Designers, salesmen, couriers: Who will be the busiest people after Nike’s reform?

Text / Sun Baishan

Editor/ Guo Yang

For most of the recent time, the Nike Group has been plagued by negative factors such as “departures, layoffs, tidal shoe competitions, and NBA jersey tearing”, and it is in the position of the world's largest sports brand.

However, Nike has begun to take action.

In the recent investment day event, the group announced that it will begin large-scale reforms at the product supply and retail terminals to increase the leading distance from competitors. In terms of product supply, the group demanded more efficient "will reduce the design and manufacturing process by half to 6 months." This means that Nike's product innovation speed will be greatly accelerated, thus reducing the previous one-year cycle to about three months.

In terms of retail terminals, Nike focuses on the “differentiation” of retail terminals, hoping to connect different target audiences through different channels, and eliminate those “medium retail channels”. Previously, Nike launched the "Consumer Direct Offense" strategy, direct direct marketing and digitization to target audiences, and started direct sales with social media Instagram. It is said that in the future this direct sales model will be copied to China's domestic social media.

Nike's admiration for digital channels may affect its cooperation with traditional retailers. However, during the aforementioned investment day activities, Nike expressed its determination to continue cooperation with traditional channels such as Foot Locker Inc. and high-end retail brand Nordstrom Inc. In fact, Nike's sales in the North American market are still mainly from the Amazon and Foot Locker stores, which solved most of the sales for Nike.

However, Foot Locker's sales are slowing down, and Amazon has reported that it is necessary to build sports brands against Nike...

Foot Locker, which is located in a service-oriented sports shoe retail store, has formed a mature distribution channel, marketing method, inventory management method, and sales data statistics system since opening its first store in 1974. Its store business model and the current mainstream The model is no different, but at the salesperson's point, the Foot Locker clerk acting as a "buyer" is just like his company's Logo shows: the referee.

Well-sold stores, more and more customers, bargaining prices to suppliers, attracting more customers at low prices, increasing sales, more brands entering the market, and selling better and better. Foot Locker snowballs The sales model of the store attracted Nike, Adidas, Puma, VF, Under Armour and other top-ranking players, among which the five companies occupy more than 90% of Foot Locker's sales. According to Foot Locker's annual report last year, 68% of its total sales during the period came from the Nike and Jordan Brand brands.

One Rongrong and one loss all resulted in weak Nike sales. The Foot Locker, which had a net profit margin of 6-8% in the past five years, was thus dragged down. On August 18, US time, Foot Locker announced its financial report for the second quarter of fiscal year 2017. The report shows that Foot Locker’s offline sales fell 6% in the past year. On the announcement day, Foot Locker's share price plummeted by 25%. Some agencies expect Foot Locker to reduce sales by 3% to 4% in the second half of 2017.

But online, Amazon does not plan to experience the winter of American retail industry together with Nike and Foot Locker. Year-to-date, Amazon's share price has soared by 32%, while the offline Macy's and JC Penney have plummeted by about 40% over the same period.

The American research organization Bespoke Investment Group created the "Death By Amazon" index, which includes 54 companies in the U.S. retail industry that the agency is expected to suffer the most from the Amazon. According to Beth Burke, in terms of market value, since the beginning of the year, 54 stocks have lost 70 billion U.S. dollars. At the same time, Amazon's market value has increased by 120 billion U.S. dollars.

Foot Locker and Dick's Sporting Goods are both members of the Amazon Index. At the same time, Amazon is also preparing to launch its own sportswear products. It is reported that Amazon currently owns 34 own brands, of which the clothing line has 19 brands, including women's, underwear, men's and children's wear several categories, but there has been no special sportswear brand. Since the media revealed that Amazon plans to launch its own sports brand news, Lululemon shares once fell 4.9%, Under Armour fell 2.8%.

In the face of Amazon's strength, Nike also shifted from "resistance" to "cooperation." The importance of the channel is self-evident, but above the channel, it is the intrinsic value of a brand. It should be noted that this value must continue to grow and be accepted by more people at this time.

Suddenly accelerating the pace of design and manufacturing must be supported by strong copyright and patent resources. The reason Nike dares to emphasize this point is that it still has confidence in copyright and patents.

Earlier, the eco-sphere author, Nike can use the brand bargaining power to control the distribution and flow of global foundry business, thanks to this, in the past ten years, Nike's average gross margin has reached 45%.

In addition, just as the market has generally discussed in the past few months, Adidas has firmly suppressed Nike's professional sports series through its sports and leisure series. What's more noteworthy is that Nike has not yet enough products to appeal to the professional sports category. . This is a great threat to Nike, because it will undermine consumers' continued attention to the Nike brand and leave the entry channel for competing products.

A few days ago, Nike played an "unprecedented" discount to promote products. For this behavior, the market generally interpreted it as cleaning inventory, but from the brand point of view, a large number of discounts are negative factors. Various negative factors have piled up, and consumers have formed such impressions as Nike's hardship and Nike brand problems.

From design to manufacturing to retail, Nike has launched improvement plans throughout the supply chain, but whether or not the plan will work will depend on how well its competitors compete, in addition to its own execution capabilities. In fact, there is another view that the current sports and leisure boom has reached a critical point, and that the market will soon lose heat. According to this, Nike's chances or really returned to their own door.