NIKE's sporting chance to score digital success in retail

Profile picture for user slauchlan By Stuart Lauchlan September 26, 2017
NIKE's Connected Jersey for NBA fans is only part of the wider digital transformation journey for the retailer.

Digitally-connected jerseys

NIKE’s digital progress has been one of the retail digital transformation journeys that we’ve tracked closely at diginomica. New stats out of the firm are indicative of the importance of getting the digital strategy right.

For its first quarter of fiscal 2018, NIKE Brand revenue grew 2% while new store and compable store growth was 5%. Meanwhile NIKE Direct saw an 11% rise, fuelled by a 19% growth in online. In some regions that online percentage is even more striking. For example, in London is currently running at 60% up year-on-year.

Alongside the commercial implications of this, there’s the wider question of how NIKE connects with the digitally-enabled sports fan of today, says Trevor Edwards, President, NIKE Brand:

By leveraging the power of sport, time and again, we authentically connect with consumers through premium innovative product and elevated services led by digital and mobile. Our Consumer Direct Offense accelerates that work through a more personal lens.

By infusing digital in how we bring our brand to life for consumers, we invent new ways to connect more closely with them. It all comes down to serving the consumer completely. Our ability to connect breakthrough technologies to our brand-defining energy and emotion has us incredibly excited about the future. It’s with this focus that we take the sports industry into the next era of digital.

Edwards cites the basketball market as a case in point, pointing to NIKE’s partnership with the NBA and the Connected Jersey, each of which contains a unique chip built into its jock tag. Using NIKEconnect, fans are able to access real-time, personalized experiences through their smartphone. This is a work in progress, he says:

First of all, of course, we are elevating performance through innovation with the lightest and most breathable NBA Jersey ever. At the same time, the NIKE NBA Connected Jersey is much more than a uniform. It’s a digitally-enabled jersey that drives a new level of service for fans to tap into the game they love and get insider access to their favorite teams, players and special products.

Above all, it’s a premium and personal membership experience that fuels a direct emotional connection and allows us to serve them better.The jersey experience will unlock a brand-new world of connection for members. For example, NBA players can now connect directly to fans who own their jersey, sending them personalized exclusive messages instantly to their phones. That’s the future we’re really excited about, both as a brand and as a business.

Digital era

For NIKE CEO Mark Parker, NIKE Connect is just the first step into a retail era of digitally-connected products:

We see great potential ahead to link future product with services and experiences in seamless ways. There’s also a massive commercial opportunity that comes from working directly with the NBA. With the three most authentic basketball brands, NIKE, Jordan and Converse, we will drive growth for performance products and connect the energy of the NBA to sneakers, style and the culture around the game.

To that end, NIKE is running a number of digital pilotsk, including one that combines , consumer personalization, 2X Direct and 2X Speed at a Nike By You Studio in New York. Parker explains:

This will re-engage the consumer to generate custom graphics and colors, and we build the shoe onsite and have it ready to take home in an hour. There’s a lot of great learning here that we’re connecting back to our broader membership plans. 2X Speed is coming to life in other ways across the company. On the larger scale, we’re capturing more real-time demand, while delivering end-to-end benefits to our entire product creation cycle.

As one of strongest global retail brands, NIKE needs to adapt its strategic thinking to meet different international markets. Digital strategy is no different, says Parker:

This approach is about serving all of our consumers globally. It’s more than transforming a developed market like North America. It’s also about accelerating developing markets as well. Our international business is now over 55% of our revenue, and there’s much more opportunity ahead in our developing markets. That’s why we focus on a market like China, for example…With an economy that’s being driven by digital natives, they by-passed old models, naturally blending digital and physical retail and shopping within their social channels.

In contrast, a developed market like North America must embrace change to its legacy retail infrastructure. As the leader, we’re fully committed to energizing and growing the marketplace through both our own NIKE Direct businesses and with strategic wholesale partners.

With the wider US retail sector in considerable turmoil, Parker stakes a claim for NIKE’s market to have some competitive advantages over other sectors:

In sport, storytelling expertise and service matter, people need and seek guidance, and for the sport and sneaker consumer, mobile is the first step in any search for the right product. The key is for our experiences to feel special, and that could mean a personal one-to-one interaction, reserving products based on a consumer’s shopping history or as simple as delivering products within hours.

Our vision is for every consumer who engages with the NIKE Brand to enjoy an elevated consistent experience regardless of channel. That’s why we’re working so closely with a select group of our strategic partners to define the new consumer experience together. Our most progressive partners are already testing elevated and digitally integrated consumer concepts. Others are just beginning their acceleration. And with the new commerce partners, we’re really pushing the boundaries of existing models.

The wider message is simple, concludes Parker:

Retailers who don’t embrace distinction will be left behind. While the transformation maybe difficult for some, NIKE will lead the industry to come out much stronger.

My take

NIKE remains a solid example of digital transformation in practice in the retail sector and sets a good example to others in the market.