Posted on : 2023-09-22 05:28:57
Article : Good Evening Friday Management TASK 260- Sometimes companies need to go on the offence in a “disrupt yourself” style in distribution to propel the company faster and further into the future….
This is our yet another interesting strategic business management decisive path article on distribution system which might inspire many companies to plan for.
Accessories like branded footwear, eyewear, sportswear are sold in multi brand retail stores, company brand stores and online. These branded products need high consumer visibility in the outlets with large store space to keep a greater number of models and SKUs in market place. To sell in a greater number of outlets, these products distribution is key to be available nearer to the shopper for convenience and to garner higher sales volumes. To fulfil the consumer aspiration for possessing most popular brands, availability of those brands is seen more in multiband retail chains with whom the companies’ partner with. In this TASK-SOLUTION article we would discuss about a global foot wear brand as how they brought a total transformation in distribution. Nike is a global largest footwear brand at $21 billion revenue and large athletic apparel brand contributing $9.6 billion. They hold the #1 market share in all markets and in all major categories.
In mid-2017 Nike unveiled its plan for growth called the “Triple Double Strategy (2X)”. Through it, the company promised to “double its impact of innovation”, “double its speed to market” and “double its direct connections with consumers”. The cornerstone of the Triple Double Strategy is the Nike Consumer Experience (NCX), which includes Nike’s own direct-to-consumer network, as well as a vastly streamlined slate of wholesale distribution partners. It is through the NCX that the company is feeding its 2X Innovation and 2X Speed initiatives. In a way Nike is going on the offense in a “disrupt yourself” way to propel the company faster and further into the future.
In “Just Do It” fashion, Nike recognized that it must “edit to amplify” growth, so it is putting 25% fewer styles into the market to make space in order to amplify sales. And it also includes streamlining distribution to only those that deliver the fastest and most profitable growth. That means Nike could potentially edit out a massive number of distribution partners from its current slate of 30,000 retailers to focus primarily on only 40 that offer superior customer experiences, quality service and storytelling that differentiates the brand. And of course, the company’s own Nike Direct retail platform both online and offline, is where it can deliver all those at the highest level.
With a little over a year of executing on the Triple Double Strategy, the results are started to show. In fourth quarter 2018 Nike brand revenues grew 9% on a currency-neutral basis, followed by a 10% increase in first quarter 2019. Such dramatic strategies are not for the faint of heart, but absolutely critical to manage disruption in established businesses caused by demographic, geographic and psychographic shifts in the market. Empowered consumers won’t wait for brands to catch up, nor will product marketers wait for their retail partners either. Nike has decided to proactively get out in front of those changes and be there whenever and wherever the customer wants to engage with them.
While Nike is placing a heavy emphasis on direct-to-consumer channels through Nike.com and its own retail stores, wholesale distribution still accounts for the lion’s share of sales nearly 70% in 2018, though that share has decreased from 82% of 2014.To amplify sales through its wholesale distribution channels, Nike has identified only 40 retail partners, both online ecommerce players and physical retailers, that offer the best access to the customers it targets and who can deliver best-practices customer experience for the brand.
While this is what Nike plans, what could be the real execution in the market place? Post your perceptive comments in our comments box and mail us. Our Solution will be posted on Good Morning Monday Management Solution for TASK 260 on 25th Sept 2023.
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