Nike & DTC: The Unexpected Power Couple
29 March 2021
Author: Jasmine Waters
There’s no corner of the world that’s a stranger to Nike. A global sportswear giant, they’ve been the brand to look up to for the last three decades, showing how to wear sports with style, leaving no hesitance in brand image when we hear the slogan ‘just do it’. Now, we’re looking to them again for an entirely new reason. Nike are in the midst of an impressively fast shift to DTC selling, hailing much of their success down to their unique leverage of consumer data. What exactly are they doing right and what can smaller, independent brands apply to their 2021 strategy?
Why have Nike turned to DTC?
Thanks to a path of persistent growth, Nike now stands at a staggering $35.6 billion, generating more in DTC sales by themselves than some of their strongest competitors are in total. Having the right products will get you a fair portion of the way, but Nike’s success has also been helped by their confidence to make tough – but essential – decisions. We know that a DTC strategy is currently a profitable one from the emergence of more start-ups, and Nike has tripled down on its DTC spending as a result. This has unarguably been accelerated by the pandemic, with researchers recommending that those brands who want to succeed long-term through this unprecedented period should be aiming for a minimum of 20% DTC business. Across various industry segments, there is now a growing drive to segment and profit from the virtuous cycle of higher margins that DTC seems to bring with it. Nike’s changes may not have occurred overnight but have proven to be incredibly well timed.
Is it all down to investing?
The most important change to notes if the carefully constructed ecosystem Nike has built up to support the DTC shift. The brand has years of physical retail space experimentation behind it, digitally connected store concepts take small-format store space while the brand’s app has been developed to a standard where the consumer is at a disadvantage for not having it. To acknowledge that the consumer’s purchasing journey is fragmented has been smart, with the question of how best to use first-person data to provide the best journey converting to sales a thoughtful one. The strong sense of purpose across all of Nike’s channels are creating an interconnected experience, building community through platforms being seen as more than just revenue opportunities. Digital trends are forcing sportswear to become nimble, with lead times shortened and more frequent products two obvious by-products. From this, Nike are emphasising the impact of uniqueness, using localised assortments to best suit different geographical areas as well as their robust data ecosystem providing the benefit of stores being used as pick-up points.
The trick is to get the right product in the right place at the right time – and Nike are citing that they are only just starting to crack the ice in terms of personalisation. The data-heavy focus has benefitted its physical and online retail, striking a balance to significantly simplify, while willing to make heavy investment where needed. It may be argued at smaller brands will always be at a disadvantage if they don’t have the capital to do so, but there’s many essential lessons that can be taken from their overall strategy. Being quick and unafraid to act, change and adapt will be a risk worth taking when the right products are successfully marketed to the right consumer – resulting in the payoff that’s left Nike moving from strength to strength.
Image source: https://www.pexels.com/@c1n3ma-21730