Nike is moving away from the sedate bricks-and-mortar channel and forging its own path, finding success by opening its own stores and through e-Commerce channels
Nike says it’s advancing its growth on mobile devices. The footwear giant now offers a single sign-on to its three main apps and is consistent with refreshing them with new features.
Nike Inc. looks like it will remain on course to achieving its ambition of becoming a $7 billion online retailer by 2020, as the company announced its online sales increased 49 percent during the fiscal first quarter of 2017, which ended 31 August 2016.
The sportswear brand did not reveal the exact e-Commerce sales figures, but indicated the 49 percent jump in e-sales contributed largely to gains in its direct-to-consumer business, which showed a 22 percent increase from the same time period last year, which includes Nike.com sales as well as those made in the company’s physical stores.
“One of our greatest competitive advantages is our ability to connect physical and digital shopping experiences for our consumers,” Nike Inc.’s CEO Mike Parker told analysts on a conference call last Tuesday, transcribed by SeekingAlpha.
“In more places than ever, Nike consumers can now shop in-store and through mobile at the same time in a single transaction. And it’s clear our investments are paying off.”
Nike relaunched its Nike+ mobile app in August this year, with new and improved features, including personalised product recommendations, 30-day product trials, access to Nike events like Nike Group workouts and chatting to Nike employees.
The company also rolled out its single sign-on app capability, which allows users to seamlessly log onto Nike’s other running and training apps by logging on with their Nike+ loyalty program credentials.
Traditionally, almost all of Nike’s business has come from wholesale, or through future orders, a system which offers a discount for bulk purchases as a way for the company to generate cash prior to delivering a product.
But as e-Commerce sales have grown and Nike has opened more of its own stores, its wholesale business is fast becoming a diminishing source of growth.
With the rise of e-Commerce giants like Amazon.com, traditional retailers are feeling the heat. Larger department stores have reduced their stocks, bringing down not only the retailer, but also the apparel makers that rely on them.
Athleticwear brand Nike however, is moving is a different direction, away from the sedate bricks-and-mortar channel and forging its own path, with the company finding success both by opening its own stores and through e-Commerce channels.
The brand reports it had $1.51 billion in online sales last year, which is 4.7 percent of its total sales, up from 3.3 percent the previous year.
In order for Nike to achieve its 2020 $7 billion online retail sales goal, it would have to grow at a rate of 46.7 percent per year, for the next four years. So Nike topped this at 49 percent for its last quarter, which is great, however, bear in mind this means keeping these rates up will be more of a challenge as the company grows.
Still, things are looking up for Nike, with the world’s love of activewear and sportswear is on the up and up. “The look of sport continues to influence everyday style around the world. As a result, new brands are entering into the athletic landscape,” said Parker.
“The activewear market continues to outpace the overall apparel and footwear market, which itself continues to outpace global GDP growth. It’s a great time to be in the business of sports and as the market leader, this is a great time to be Nike.”