Nike is quickening its move to digital design and away from traditional manufacturing processes to produce prototypes at previously impossible speeds and offer fans unprecedented levels of personalisation.
It encapsulates part of the innovation push the world’s largest sportswear brand hopes can kickstart growth following an underwheliming quarter. While sales were up 8 per cent in the period, the business has seen Under Armour and Adidas chip away at its decades long dominance, losing basketball sales to the former and seeing the latter enjoy successes in the fashion footwear category in recent months.
Speaking to analysts about the performance on an earnings call yesterday evening (28 September), Nike chief executive Mark Parker discussed the company’s plans to bring products to market faster, and more importantly directly to consumers rather than through wholesale partners. Part of that shift is dependent on what Parker called “our transition from cut and sow where precision is at the stitch level to digital design where precision is at the pixel level”.
“We’re leveraging the power of computational design that uses algorithms to create highly tunable innovations very quickly,” he said.
“This summer in Rio, athletes such as Allyson Felix, Elaine Thompson and Mo Farah claimed gold wearing our latest track spikes. Each were developed using computational design, 3D printing and Selective Laser Sintering, which allowed us to create and refine prototypes in hours instead of months and aligned with the athlete’s specific training programs and competitive needs.”
One example of the “real-time personalised opportunities” the business will look to exploit is around basketball. To champion ambassador Kevin Durant’s move to the Golden State Warriors team in the summer, Nike allowed fans to customise their own versions of the KD9 shoe in the blue and yellow colours of the team. “You’ll see more of these kind of real-time personalised opportunities as we invest in capability to deliver products to market when and where the fans want them most,” Parker teased.
“Personalised products and services where and when you need them is the future Nike is building for tomorrow and delivering today.”
While 3D printing has generated much hype over its potential industrial and home use, it is becoming an important complement to the more labour-intensive factories. Adidas is another sportswear manufacturer looking to tap into the rise of personalised products, with both it and its long-time rival taking an interest in the speed at which changes can be made rather than the volumes.
It’s not just 3D printing where Nike sees gains to be made. Parker also teased more to come from its ongoing relationship with Apple, which has already seen the two work together on apps and the popular Nike+ community. Earlier this month, the two brands announced the Nike+ app for the Apple Watch, translating key features from the mobile app such as run reminders and training data to what both refer to as the “perfect running partner”.
“We got a taste of the combined power of Nike and Apple again this month and there’s much more to come as we focus on solving problems for athletes together, combining NIKE's deep knowledge of sport with Apple’s expertise in digital technology,” added Parker.
All these efforts will likely be steered to an extent by Adam Sussman, Nike’s first chief digital officer. Hired at the start of the year, Sussman reports to president of the Nike brand Trevor Edwards and was heralded as the “beginning” of a “big year for the world of Nike digital”.
Elsewhere, the business was quick to highlight its performance over a summer that included the Rio Olympics, European Championship and Copa America, which all worked to help it accrue $9.1bn sales.
If Nike were a country, it would have stood atop the medal count leaderboard, with over 1,500 Olympians from 60 countries winning 189 metals while wearing its products, the company boasted. What’s more the European Championship also concluded with the first all-Nike final, with Portugal defeating host nation France.
Despite the performance, the company is all too aware it is a tricky time for both its own prospects and those of the wider category, including the bankruptcy of major retail partners such as The Sports Authority in its homeland among others.
Those pressures heaped a worse than expected slowdown in North America, where orders – a key indicator of demand for the brand – rose just 1 per cent when analysts had predicted 5 per cent. However, Nike doesn’t believe they’re a clear proxy for sales anymore and revealed it will no longer report the numbers in its quarterly earnings releases.