Nike Hits $1 Billion in Digital Revenue in North America
Nike shared more details on its analytics strategy, including its February acquisition of data integration platform Datalogue, which uses machine learning to translate raw data in real time into actionable insight at an enterprise level.
Datalogue, which is Nike’s fourth data and analytics acquisition over the last few years, will help the shoe giant provide quicker and keener personalized product, marketing and service recommendations to existing and potential members, expected to increase member buying frequency, basket size and member retention rates.
As part of this, Nike recently realigned its organization to put its data teams alongside the creative teams.
“Data just allows us to have a more personalized experience with consumers, and it’s what consumers want and expect from a brand like Nike,” said John Donahoe, president and CEO of Nike Inc.
Beyond personalized experiences, the financial value off data and technology are playing out in the company’s ability to make better pricing and merchandising decisions, especially regarding how it fulfills demand.
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“I think more broadly as an enterprise, as we continue to automate the way we work and leverage technology end-to-end, there is going to be productivity in the manual processes and work that we do as a company today,” added Matt Friend, chief financial officer.
Indeed, the company’s digital efforts paid off yet again, with its owned digital business growing 54% on a currency-neutral basis during the fiscal third quarter. North America led the growth, tallying its very first quarter with $1 billion in digital revenue.
Revenue for Nike Inc. grew 3% to $10.4 billion compared to the prior year, which is down 1% on a currency-neutral basis. But Nike brand digital sales grew 54%, powered by its mobile ecosystem, with demand on the Nike app rising 90% vs. last year.
The company expects digital to continue to be its fastest-growing marketplace channel, with digital mix increasing toward its 50% vision.
Membership Mindset
At the heart of Nike’s digital playbook is its membership strategy, which recorded a more than 60% increase in monthly engaged users for the quarter. This was led by the SNKRS app, which had four times the engagement in monthly active users compared with last year.
Member growth is outpacing total digital growth, with buying members growing 80% vs. last year. In its owned stores, member demand penetration rates are also “seeing meaningful increases,” said Donohoe, thanks to store training programs, member-specific promotions and enhanced account linking capabilities.
“This is critical as we strategically focus on better serving and driving repeat engagement with active, high-value members across all of our channels,” he noted.
While 35% of Nike-owned stores remained closed, physical retail, especially Nike’s new concept stores, will continue to play a key component of Nike’s direct-to-consumer acceleration. In addition recapturing displaced consumer demand as Nike restructures its wholesale marketplace, its stores are helping gain members at scale.
Friend pointed to the two recently opened Nike Live concepts in China, which recorded member checkout rates reaching 90%, and Donohoe noted today’s consumers demand a product when they want it, how they want it.
“They want a seamless, premium digital and physical experience. In fact, in many cases, they don’t see a difference between digital and physical — whether they bought it on digitally and had it delivered at home, or whether they bought it digitally and picked it up in store, whether it was one of our stores or one of our strategic partner stores,” Donohoe said. “And so we do see a need and a really important role for strategic physical presence, both ours and our partners.”
As part of this, Nike is working with a smaller number of partners on its One Nike Marketplace that are willing to share membership data in order to deliver personalized experiences, which he said are the partners that have the most robust business with their shared consumers today.
High double-digit retail sales growth across its marketplace has also enabled Nike to increase its market share across key markets during the quarter.
