March 28, 2022
Nike has communicated its key “account pivots” as part of its market realignment that has reduced the number of wholesale partners globally by more than 50% over the past four years.
Nike last year in the United States stopped selling to six retailers: Big 5 Sporting Goods, DSW, Dunham’s Sports, Olympia Sports, Shoe Show and Urban Outfitters. She also no longer sells clothes at Macy’s. In 2020, cuts included Belk, Bob’s Stores, Boscov’s, City Blue, Dillard’s, EbLens, Fred Meyer, VIM and Zappos.
For the current year, Nike sales will be reduced to 55% of Foot Locker sales by the fourth quarter and will continue at this level through 2023, down from 65% in the fourth quarter of 2021.
Nike said the overall wholesale overhaul was designed to move away from “undifferentiated” retailers, although many industry insiders believe the main priority is to accelerate the growth of its retail business. direct to consumers.
In the third quarter ended February 28 Nike’s direct sales rose 17% to 42.2% of sales from 38.5% a year ago, driven by digital growth of 54%. Wholesale sales increased by one percent.
“Wholesale partners play a critical role in our future market, first to authenticate our brands and then to create scale of distribution through a consistent customer experience across a larger retail footprint,” said Matt Friend. , chief financial officer, last week on a quarterly analyst call.
Friend said the new structure will require Nike to “also invest with our partners in their consumer experiences so that the consumer has a consistent, premium experience” regardless of where they shop.
An example of high collaboration cited was a program introduced last fall that allows loyal members of Dick’s Sporting Goods and Nike to link accounts. Via the Dick’s mobile app, customers can browse member-exclusive Nike merchandise and participate in high-temperature drops.
A collaboration with sneaker store Social Status was also cited to develop unique silhouettes of Jordan and Dunk merchandise, as well as produce content on SNKRS Live, Nike’s live streaming platform.
Mr. Friend said, “We are committed to driving growth with partners like this as they create authentic and deeply connected consumer concepts in key cities and communities around the world.
DISCUSSION QUESTIONS: Is the main reason for Nike’s wholesale reset likely the exit of “undifferentiated” retail partners or the expansion of direct channels? Does shrinking wholesale accounts in digital-led direct-to-consumer changes make sense for many other brands?
“Nike controls its own destiny. Love of brand, experiences, exclusivity and yes profit margin are the driving forces.”