Hoping to own the customer experience, Nike is redefining itself.
- Between 2011 and 2020, DTC sales grew from 16% to 35%.
- By 2022, Nike aims to become a 50% digital business.
Executing its One Nike Marketplace strategy, the company is shuttering wholesale accounts, opening Nike Live stores, and going all-in on its arsenal of apps. According to Nike CEO John Donahoe:
“We know a consumer who connects with us on two or more platforms has a lifetime value that’s four times higher than those who don’t.”
Apparel, Fitness, and Community
As apparel and fitness intersect, Nike’s Training Club and Run Club apps put it at odds with both lululemon and Peloton.
For context: Nike began experimenting with hardware in 2006, introducing the Nike+iPod Sport Kit. In 2008, Nike+ SportBand Kit was released. The Nike+ SportWatch GPS came in 2011. Then, in 2012, Nike launched the FuelBand.
Two years on, Nike disbanded its FuelBand business. Of note, Apple CEO Tim Cook has served on Nike’s board of directors since 2005. As Apple prioritized its own wrist-worn device, Cook likely helped Nike see that their hardware efforts were futile. In the end, Apple hired members of the FuelBand team to work on iWatch (as Apple’s smartwatch was known at the time).
Flash-forward: Jumping ahead to the present day, Nike’s decision to exit wearables in favor of fitness software served them well. As of November 2019, Nike has 170M users across its family of apps, including Nike’s main app, Nike+, SNKRS, Nike Training Club (NTC), and Nike Run Club (NRC). During COVID, the company’s digital portfolio has paid dividends.
In the fourth quarter ending May 31, 2020:
- Nike apps added 25M new members.
- In April ’20, Training Club members logged 20M workouts, up from 1.8M in ’16.
- 50% of Nike’s global members completed a Run/Training Club workout during summer 2020
- The boost in users led to an increase in digital sales.
“Our vision is to create direct, unbreakable relationships with our consumers. And we know the most direct connection is through the mobile device they carry with them everywhere they go.” – Nike COO Andy Campion
Punchline: In hindsight, Nike’s decision to ditch hardware looks like the right choice. And it will be worth watching to see how they evolve their digital strategy.
Likewise, tracking the lululemon x MIRROR partnership in relation to Nike’s in-house software efforts will be telling as the quest for “unbreakable” customer relationships continues.