Nike’s Digital Strategy “Not Easily Replicated,” According to CEO
As digital sales surge 82%, Nike CEO John Donahoe says the retailer "is just scratching the surface of what’s possible."
Need to Know
- Digital sales soared over the quarter, increasing by 82% year-over-year, “three years ahead of schedule.”
- Online sales comprise 30% of the retailer’s total sales.
- Nike also reported triple-digit growth in monthly active users for its Nike Commerce App, as well as 200% growth in demand.
- Many of the retailer’s stores are now open after a lockdown period; Nike is reporting higher-than-usual conversion rates among in-store shoppers, compared to pre-pandemic numbers.
Analysis
Sports retailer Nike is bouncing back, posting higher-than-expected revenue for the quarter ending August 31.
Nike posted enormous digital sales over that period as well, with online buying increasing by 82% year-over-year. Overall sales slipped by 2% in North America but rose by 6% in China, as revenue decreased 0.6% to $10.59 billion; this, however, topped forecasts of $9.15 billion for the company.
“The consumer today is digitally grounded and simply will not revert back,” CEO John Donahoe said during an earnings conference call, adding that the company knows that digital shopping is “the new normal.”
“Our Nike Digital business is already meeting our mix goal of 30%, nearly three years ahead of schedule and we will continue to grow from here,” he continued. “This quarter, our owned digital channel grew 83% on a currency-neutral basis, driving almost 900 million [in] incremental revenue versus the prior year, and an acceleration versus the prior quarter even as our doors at retail reopened.”
Donahoe also noted that the Nike Commerce app is performing extremely well, with triple-digit increases in monthly active users and an overall 200% gain in demand.
“NIKE’s digital transformation strategy is not easily replicated,” says Donahoe. “[Nike Commerce app growth] is significant for us, as it speaks to the increasing consumer adoption of our apps and while we have had tremendous success in digital and quickly pivoted to the accelerated consumer shift, I truly believe that NIKE is just scratching the surface of what’s possible.”
Many of Nike’s bricks-and-mortar stores have indeed reopened after a period of lockdown, and the company is reporting that, while fewer customers are visiting their stores than in the pre-pandemic period, those who do enter physical storefronts are more likely to buy. Nike’s physical stores have also served as pickup points for online orders, as customers continue to show a preference towards digital commerce versus in-store shopping.
Nike has seen substantial growth in its digital channels throughout the pandemic, posting a 70% increase in digital sales for China, Europe, the Middle East, and Africa for Q4 this year, with digital revenue for EMEA exceeding $1 billion. The company also revealed at that time that its Commerce app has been downloaded more than eight million times, and SNKRS, Nike’s footwear-focused app, earned $1-billion in revenue for the company.
In July, the company unveiled a digital concept store, Nike Rise, the first of which opened in China the same month. The stores emphasize digital engagement my sending alerts to Nike’s app to users while they shop, and by utilizing various technologies including Nike Fit, which lets customers scan their foot to find the perfect in any style; and Scan to Learn and Scan to Try, which allows customers to use alert staff that they require attention.
This week, Nike said that digital sales currently account for about 30% of its total quarterly sales. The company expects its next quarter to be roughly flat compared to the year prior.