Nike Doubling Down on Digital, New Product Introductions
It may have been Nike’s 40th annual shareholders meeting, but there were a number of firsts.
Not only was it the first virtual gathering, but it also marked the first starring role for John Donahoe, who took over as the activewear giant’s chief executive officer in January.
Because the meeting was webcast, no shareholders were in attendance, allowing Donahoe and former ceo Mark Parker, executive chairman, to put an optimistic spin on how effectively the group — which, while supporting calls for social justice, also has come under fire for its own lack of diversity and treatment of athletes — has been managing through the pandemic and where it sees opportunities for growth in the future.
Although Nike Inc. has definitely been impacted by the COVID-19 pandemic, the company will continue to double down on innovation and work to further increase its reach in apparel overall and women’s wear specifically — areas that it has previously identified as prime for growth. Nike has only about a 10 percent market share in women’s.
Despite the financial challenges, “we stayed on the offense, always adapting,” Donahoe said. He singled out key product introductions such as the Pegasus 37 running shoe, which was a hit with women in particular; new yoga collections for men and women; the Victory Swim hijab collection, and the Nike M maternity collection as examples to capitalize on consumer demand for not only sport, but health and wellness as well.
He said Nike had previously set a goal to double its revenue from new innovation platforms, but in fiscal 2020, it “more than tripled innovation as a percent of revenue. And we’re not slowing down. We will sustain this level of innovation in this fiscal year and beyond.”
Donahoe also pointed to the company’s Consumer Direct Acceleration strategy, that included a major focus on increasing its digital reach. Although the company had anticipated that e-commerce would represent 30 percent of sales by fiscal year 2023, it is now projecting that digital sales, from owned and partnered stores, to be more than 50 percent of the business in the foreseeable future.
On the brick-and-mortar front, Nike in July opened its first Rise large-format stores in China as well as a new House of Innovation flagship in Paris and has committed to opening between 150 and 200 small footprint, digitally enabled monobrand stores in North America and EMEA [Europe, the Middle East and Africa].
At the same time, Nike will continue to de-emphasize its focus on wholesale, as its own stores and digital sales continue to strengthen.
Donahoe summed it up: “Simply put, consumer behavior is shifting fundamentally during this pandemic, and we don’t think it’s going to flip back.”
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