Nike CEO admits direct push goes too far | Wilnesh News

Nike Chief Executive John Donahoe acknowledged on Friday that the company was too far away from its wholesale partners, such as macy’s department store and deep water shallow water area The goal is to become a retailer that sells primarily to shoppers through its own stores and website.

“We recognized that as we moved toward digital, we focused more on wholesale than we anticipated,” Donahoe told CNBC’s Sara Eisen in Paris. “We’ve corrected that. We’re working on it. There’s a lot of investment going on with our retail partners. They’ve all been here over the past few days; they’re very excited about the innovation pipeline.”

Over the past few years, Nike has been working to transform its business from a brand that sells sneakers and apparel primarily in department stores and specialty sports stores to one that sells most of its sales directly to consumers.

This strategy allows Nike to generate more revenue from sales and better understand its customers through data collection. Donahoe said Nike’s mobile and digital businesses have tripled in the past four years, from about 10% of total sales to 30%.

However, it’s a difficult strategy and could put pressure on margins in the short term. Moving to a direct model is capital-intensive and creates returns and in-house inventory headaches for Nike that typically fall on wholesale partners.

The bottom line is that department and specialty stores are massive customer acquisition engines. Without them, brands have to invest more in marketing, and online marketing becomes more expensive and challenging.

Some analysts said Nike’s decision to turn down wholesale partners was a mistake. They believe this sets the company back and is part of the reason it lags behind in innovation and products. It also has a negative impact on Foot Locker, which has long relied on Nike to drive sales and is now receiving a different variety of products than before.

In its push for a direct-sales model, Nike has temporarily severed ties with retailers such as macy’s department store and deep water shallow water areaBut it revived those partnerships last year as it began to change its attitude toward wholesalers.

The change comes at a difficult time for Nike, which has been criticized for falling behind in innovation and losing market share to upstarts such as its own. while running and Hoka. In December, the company announced a broad restructuring plan to cut costs by about $2 billion over the next three years. The company also lowered its sales guidance as it warned of weaker demand in the coming quarters.

Two months later, Nike said it would cut 2% of its workforce, or more than 1,500 jobs, so it could invest in growth areas such as running, the women’s category and Jordan Brand.

In Friday’s interview, Donahoe reiterated that today’s consumers “want to get what they want, when they want it, how they want it” — a point he has made discussing Nike over the past year. A phrase used when changing sales strategies.

“There’s no digital shopper vs. brick-and-mortar retail shopper. There’s no single-brand shopper vs. multi-brand shopper,” Donahoe said. “Consumers want to get what they want through multiple channels…Consumers can choose to come directly to Nike digitally, come to Nike’s doorstep or go to one of our wholesale (partners) .”