Is Nike Really Going Back to Being a Traditional Wholesaler?Customer experience ·
In a significant industry shift, Nike, the iconic sportswear brand, has made a surprising announcement that it will be revisiting its wholesale partnerships after a period of focusing on direct-to-consumer (D2C) sales. On June Macy’s chairman and CEO Jeff Gennette, speaking on the retailer’s first-quarter earnings call, announced that Nike merchandise will be back on Macys.com and in select stores nationwide starting in October with plans to scale up by the spring of 2024.
Over the past few years, and particularly since 2017, Nike has been laser-focused on its "Consumer Direct Offense" strategy, where it prioritized D2C sales through its own physical and digital channels. The move allowed Nike to have direct control over the customer experience, gain valuable consumer insights, and offer personalized products and services. By cutting ties with some wholesale partners, Nike was able to better cater to the evolving demands and preferences of its global customer base, aiming to elevate differentiated retail spaces to make up 80% of its distribution.
This blog post delves into the factors behind Nike's past success in D2C and the reasons for its return to wholesale partnerships.
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The Strategy Behind the Nike’s announcement
One of the primary drivers behind Nike's decision to re-embrace wholesale lies in the vast market reach it can achieve through established retail partners. While D2C channels offer unparalleled control over the customer journey, wholesale partnerships provide access to different demographics and geographic regions that might not have been effectively reached through Nike's direct channels alone.
During Macy's first-quarter earnings call, the company's chairman and CEO, Jeff Gennette, emphasized the significance of Nike's apparel as "one of the most important brands for our customers". Gennette acknowledged that many customers expressed disappointment during the past year when Nike merchandise was not available at Macy's.
In response to the overwhelming demand, Nike merchandise will return to Macys.com and select stores nationwide from October onwards. The partnership between Nike and Macy's is poised to grow further, with plans to expand the availability of Nike products in Macy's stores nationwide by the spring of 2024. This strategic move represents a win-win situation for both companies, allowing Nike to re-establish its presence at Macy's and offering Macy's customers access to the highly sought-after Nike apparel and accessories.
In the same way, Nike is also reviving and fortifying their partnership with Foot Locker. Foot Locker's CEO, Mary Dillon, described the relationship with Nike as "renewed". In May, she shared that the two companies' teams met in Portland to plan for the growth of their Nike business in 2024. They are also collaborating closely on data sharing and improving their joint capability to cater to customer demands and enhance the marketplace experience.
By joining forces with key retailers such as Designer Shoe Warehouse (DSW), Macy's, and Foot Locker, Nike can position its diverse product portfolio in front of a broad spectrum of consumers. These retailers boast well-established customer bases and trusted reputations, making them valuable channels for introducing Nike's cutting-edge sportswear and footwear to new audiences. Leveraging the expansive network of wholesale partners enables Nike to expand its footprint and foster relationships with consumers beyond the reach of its own D2C channels.
Moreover, Nike's re-entry into the wholesale market allows it to capitalize on the diverse preferences and trends that vary across regions and demographics. The needs and desires of consumers differ significantly based on their location and lifestyle, and wholesale partners possess valuable market insights and local expertise that can inform Nike's product assortment and marketing strategies in a targeted manner. This localized approach ensures that Nike can resonate with consumers on a deeper level, offering tailored solutions that cater to the specific tastes and demands of diverse communities.
The partnership with Designer Shoe Warehouse, Macy's, and Foot Locker represents a strategic alignment of interests, creating a mutually beneficial relationship where Nike's innovative products and brand appeal are complemented by the retailers' widespread distribution channels and engaged customer bases. This collaboration translates into heightened visibility and accessibility for Nike products, sparking excitement and interest among consumers.
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Is Nike really disinvesting from D2C?
It's essential to note that Nike's renewed interest in wholesale partnerships does not imply a disinvestment from D2C. The D2C strategy remains a cornerstone of Nike's approach, offering the brand unparalleled opportunities for direct customer engagement, brand storytelling, and building lasting relationships. The two channels, wholesale and D2C, complement each other and create a symbiotic relationship that can drive overall brand success.
Nike's decision to invest in both wholesale and D2C underscores the significance of integrating the two channels seamlessly. By harmonizing the customer experience across all touchpoints, Nike can ensure a consistent and compelling journey for consumers, regardless of where they choose to shop. This integration enables Nike to leverage valuable customer data from both channels, helping the brand gain deeper insights into consumer behavior and preferences.
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