Nike Apps Surge Digital Growth by 38% in Q2

Need to Know

• Nike shared its 2020 Q2 earnings, showing a growth rate of 38% for its digital properties.
• On Black Friday, Nike’s digital sales grew over 70%, the highest total ever.
• A major factor in Nike’s digital growth is its SNKRS app, a mobile experience offering exclusive merch options and unique brand experiences. Nike also launched its app in China this quarter for the first time.
• The SNKRS app, as well as Nike’s regular shopping app, make up one-third of the retailer’s total digital revenue.
• Active users for the apps are growing “by almost triple digits.”

Analysis

Nike has announced its numbers for 2019’s second quarter, revealing a 38% growth rate for Nike Digital. These numbers signal success for the company’s recent push towards a digital transformation.

Earlier this year, Nike replaced CEO Mark Parker with Silicon Valley tech guru John Donahoe, who happens to be the former CEO of eBay.

“While products are usually the first to grab the attention of our consumers, we deepen those relationships through the power of digital,” Parker said in a call with investors in September, adding, “[Donahoe is] the best choice to come in and actually usher in this next wave of growth for Nike.”

Black Friday was massive for Nike, as total digital sales grew over 70% and the retailer had its highest member engagement ever. Another major driver of growth was the fact that Nike’s regular shopping app debuted in China this quarter.

“The digital share of our business in Greater China is larger than any other geography for Nike, we still see so much potential ahead,” said Parker on an earnings call. Parker is still serving as CEO until mid-January.  

Nike can also credit their newest release, SNKRS, for a large part of the surge in growth. 

SNKRS is a mobile app dedicated to exclusively releasing particularly hyped shoes. Rolled out in 2015, the SNKRS app is a valuable marketing tool for the Nike brand, as it sends customers an alert when a shoe is about to launch. Shoes routinely sell out, which encourages a must-have-now mindset among users.

“We’re taking the energy and storytelling we drive in footwear and amplifying one of our biggest growth opportunities. We’re seeing strong-sell through of our apparel collections that we’ve co-designed with collaborators on SNKRS,” said Parker on the call.

In that same call, Parker shared that the company’s “strong growth also continues to be fueled by an increasingly more direct connection to consumers in the marketplace… Our digital growth was driven primarily by the Nike App and SNKRS app, with both now live in over 20 countries.” 

Between the SNKRS app and Nike’s regular shopping app, digital growth has seen a 38% increase and “both apps now make up over 1/3 of our Digital revenue and active users for our apps are growing almost triple digits.” Nike Direct grew 17% on a currency-neutral basis in Q2.

Retail shoe sales are a huge market for Nike, representing the most total sales for the retailer. Nike is even experimenting with new ways to battle counterfeiting shoes, recently obtaining a patent to develop CryptoKicks, a pair of sneakers linked to the blockchain.

In a recent press release, the company shared that “overall revenue increased to $10.3 billion in the second quarter, up 10 percent on a reported basis.” Parker said, “In Q2, Nike has proven again that innovation is our greatest competitive edge – turning athlete insights into breakthrough product and digital services, as we offer more choice to more consumers at an accelerated pace.”