American athletic footwear and apparel corporation Nike, Inc. The bright trademark of is seen on the window of a Nike store in Antwerp, Belgium. (Photo by Karol Serewis/SOPA Images/LightRocket via Getty Images)
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Nike CEO John Donahue admitted Friday that the company has moved away from wholesale partners such as Messi And DSW In pursuit of becoming a retailer that primarily sells goods to consumers through its stores and website.
“We recognize that in our movement toward digital, we took a little more away from wholesale than we intended,” Donahue told CNBC’s Sarah Eisen from Paris. “We’ve got it right. We’re investing heavily with our retail partners. They’ve all been here in the last few days. They’re very excited about the innovation pipeline.”
Over the past several years, Nike has worked to transform its business from a brand that primarily sells its footwear and apparel in department stores and specialty athletic shops to direct-to-consumer sales for the majority of its sales. Delivers to
The strategy allowed Nike to earn more from its sales and gain better insight into its customers through data collection. Over the past four years, Donahue said Nike grew its mobile and digital business from about 10% to 30% of total sales.
However, this is a difficult strategy and one that can put pressure on margins in the short term. Moving to a direct model is capital-intensive and with returns and proprietary inventory headaches for Nike, which typically fell to wholesale partners.
On top of that, department stores and specialty shops are massive consumer acquisition engines. Without them, brands have to spend more on marketing, which has become more expensive and difficult to do online.
Some analysts have said that Nike’s decision to stay away from wholesale partners was a mistake. He argued that this held the company back and was part of the reason why it fell behind in innovation and products. It also had a negative impact on Foot Locker, which has long relied on Nike to drive sales and no longer gets the same assortment of products it once did.
Moving to a direct model, Nike temporarily cut ties with retailers such as Messi And DSWbut it revived those partnerships last year as it began to shift its focus to wholesalers.
The change comes at a difficult time for Nike, which has faced criticism for falling behind on innovation and losing market share to upstarts. On the run And it happened. In December, it announced a sweeping restructuring plan to cut costs by about $2 billion over the next three years. It also lowered its sales guidance as it warned of weaker demand in the coming quarters.
Two months later, Nike said it was cutting 2% of its workforce, or more than 1,500 jobs, so it could invest in its growth areas, such as running, the women’s category and the Jordan brand. .
During Friday’s interview, Donahue reiterated that consumers today “want to get what they want, when they want it, how they want it” — a refrain he shared during his transition to Nike last year. is used when discussing the sales strategy of
“There aren’t digital shoppers versus physical retail shoppers. There aren’t shoppers who only shop in mono-brand stores versus multi-brand shoppers,” Donahoe said. “Consumers want to get what they want across multiple channels. … Consumers will have the option to come directly to Nike digitally, to Nike’s door or to one of our wholesale (partners).” Go.”