Nike digital transformation powers rise in sales and consumer experience

Mark Parker, chairman, president and CEO at Nike, has revealed the shoe-maker’s main achievements following its investment in digital transformation.
Nike store with RFID
Ratnakar Lavu is the company’s first global chief digital information officer responsible for driving the digital programs. He reports to Eric Sprunk, chief operating officer of Nike. Ratnakar Lavu most recently was the chief technology and information officer at Kohl’s. Prior to joining Kohl’s, Ratnakar Lavu was chief technology officer at Redbox.

Nike has reported that its revenue for the second quarter of 2019 grew 10 percent. Nike’s international business grew 18 percent, led by Greater China at 23 percent thanks to Nike’s digital advantage in the marketplace. The Nike app and the SNKRS app are outperforming all other channels, driving digital growth of 38 percent for Q2, Mark Parker said.

Nike Digital grew 32 percent in North America, fuelled by Black Friday. Nike Digital in EMEA grew 27 percent. Nike Digital in Asia Pacific Latin America was up 67 percent in Q2. NIKE Digital grew at 44 percent in China, fuelled by record-breaking single day.

Nike’s digital commerce revenue grew 38 percent powered by an outstanding performance during its holiday moments in November. Digital sales grew over 70 percent in North America during Black Friday and broke records for the weekend across many of metrics including its highest week of member engagement ever. Buying members grew 45 percent versus last year

Nike achieved phenomenal success in the EMEA region with an increase of nearly 50 percent in demand during Black Friday week. Nike created demand, generating nearly $0.5 billion in revenue, through Singles’ Day.

The company strengthened its relationships through Nike+, adding 3 million members. It served its consumer faster, delivering 20 percent of the 11.11 orders the same day, and it finished as the number one athletic brand on Tmall.

It added the Nike app to a portfolio in China that includes nike.com, SNKRS, NRZ, NTC and our branded experiences with Tmall and WeChat.

Chinese consumers downloaded Nike app 1 million times during launch. It’s the number one shopping app in China.
“Membership is the sharp point of growth. For the quarter SNKRS app grew strong double digits, the Nike app more than doubled and both apps make up over one-third of our digital revenue. Active users for our apps are growing almost triple digits,” Mark Parker said.

Nike app at retail is one of the opportunities to create scale as Nike pairs the app with physical retail stores. Through the Nike app at retail, personalization and convenience moved to another level. Inside the store, members can unlock tailored offers based on their past engagement with Nike and shop at their pace on the retail floor, scanning products for information and checking out offers.

Nike is also changing the experience of finding product and how it’s delivered. Members can reserve product online and have it waiting for them at their nearest store, so they can try it on first.

Nike said its new investments in RFID will enable the consumers and executives to instantly track products. Nike has RFID in about 100 percent of footwear, about three quarters of Nike apparel. Eight of its distribution centers have the RFID ability.

Nike started testing Nike Live internationally in Shibuya, its smallest Nike Live door in the world, but serving millions through the power of digital.

Nike recently announced the acquisition of Celect for applying and developing algorithms to understand consumer preferences. “We are leveraging data that includes past and present consumer interest in products and purchasing signals to better predict demand. We can decide how to stage inventory in our distribution centers and our stores in different ways,” Mark Parker said.

Nike Direct grew 17 percent in Q2, led by Nike Digital, growing at 38 percent. Its digital growth was driven primarily by the Nike app and SNKRS app with both now live in over 20 countries.

More than half of digital traffic came from logged in members during Q2. A Nike member is a consumer host chosen to create a profile with Nike. The average order value for members is significantly greater than for non-members.

The investment in Invertex enabled Nike Fit to give consumers confidence that they are getting the right size in that specific style.

The acquisition of Zodiac allowed Nike us to assess how each offering impacts engagement and consumer lifetime value.

“Transforming the consumer journey also has significant financial impacts. We will capture greater demand at the moment of truth; we will have stronger full price sell-through and more efficient markdowns, we’ll have fewer days in inventory, and we’ll have greater member retention and repeat buying,” Mark Parker said.

Nike is expecting that the arrival of John Donahoe as the new chief executive officer will add more power to its digital transformation initiatives.

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