Nike Tries to Outrun Snags With D2C and Concept Retail

Nike shoes are running hard as the famed footwear brand hustles to reverse a 2022 slide.

As the Oregon-based athletic footwear, apparel and equipment maker gets set to report fiscal second-quarter financial results Tuesday (Dec. 20) afternoon, Nike is still pushing digital innovation, distribution changes and new retail concepts to bring swoosh back to the brand for 2023.

One such venture includes the opening of the first “Jordan World of Flight” store in Milan last week, with aspirations to grow it into an international chain of footwear and apparel stores that ply luxury and experiential retail.

In a press release, the company said, “World of Flight is at the forefront of streetwear and basketball culture, inspiring deeper consumer connections and a platform to demonstrate the universal language of the Jumpman,” referring to NBA immortal and sneaker magnate Michael Jordan.

Located next to luxury retailers including Gucci on Milan’s Via Torino shopping thoroughfare, World of Flight is a 4,000-square-foot experiential retail concept tied closely to the brand’s ramped-up direct-to-consumer (D2C) digital efforts.

After a lathering of its stock, Nike’s D2C push outperformed expectations, with Nike CEO John Donahoe telling analysts and investors during last quarter’s earnings call on Sept. 30 that “our remodeled brand stores continue to play the key role of supplementing where there are gaps in the marketplace, such as women’s or Jordan.”

“Now this quarter, we delivered Nike Digital’s highest net revenue quarter ever. We see consumers continuing to vote for Nike Digital as the Nike commerce app had its highest traffic in history during Q1,” he said.

Even so, there’s no escaping that pain felt by Nike shareholders, who have seen the stock fall at a time when fitness and athleisure and connected device use are all continuing to rise — all while competitors including Adidas, Reebok and UnderArmour and more struggle to get their own footing and take advantage of their larger rival’s period of pain.

“From sales in China that fell 16%, to North American inventories that jumped 65%, to strong dollar headwinds that whittled 10% revenue growth down to 4%, to container ships and orders that came too slow and then too fast, the past three, six, nine and twelve months have delivered a bear market and an unprecedented come down in the land of the ‘Swoosh’,” Donahoe said.

Nike Promises ‘Decisive Action’ on Inventory, More Investment in D2C

Swooshing to Remake Distribution

The company’s D2C efforts upended the retail footwear sector starting in 2021 as it stopped selling to chains including DSW, Urban Outfitters and others. Reports that Nike was dropping or drastically reducing its longtime pact with Foot Locker were somewhat exaggerated.

Complex quoted Donahoe in March as saying, “To be crystal clear, Foot Locker always has been and always will be a large and important partner of Nike’s, and that will continue to be the case. And they’ll have a very distinct role in our marketplace strategy as a wholesaler,” adding that “they are one of our important partners going forward.”

Foot Locker has kept on its feet striking new deals with Adidas and other brands to fill any voids created by Nike.

Footwear News reported in November that “This quarter marked the first period in which the diminishment of Nike product would be felt in stores. Earlier this year, Foot Locker said the amount of Nike product in its stores would be significantly less as the Swoosh accelerated its shift towards DTC sales. While this move initially caused the retailer to post a bleak outlook for 2022, it has recently encouraged Foot Locker to lean into other high-demand brands.”

Nike Tries to Stamp out Sneaker Resellers

In addition to trimming retail distribution, Nike has also taken aim at sneaker resellers in 2022. The brand has taken online sneaker reCommerce marketplace StockX to task alleging sales of counterfeit Nike’s on the site.

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