Nike Team Case Study:
Analysis of the situation, the company and the clear business challenge moving forward
Nike Background
-Big footwear and apparel company that has been around for 51 years
-The company business was built on relationships with the aim of enabling athletes to perform their best and support them in whatever capability they can
-Owns three other brands: Converse, Hurley (until 2018) and Jordan with footwear being its largest source of revenue
-In recent years Nike’s focus has shifted from “A mile wide, an inch deep” to the opposite by reducing styles by 25% overall and offering a deeper selection within top franchises
-Focus on digital via: The Nike app, Nike Run Club, Nike Training Club, and SNKRS App.
Nike’s Reinvention of the Sneaker Game
-Nike thrives on exclusivity and in some instances scarcity
-High energy-launches fall into 3 categories: Explore, Invest and Scale
-For hyped footwear, the SNKRS App can be thought of as a key connection point to consumers across the marketplace
-SNKRS helps drives the energy for Nike’s sneaker business
-“This is so cool – this is how I want to wait in line for Jordans forever.”:
1. Nike was treating digital apps more as marketing content and less as a live service
2. To elevate the SNKRS App, Nike acquired Virgin Mega to form S23NYC
3. Farris and his team elevated the SNKRS App:
(1)Increased story-telling and focus on the “how” and not the “what”
(2)Bringing energy back to the consumer and turning shopping into a sport
(3)Season One:
-SNKRS Gesture Unlock like a video game /SNKRS Stash like a treasure hunt/SNKRS Cam like a puzzle/SNKRS Shock Drop
(4)Season Two:
-Campaigns: The Art of Championships and Kendrick Lamar’s tour
-Stash Upgrades ~ City Edition
The Challenges
-How will Nike grow?
-Fast growth but are these innovations sustainable and will they stand the test of time?
-How long will they introduce new features to maintain consumer energy and excitement and to what end?
-Will it be profitable 5-10 years from now when the consumer changes their mind?
I-ncrease accessibility to all our consumers world-wide but still maintain scarcity & exclusivity?
The Challenges
-Covid
Surge in demand for e-commerce platforms (put pressure on companies to innovate and improve their digital capabilities, such as contactless service, live streaming, virtual events, and enhanced personalization) because of the closed of physical stores and consumers shift their shopping behavior online. At the same time, retail e-commerce grew, sales in some industries declined from 2019 to 2020 as pandemic-related lockdowns kept people at home, working, shopping and even studying online. Sales at clothing and clothing accessories stores slipped from $269.5 billion in 2019 to $201.4 billion in 2020, as the need for new clothes and accessories for the workplace or social outings waned.
-News about secondary markets
Secondary markets have created new challenges for Nike. Reselling some limited-edition sneakers fetched prices in the tens of thousands, which has led to concerns about the fairness and accessibility of limited releases, prompting some companies to reevaluate their release strategies.
-Challenges Nike’s SNKRS app may face in light of recent news and events
Nike has found increased competition, greater pressure to innovate, and the needs to address the previously mentioned concerns around sneakers reselling. While the app has been successful in providing Nike a direct- to-consumer channel and way to engage with sneaker enthusiasts, it may need to evolve to stay ahead of the curve.
-Would you redefine their challenges? Would their challenges remain the same?
Going forward it is important to consider factors such as improving the app’s user experience, investing in new technologies such as augmented reality and virtual try-on, and developing new strategies for releasing limited edition sneakers. The company may also need to explore ways to address the issue of sneaker reselling, such as limiting the number of purchases per customer, partnering with resale platforms to provide a more transparent and fair process, or releasing more stock to meet demand.
Recommendations
-Utilize current digital trends/innovation:
(1)Stay on top of consumer digital trends and be able to tell what are not just fads but can become long-term trends.
(2)Reevaluate current digital initiatives and Invest in digital trends that are doing well, reduce the use of one’s not capturing the consumers attention, and innovate on new ones based on consumer trends.
-Capture reselling market:
(1)Create a platform within the SNKRs app that allows consumers to resell their shoes at markup or retail price.
(2)Create a platform that gives Nike control over the reselling and authentication of their shoes.
(3)Incentives consumers to use this system
-Inspire/create experiences to invoke “stories like the old days”:
(1)Do extensive A/B testing on the UX of the app with different consumer experiences within the app and invest in the experiences that create the most engagement
(2)Start investing in real consumer experiences that are connected to the app that allow consumers to purchase the shoes
(3)Go on a Hike/run and get access to an ACG shoe and gear
-Evolve alongside the ever-changing online retail experience:
(1)Create transparency in the consumer purchase process:
1. Tell consumers their chances they will likely win a SNKRs draw
2. Make a more accessible purchase process
3. Show consumers what it takes to win the shoes ie. the real SNKRS events or fitness initiatives to get access
(2)Implement better forecasting on key styles to better match consumer demand with the rise of ecommerce post COVID
(3)Find a happy balance between exclusivity and accessibility
End-to-end digital control of consumer purchase experience
-Utilize current digital innovation
-Capture reselling market
-Evolve alongside the ever-changing online retail experience
-Invoke experiences “like the old days”
Rationale recommendation
-Ecosystem:
The move to digital extends beyond a DTC business model. It is about creating an ecosystem that prioritizes ease of use and meets the consumer in the place they want to.
-Capture resale:
Currently too much of the sneaker market exists outside of the desired ecosystem, particularly with resale, this reduces control and the ability to capture data.
-Community and storytelling:
This ecosystem has to extend outside of the digital world. This way you are able to enhance the community around sneakers, benefiting the ability to storytell and consumer engagement.
-Transparency and creative engagement:
Increasing transparency around the ability to gain access to shoes is beneficial in both giving consumers realistic expectations of shoes but also may increase the demand through scarcity principles. Ability to access should also be creative to match the designer inspiration behind the shoe.
