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Where Nike’s Marketplace Strategy Is Going Next

Nike Paris store House of Innovation
Nike's Paris flagship, one of three locations for its House of Innovation concept.

Many athletic brands have followed Nike’s lead and created an omnichannel playbook to win over consumers. But if you ask Daniel Heaf, VP of Nike Direct, there’s a clear difference in the Swoosh ecosystem.

“Everybody knows that what you need are physical and digital touch points. It’s not stores and digital or direct and wholesale. What makes Nike unique is the scale and diversity of our marketplace strategy,” Heaf told FN.”There’s no other brand that operates at the scale that we do. The direct business that we’ve built — particularly over the last five or six years — combined with the strength of our wholesale partners and points distribution, it’s unmatched in the industry.”

In its last reported quarter, Nike Direct sales climbed 22% to $5.3 billion, with Nike brand digital sales increasing 24%. Also during Q3 for its fiscal 2023, the company’s wholesale revenues grew 18%, a notable mark given Nike’s emphasis on its direct-to-consumer business.

From Nike’s S23 Studio in New York, Heaf addressed select media and shared how connection and community is at the heart of the athletic giant’s marketplace strategy.

The exec stated much of what Nike has learned comes from its robust membership of 160 million members.

“We understand what their needs are, and we’re able to take that and use it in product creation and the process of personalizing marketing, merchandising and marketplace experiences across both our own channels and across the marketplace,” Heaf said.

Speaking with FN after his presentation, Heaf highlighted membership as one of the company’s most profound successes.

The Membership Formula

“We have the ability to know, serve and contact members individually. Three years ago, almost all the demand through Nike Direct was from new members. Today, most of the demand is through repeat purchase,” Heaf said. “What we’ve done is we’ve created this ecosystem that means consumers interact with us more frequently, they buy with us more frequently and they’re more loyal to the brand. That is a really meaningful change to the way that business has ever operated.”

The learnings Nike acquired through membership, Heaf explained, have also informed its approach to its owned retail locations. The highlights of its store fleet include House of Innovation, which is the company’s flagship concept that showcases innovation in both product and storytelling, and Nike Live, which specifically serves the woman consumer.

Nike Live
Inside a Nike Live store.Courtesy of Nike

But Heaf said Nike is aware that its consumers don’t just live in its own channels.

Arguably its most notable recent experiment from a retail partnership perspective was a connection forged with Dick’s Sporting Goods, which was announced in November 2021. This partnership allows Dick’s Scorecard and Nike Membership accounts to connect through the Dick’s mobile app, resulting in an easy-to-use platform for customers to seamlessly shop an expanded selection of Nike footwear and apparel.

“We’re just focused on making it easier and a richer experience,” Heaf said.

What’s more, Foot Locker CEO Mary Dillon confirmed in late-March during the retailer’s investor day that the company is “revitalizing” its partnership with Nike. The exec stated the two were focusing on key strategic areas including basketball, kids and sneaker culture, and were sharing insights to plan their strategies together.

Beyond the transactional interactions, Heaf said Nike has made “goosebumps-worthy storytelling” and experiences through its digital platforms a priority. He said the ambition that Nike has with stores business is matched by that of digital.

“We went from a pretty small digital business three or four years ago, to now if not the biggest but one of the largest footwear and apparel apps in the world. This requires a whole enterprise to get to that,” Heaf said.

Just like with its stores and retail partners, Nike has also been able to experiment digitally.

Heaf highlighted the deployment of Nike Training Club content through Netflix, which launched in December 2022, as one of the more notable wins as of late. “Tens of millions of new consumers are now engaging with our content through Netflix,” he said.

The exec also made note of its partnerships with gaming companies, such as EA Sports with its soccer and “Madden” franchises, as well as Epic Games through Fortnite and with Roblox and its own .Swoosh platform of digital collectibles.

Nike .SWOOSH digital collectible
A Nike .SWOOSH digital collectible.Courtesy of Nike

The experiences are arguably the most pronounced via the SNKRS and NBHD platforms, which Nike is using to fuel inclusive, fair and engaged communities.

“SNKRS was always meant to be both an opportunity for us to launch our incredible, highly-coveted product, but also be a community hub for this incredible crew of sneakerheads,” Lucy Rouse, VP and GM of SNKRS, said addressing media at S23 Studio.

Rouse also offered a deep dive on NHBD (pronounced neighborhood), which she described as an ecosystem that includes an inclusive network of community change-makers, creatives, retail partners and cultural authenticators.

“NHBD enables us to contribute to these incredible progressive and inclusive communities and cultures all over the world. Our NHBD partners are the ones that are driving systemic change across multiple issues, whether it’s racial injustice, whether it’s social injustice, whether it’s LGBTQIA+,” Rouse said. “They are shining a light on those issues, and us being able to work with them enables us to make sure that we are moving the world forward.”

Women’s Focus

Nike brought three women’s NHBD partners to S23 Studio to highlight how issues are being addressed. The trio included Abby Albino and Shelby Weaver, owners of Toronto-based boutique Makeway, and Stine Lindholm Pedersen, co-founder of Copenhagen-based retailer Naked.

“The main thing is inclusivity. Women just want to be on the same level of men in this industry,” Pedersen said of the most pressing issue women in sneakers are facing at the moment. “The most important thing right now is having full size ranges. We don’t want to be told that a shoe was for women and then there’s this shoe for men. We want gender fluidity if anything at the moment, and that’s definitely for the future as well.”

Weaver agreed and added, “Women just don’t want to be boxed in. We don’t want to be told to buy this particular silhouette because it’s only available in these types of shoes. We want to have access to everything and then be able to choose the things that speak to each of us for whatever our individual identities are.”

As for Albino, the issue she believes is at the top of the list is safety.

“One of the things that I’ve heard often is when women go to men-owned sneaker boutiques or sneaker boutiques with employees that are men, they just don’t feel as safe,” Albino explained. “There’s bullying and harassment and want to make sure that we actually have a really safe space for women to feel like they can be who they are and engaged and have access to sneakers in a way that is welcoming.

Although Nike is winning with its ecosystem, Heaf told FN that there’s plenty of room to grow.

“Some of the products that we offer, women’s bra and leggings for example, we have built amazing digital experiences for those particular products and we have also built bespoke experiences in our stores for it. The bras and leggings fixtures that we now see across our Nike Rise and Nike Live stores have been really successful in driving the launch of our bras and Zenvy leggings. But are we that good in every single classification?” Heaf explained. “I want to get to that level of distinction where we’re as good for basketball shoes as we are as good for women’s fitness and men’s lifestyle footwear. That requires not a one size fits all approach. We have to differentiate how we tell stories and how we surface these products to consumers.”

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Where Nike's Marketplace Strategy Is Going Next
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