Digital Transformation

After online sales soar, Nike says consumers will not revert back to bricks-and-mortar

By John Glenday | Reporter

September 23, 2020 | 4 min read

Nike has bounced back with a vengeance from a Covid-19 induced slump, reporting a staggering 82% jump in digital sales between June and August. This has offset lower traffic at physical stores, with the expectation it could become a permanent trend.

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After online sales soar, Nike says consumers will not revert back to bricks-and-mortar

Nike numbers

  • Nike outperformed analyst expectations for the quarter as net income climbed from $1.37bn to $1.52bn.

  • It wasn’t a total rebound as Nike’s revenue still fell 0.6% below last year’s, slipping from $10.66bn to $10.59bn. This still surpassed the expected haul of $9.15bn, however.

  • China played a strong role in the turnaround with sales there rising 6%, in stark contrast to North America where sales dipped 2%.

  • Changed circumstances have turbocharged Nike’s digital performance, with online sales accounting for 30% of its business in the quarter – a threshold that was not expected to be reached until 2023.

  • Direct sales have also been on the up and up, jumping 12% to reach $3.7bn as the brand works to reposition itself from being primarily a wholesaler.

A shift to digital, direct selling:

  • In recent years, Nike has pivoted away from bricks-and-mortar retail partners in favour of investing in its own stores, as well as its website and apps.

  • This approach culminated in Nike turning its back on the world’s largest retailer, Amazon, in November to focus on nurturing more personal consumer experiences.

  • Nike chief executive John Donahoe has told investors he believes online habits have become hard-wired as much of the digital growth came after most retail stores had reopened.

  • Donahoe remarked: “We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back.“

  • Nike is not alone in registering profound shifts in consumer behaviour, with Lululemon, Dick’s Sporting Goods and Peloton all reporting strong demand for clothing and workout gear.

  • This has been driven by a ’running boom’ as locked-out gym goers pound the pavement instead, bringing knock-on befits to the likes of Asics.

Digital Transformation

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Nike, Inc. is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services.

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