Nike store openings will generate additional pressure on wholesale accounts – ARCH-USA
The pace of Nike store openings is accelerating as the sportswear giant continues its shift towards more direct sales.
Source: Nike is aggressively opening new stores as it continues its direct-to-consumer plan. Wall Street is not sold on the strategy.
Business Insider has released a list of upcoming Nike store openings. In 2020, Nike has charted a course to connect with its consumers through additional brand doors. In 2017, however, at Scale of Sport’s Investor Day, the action plan was detailed and the name Consumer Direct Offense was given to their direct-to-consumer strategy which included shutting down wholesale accounts. At the time, it became clear that the brand’s longtime partners should consider life without Nike, as the brand made adjustments to its strategy by finalizing the removal of Futures and emphasizing their experience. in-app which attracted 3x purchases. of a visit to Nike’s dot com. This expansion of Nike sites continues an understudied trend that I began documenting in 2014.
What analysts, journalists and sneaker culture continue to ignore with Nike account cancellations
Nike’s DTC and direct revenue growth and store growth
2014 (768 Nike stores)
2015 DTC 6.6 billion (832 stores)
2016 DTC 7.9 billion (919 stores)
DTC 2017 revenue 9.1 billion (985 stores)
A Nike Store causes wholesale accounts to shrink organically. When Nike adds locations, they don’t just add retail doors. The action plan is strategic and anchored in the data extracted from their applications. Think of it as a singer using Spotify or YouTube data to create tour dates. If Austin, TX is a hotspot for streams and views, Austin becomes a must stop on a tour. Nike is a technology-driven company that is constantly working on ways to connect with the consumer and every in-app engagement provides proof of how well a Nike store performs. Store openings in the Bronx and Silver Spring are already being celebrated and promoted.
The very first Nike store in the Bronx has just opened in New York (timeout.com)
Nike Unite Store to Open Nov. 3 in Downtown Silver Spring – Source of the Spring
Can Nike.com Japan’s new delivery service spread to the United States?
Concerns from Wall Street, BOPIS and Konbini
Wall Street’s worries seem a bit unwarranted when you look at the list above documenting DTC’s revenue growth as more Nike stores open. Of course, investing in real estate is always a burden on a business, but it seems Wall Street hasn’t been paying attention to Nike’s numbers and its international business strategies that have been implemented, especially Buy Online Pick Up in Store (BOPIS) and Nike. Konbini. In a recent article on Mary Dillon and Foot Locker, I stated that Foot Locker’s Power Stores provide a unique opportunity for the retailer. I said that because of the BOPIS and Locker Opportunities. As Nike is encroaching on the territory of their remaining wholesale accounts, this can be considered a technological advantage comparable to Amazon and Whole Foods. When Amazon acquired Whole Foods, they lowered prices, but it was the ability to put Amazon Lockers in those locations that improved in-store shopping times. Nike mimics tech companies. There’s almost a guarantee that Nike’s pilot with Amazon has provided information for use in store expansion. I’ve talked about Konbini many times here on the site, but only in regards to local bodegas and grocery stores.
Nike retail stores are destination shopping experiences and low-income families will save money for family trips into town to visit a Nike clearance or factory outlet. This is a topic very rarely discussed by analysts as they are not at the street level of Nike’s business, and they cannot measure the impact of the spot customer, but this is the opportunity. BOPIS and integrating the cash customer into Nike’s digital economy that holds the most value. All neighborhoods are facing porch hijackers and theft, but many neighborhoods are unable to participate in the digital economy and Nike’s digital declines due to delivery issues to apartment complexes and porches not Covered. Nike relied heavily on Shoe Palace, Foot Locker, City Gear and DTLR to meet cash customer needs. As Cash App, PayPal, Venmo, and other digital wallets become more prominent, it follows that consumers will seek to gain the same access to products that they have traditionally been unable to obtain. If Nike introduces “Nike HOLD – Online Delivery Help” (don’t search, I just created the name and acronym), new Unite stores become capable of being monetized in a unique and extremely profitable way. Think of a Unite store with customizable Nike By You products and put your kicks in The HOLD until you can pick them up. What seems insignificant to those participating in the digital economy is only trivial because it is accessible. Nike’s revenue has been shown to increase with the addition of Nike stores, and the closer Nike gets to all of its consumers, even as a full-price luxury brand, the more revenue they will increase.