter, while its retail locations notched a 5% gain in same-store sales. 28% of all sales are direct this coming year, in comparison with 4% 5 years ago. CEO Mark Parker said the company is obsessed right now 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 even. The overlooked beauty of bricks-and-mortar retail is how well retail chains lend themselves from what economists call price segmentation. Shoemakers like Nike can certainly target customers by sending the correct shoes to the right type of store (think: first-class vs. coach, iPhone X vs. iPhone 8, Banana Republic vs. Old Navy). In Nike’s case, it ships expensive, exclusive 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 such places as DSW Inc.
If done properly, all of this socioeconomic slotting moves as much merchandise as is possible with minimal fuss, without tarnishing the larger brand. To make no mistake: Nike does it correctly. On its face, the Swoosh is a design shop supercharged by the kind 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 and every sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager having a giant spreadsheet, ensuring “Momofuku” Dunks aren’t too easy to find, ordering up a special design for China, distributing its best-sellers to any or all the right D.ick’s Sporting Goods Inc. outlets and dumping plenty of Chuck Taylors at outlet malls.
Nike is currently 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 attempting to make a stop play the basic economics of price segmentation. The strategy-a bold move, because of the historical manufacturer-to-retail model being discarded-requires an abundance of swagger. But Cheap Nike Shoes Free Shipping numbers show that the bet appears to be working, primarily because Nike has been 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 their lineup, meanwhile, sells on Nike.com and in its own big box stores. When it comes to cheaper, less-popular kicks, they quietly trickle in to the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even includes a studio in Ny which makes customized shoes on-site in about an hour or so.
In a nutshell, the business is deemphasizing its ready-made network of retailers to create a more precise targeting mechanism. Tuesday Parker said the conclusion goal is to buy in front of the consumer and present “the most personal, digitally connected experiences” in the industry. “While switching your approach is never easy, Nike has proven before that whenever we all do, it’s always kpelqt the following phase of growth for our company,” he explained.
In principle, Nike can know any customer better-and his or her willingness to pay-by making use of their own venues and platforms, particularly on its digital properties. The task will be building the mechanism to sort each of the data, and by doing this, the shoppers. In real life, they sort themselves: The top-end boutique isn’t right next to the cut-rate discount outlet. Inside the virtual world, it’s not too easy.
For that record, Under Armour Inc. is slightly in front of Nike Inc., with 31% of the sales coming straight from consumers; Wholesale Jordans is slightly behind, with 23% of revenue from retail. At its current pace, Nike will soon be collecting one out of three of their sales dollars directly from consumers. Its challenge is going to be making sure that not one of them get too good a deal.