Nike reveals outcome from investment in digital transformation

Nike has revealed the outcome from its investment in digital transformation that assisted the company in serving consumers better and driving significant growth.
Nike and digital transformation
Nike reported Q3 fiscal 2019 revenue of $9.6 billion (+7 percent). NIKE Digital achieved $1 billion (+36 percent) revenue during the quarter. This is for the first Nike’s digital business achieved one billion dollar revenue in a single quarter, reflecting the efforts of investment in digital areas.

Nike CIO Jim Scholefield has the left the US-based sports and fashion retail company, in end of 2018 to join pharmaceutical major Merck as chief information and digital officer. Nike COO Eric Sprunk is currently managing technology and procurement functions.

The company faced pressure from European rivals Adidas and Puma, but has managed to win back market share with new launches of its popular Air Max and Jordan sneakers, increased focus on women’s wear and higher investment in online business.

Andy Campion, chief financial officer of Nike, said: “We will continue investing in key capabilities to drive digital transformation and fuel strong profitable growth into next fiscal year and beyond.”

Nike during the analyst calls said it will launch more than 40 new styles of bras to expand its inclusive sizing considerably and building off the adaptive basketball launch. Nike will expand the platform into new categories and embed the Adapt technology into its digital eco-system.

Consumers using the Nike App at Retail average 40 percent higher sales than those who don’t. Nike said SNKRS traffic and revenue rose in triple digits, 17 of the top 20 SNKRS launches had 100 percent sell through. Nike’s digital eco-system processed 300 transactions per second during the Air Jordan 11 Concord launch.

Digital transformation is creating efficiencies is within product creation teams. Nike has fully digitized its over 6,000 footwear materials, allowing design teams to build on one another’s work and adapt to market trends more quickly.

Nike said its digital tools are reducing lead times, driving sustainability, and leading to faster design cycles. Nike is digitally tagging and tracking products from production through retail.

Its investment in RFID initiative is improving product visibility. The deployment of RFID is a major step towards integrating eco-system of physical and digital experiences, distribution centers, and contract factories.

“This will give the consumer easier access to product and allow Nike to accurately match supply to demand across the world and ultimately fuel better, higher quality growth,” Nike CEO Mark Parker said.

Beaverton, Ore-based Nike said its gross margin expanded by 130bps in Q3 to 45.1 percent. Operating overhead increased 17 percent to $2.2 billion, partly driven by investment in Nike’s digital transformation powered by the addition of more number of skilled manpower.

Nike will make more investments in new digital member services in data and analytics, in demand sensing technology, in technologies such as RFID that enable Connected Inventory across the marketplace and in a new editorial content engine.

Rajani Baburajan

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