Despite consumers feeling the pinch on discretionary spending, Nike is witnessing robust direct-to-consumer (D2C) sales. In response, Nike has introduced Nike Refurbished, an online platform that provides a curated range of preowned sneakers.
This release marks an expansion of the Nike Refurbished initiative, which was previously available only at specific locations. The initiative, introduced in April 2021, is a key component of the sportswear giant’s Move to Zero mission.
Unlike some other programs where companies collect used footwear from consumers, Nike does not participate in such initiatives, at least not currently.
Nike Refurbished consists of a collection of items including returns, exchanges, and footwear with minor imperfections, both men’s and women’s performance and lifestyle shoes. Each pair undergoes a grading process, which categorizes them into one of three conditions: like new, gently worn, or slightly imperfect. Every shoe is subjected to a thorough cleaning process.
The Nike Refurbished program offers shoes at a discount of up to 50% off their original retail prices.
Nike’s decision to expand its refurbished program aligns with the anticipated surge in the resale industry, as projections indicate it will reach $53 billion in 2023.
Footwear has managed to establish a presence within the resale market. For instance, StockX reported a valuation of $3.8 billion in 2021 and disclosed that it declined around $90 million worth of counterfeit footwear on its platform during the same year.
StockX’s choice is reasonable, considering its role in managing high-profile transactions for rare and limited-edition sneakers that often come with steep price tags. However, the question of how it deals with everyday sneakers was raised by PYMNTS in August.
Read more: StockX’s Luxury Resale Dominance: Can Everyday Sneakers Step Up?
The sportswear giant has the potential to carve out a dominant position in the resale market due to the trifecta of its name, notoriety, and consumer demand it generates. This could outweigh common resale concerns, such as the possibility that while some preowned sneakers may be in excellent condition or seem brand new, others might show signs of wear, raising questions about the hygiene standards maintained in this category of footwear.
With that, Nike’s upper hand includes Nike Direct revenues which reached $5.4 billion in the fiscal first-quarter earnings report, a 6% increase from the previous year.
During the call, Chief Financial Officer Matthew Friend said user engagement in the Direct business has increased by double digits compared to the previous year, accompanied by rising order values.
He also said, “We are seeing consumers spending more time in brick-and-mortar locations. But 90% of their shopping journeys are starting with digital.”
Direct sales now constitute about 41% of the overall consolidated revenue, signifying a substantial rise from the midteens percentage observed about a decade ago.
Friend also told analysts that Nike Direct will “continue to lead our growth throughout the remainder of this fiscal year.”
This isn’t to suggest that the wholesale business has become obsolete. Retail sales showed growth ranging from high single-digits to low double-digits, contingent on the market. In total, first-quarter fiscal sales saw a 2% increase compared to the previous year.
With that, retail partnerships have been reinstated, solidifying Nike’s presence in physical stores. For instance, starting in November, you’ll find Nike products at Designer Shoe Warehouse. Additionally, the company extended its retail agreements with Macy’s and Foot Locker.
Read more: Nike Sees Strong D2C Sales Despite Consumers’ Discretionary Spending Pressures
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