Posted on : 2023-09-24 19:47:02
Article : Good Morning Monday Management Solution for TASK 260- Its important as the study of Nike’s new distribution strategy demonstrates the ways that other brands and retailers need to think about retail distribution in this internet-disrupted age.
Read our TASK 260 part to continue reading this Solution part to know fully well about Nike’s strategy on their disruptive distribution mechanism to grow their sales. In their new distribution system to hike their sales, Nike calls best-of-the-best partner retailers “differentiated retailers,” as distinguished from undifferentiated retailers that don’t offer quality service. The differentiated retailers will gain access to the most popular products, including exclusives and more marketing dollars to draw shoppers away from undifferentiated retailers. These undifferentiated retailers are described as “mediocre,” and destined not to survive. However, over 60% of its North American business today comes through undifferentiated retailers. Wishful goal is to generate 80% of its North American wholesale business through differentiated retailers in 2023, up from 40% in 2017.
While Nike does not explicitly state what criteria, it used to define differentiated partners, Nordstrom and Foot Locker provide examples of the differentiation it is looking for. Nordstrom has a shop-in-shop agreement where Nike operates its own space and provides their sales staff. Foot Locker has similar separate spaces and company-trained “Nike Experts” on staff. For its pure-play digital partners, Nike expects them to share data.
The Nike App enhances the shopper experience and gives access to the Nike Plus rewards program. This loyalty program offers members exclusive products, of which about one-third of its assortment is online and member exclusives can further access to Nike experts, personalized workouts, priority access to events, free shipping and 30-day wear tests. Awards are accrued based on spending and fitness app usage which unlocks even more exclusives, more services, personalized discounts and access to VIP experiences.
While Nike Plus members get the awards, Nike gets the customer data which allows the company to drill down on their shopping habits and product preferences in order to personalize their future engagements with the brand. The House of Innovation in Shanghai is a new experiential retail concept that will be customized to each planned city with a Nike Arena for rotating product and installation displays and a Center Court area to host presentations and workshops.
As important as the study of Nike’s new distribution strategy is to sportswear marketers and retailers, it demonstrates the ways that other brands and retailers need to think about retail distribution in this internet-disrupted age. But for multi-brand retailers, the learning is even more compelling. It is a warning to lacklustre retailers that brands, like customers, will leave if they do not perform well in sales and service front. The important lesson for retailers is that they must move fast to innovate and differentiate themselves to offer value to both shoppers and to the power brands to avoid pull back from their stores.
END POINT-The Nike strategy is the writing on the wall for retailers large and small that have not figured out how to be collaborative and productive partners for the brands they carry. It’s not enough to just show the brands, retailers have to sell the brands too. Nike's New Consumer Experience Distribution Strategy hits the Ground Running.
If retailers don’t step up to provide superior customer experiences, quality service and storytelling for the brands they carry, then the companies and their customers will walk, jog or run away, like Nike is doing to its currently undifferentiated retailers.
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