One big, strategic challenge for Nike is to boost profitability by moving more business into ‘direct retail to the customer’ from ‘wholesale supply’. Mark Parker, Nike CEO, is planning to increase “direct to consumer” (including retail and digital) from 15pc to 25pc of the business and above. “We want really great point of sale,” he said. “It keeps the business very focused on the customer. We have a saying at Nike that the customer decides. They have a vote every day.”
Nike’s online expansion is focused on Nike Soccer + which links buying Nike products with an online offer, free at this stage but with rich potential for pay models in the future.
This online offer will increase the perceived value of their product and leverage their customers presence on the web to differentiate themselves from their competitors by using a ‘unique mechanism’ to deliver added value at a relatively low cost per unit sold.
Companies like Nike have to embrace digital and realize that it is not just a communication channel but a channel for discussion and engagement with customers – as well as way to provide extra digital products that can be bundled with your off-line offerings .
This ability to almost ‘set and forget’ extra value systems online allows businesses everywhere to leverage the power of the internet to ramp up their ROI and boost their botton line.
“We see this as much more of an opportunity, not a threat, Parker said referring to the explosion of social networking, “You have to use that medium to better connect and allow consumers that you serve to connect back with you and create more of a dialogue.”
With Nike’s launch of the new Mercurial boot [the studs move by up to three millimeters depending on the condition of the pitch, giving more grip] will come with a subscription to Nike Soccer +, an online offering. This gives access to coaching advice and football insights from players, teams and managers. There is also an iPhone app.
For Nike, a retail giant, its digital space is the new area of focus – buy the product and get a layer of value-added online. With the product you get an app that allows you to connect with some of the best players and coaches in the world, and eventually that will become a richer, fuller experience for the consumer.
Nike likes to sell itself on product and storytelling – using its athletes to create a narrative of ambition and achievement.
Nike’s two-pronged approach – the detail of product innovation and “premium club” feel of online – will give the global sports company the edge when it comes to its titanic battle with the two other sports behemoths – Adidas and Puma – for supremacy in the sportswear and leisure market.
“The consumer is smart, they have more choice than ever before, they are more connected – with each other, with companies – they can have a critical dialogue with others.”
“It is imperative for companies not only to be more transparent and really commit to that relationship but to sustain it” said Parker, Nike CEO
For the full interview with Mark Parker
- Nike: Alive and kicking (telegraph.co.uk)