DISCUSSION

Will Nike’s digital drive build stronger ‘one-to-one’ relationships with consumers?

June 30, 2020Written by Tom Ryan

Source: nike.com/snkrs-app

Like others, Nike is accelerating its digital transformation due to the pandemic. However, in a linked move, member engagement is being made an equal priority. “We've talked about membership as a growth driver and differentiator before, but now we'll align our business to make it central to everything we do,” said John Donahoe, CEO, last Thursday on Nike’s quarterly call. The pandemic has likewise demonstrated the importance of Nike’s shift toward making digital “being at the center of everything they do,” he said. Nike reiterated that it expects combined online sales from its own and wholesale partner sites to eventually reach half of sales, up from 30 percent projected for the just-started fiscal year and 15 percent in 2018. Much of Nike’s digital push is about driving engagement, particularly with members. “Membership is a big word, but in my mind it breaks down three simple things,” said Mr. Donahoe. “Do we have an identified one-on-one relationship with a consumer? Can we increase our level of engagement with that consumer in value-added ways? And then does that increased engagement lead to greater retention and share of wallet if there are other purchases?” In the fourth quarter ended May 31, workouts on the Nike Training Club app more than tripled, peaking at nearly five million workouts per week during April. The gains were helped by Nike’s move to make the app free amid stay-at-home orders. App usage also accelerated for Nike Running Club and SNKRS, which offers limited-edition sneaker drops with a gamification component. The online engagement led to 25 million new members in the quarter, double year over year. At physical retail, the member focus is represented by Nike Live, which features an inventory mix based on local member activity and buying patterns. In-store, members use Nike’s mobile app to scan barcodes for more product information, reserve product, book appointments and fetch special perks. Ultimately, Mr. Donahoe said, increased engagement drives increased purchases. “Someone may only buy footwear and apparel a few times a year, but engaging with us each week, maybe even each day, brings Nike into their lives,” he said.

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