What is Happening?
Since 2011, Nike has grown direct-to-consumer (DTC) sales from 16% to to 35% of Nike Brand revenue.
The retailer was already planning to shift to more DTC sales over the past several years. But with COVID accelerating e-commerce growth, the next phase in Nike's strategy is creating already new competitive advantages for the company.
- Increased profitability from direct-to-consumer sales
- Improved control of over how the brand is presented online
- Collection of first-party data that to improve customer experience
As Nike has been pushing toward a greater percentage of DTC sales, the retailer has also been developing an ecosystem of smaller, digitally enabled stores and mobile experiences to create a stickier experience for customers.
What Does it Mean?
We are at the beginning of a new wave of retail and consumer experience and Nike is one of the largest brands leading the way.
"It becomes a sticky ecosystem because, say that you've downloaded the Nike app on your phone, and you have the Nike running app or the fitness app that they have or even just their shopping app — you'll get targeted emails and they start to know what you do athletically. Or they might know your style,"
— Joe Feldman senior managing director and assistant director of research at Telsey Advisory Group.
🥊 Nike's competitors aren't just watching. Adidas is also investing in DTC. The company launched a new strategy that focusses on the same elements that Nike is: a DTC business model and investments in digital experience and data.