Nike Aims for 50% Digital Engagement by 2022 as Online Sales Surge

Need to Know

• Amid a decline in revenue, Nike is succeeding in its digital-first approach, aiming for 50% digital usage among its customer base within two years.
• Nike Digital grew 70% in China and Europe, the Middle East, and Africa, and digital revenue for those regions exceeded $1-billion for the first time ever.
• Monthly active users on the Nike Trending app increasing by more than 350% in China.
• Workouts on the Nike Training Club app more than tripled, peaking in April at nearly 5 million workouts per week.
• In February 2020, the Nike Commerce App was downloaded more than eight million times; Nike’s SNKRS mobile commerce app hit $1-billion in revenue.

Analysis

Nike’s commitment to mobile-first and robust digital commerce has paid off: the sportswear brand boasted impressive online engagement stats for Q4—so impressive that the company’s revenue dip could be seen as secondary.

Nike’s Q4 earnings announcement revealed that, over the quarter, digital revenue in EMEA exceeded $1-billion for the first time in the company’s history. Additionally, monthly users for its Nike Trending app spiked by more than 350% in China, a region in which digital capacities were immediately bolstered following the COVID-19 outbreak (sales there were down just 3% over the quarter); in China and EMEA, digital commerce saw an increase of 70% overall.

Additionally, Nike revealed that its Commerce app has been downloaded more than eight million times, while SNKRS, Nike’s footwear-focused app, saw $1-billion in revenue for the company.

The digital engagement successes, which come as Nike reported a $790-million loss for the quarter, show how the company well-primed for success in the future as consumers seek more robust, intuitive digital shopping and customer-service experiences.

Nike CEO John Donahoe, speaking on the earnings call, said the numbers indicate that Nike is hitting some of its goals well ahead of schedule: “In fiscal year ’18, we set a goal to reach 30% digital penetration, both owned and partnered, by fiscal year ’23,” he said. “We will reach that goal more than two years ahead of plan this coming year, and looking ahead, we now expect our overall business to reach 50% digital penetration.”

Donahoe also noted that digital gains, for Nike, are a byproduct of the company’s commitment to leading with its values, adding that Nike Activity and Commerce apps were able to “directly engage with consumers in their homes as they focus on health and wellness” during the COVID-19 lockdown.

Notably, Donahoe says he is also viewing Nike as a direct-to-consumer brand—an approach that is also reflective of a changing retail landscape in the wake of the coronavirus crisis.

“Through this new consumer construct,” he said, “we can serve performance sport with more specificity while also broadening the definition of sport. This approach allows us to better focus on the individual consumer and unlock new opportunities to more nimbly serve their exact needs.” Donahoe added that to accomplish this, Nike planned to “aggressively leverage” and invest in technology to serve customers, but also to gather, analyze, and utilize customer insights and data to continue to strengthen the company’s capacities as an online and mobile retailer.