Nike’s growth powered by digital transformation

Nike has revealed that its operating expense increased 12 percent to $12.3 billion during fiscal year ended May 31, 2023 primarily due to wage-related expenses, NIKE Direct variable costs and higher strategic technology enterprise investments.
Nike’s digital transformation initiatives 2023Nike does not reveal its specific investment in digital transformation initiatives. Nike’s IT spending was one of the components in the $12.3 billion budget.

Nike’s chief information officer (CIO) Jim Scholefield, who joined the global sports brand from Coco-Cola, is spearheading its digital transformation after the exit of Ratnakar Lavu from the CIO role.

“Our investment in innovation and our digital leadership are fueling broad-based growth across our portfolio of brands,” John Donahoe, President and CEO of Nike, said.

Nike’s total revenues increased 10 percent to $51.2 billion. Nike’s digital business has achieved growth of 24 percent. Nike expects digital business to continue to lead its revenue growth and profit.

NIKE

Nike’s emphasis on creating a unique marketplace experience has contributed to its success in establishing direct connections with consumers and expanding its market presence. The company has significantly increased its investment to develop a distinctive digital platform that delivers exceptional user experiences.

With billions of visitors, Nike has experienced substantial digital growth, with notable improvements in conversion rates and average order values. As a result, the digital share of Nike’s business has risen to 26 percent in fiscal year 2023, compared to 10 percent in fiscal year 2019.

Nike attributes its sustainable and profitable growth to leveraging data-driven insights throughout its value chain, from product creation to marketing and merchandising. This approach has allowed Nike to gain a deeper understanding of its consumers, leading to increased engagement, loyalty, and purchasing behavior among its membership base.

To enhance consumer relationships on digital platforms, Nike has partnered with Adobe to enable personalized experiences for its members. This collaboration has resulted in improved member retention, click-through rates, conversions, and increased demand per member, thereby maximizing returns on digital advertising expenditure.

Nike’s digital platforms have witnessed significant growth in member engagement and purchasing frequency, contributing to double-digit increases in store traffic and revenue that surpass industry norms. The company has also achieved remarkable business growth of over 40 percent in Southeast Asia and India, while the launch of the Nike app in Korea has driven 2.5 million downloads and generated $100 million in additional demand within the first quarter.

Recognizing the unmatched potential of digital applications in the industry, Nike continues to prioritize the development of its mobile apps, which have become its fastest-growing channel. By directly connecting with consumers digitally, Nike aims to capitalize on the shifting consumer preferences towards online engagement while also maintaining a strong presence in physical stores.

By focusing on both in-store and digital channels, Nike acknowledges that consumers often engage with digital platforms before exploring wholesale marketplaces. This strategy has proven successful, as evidenced by Nike’s 44 percent total Direct mix and 26 percent Digital mix at the conclusion of fiscal year 2023.

Rajani Baburajan

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