Nike Renews Relationships With Retailers in Shift From D2C Focus

Nike products will be available again in the warehouses of designer shoes.

Nike Renews Relationships With Retailers in Shift From D2C Focus

The current strategy of activity of this manufacturer of clothing and footwear provides for the rejection of interaction with retailers. Within the framework of this concept, the company focused on the scheme of direct commercial relationships with the consumer according to the principle of D2C. But this approach of the brand has come under change. This is evidenced by the fact that on Thursday, June 8, the CEO of Designer Brands, Doug Howe, during a telephone conversation, said about the resumption of cooperation with Nike and announced the start of a commercial partnership in November this year.

Houwe also said that over the past few months, there have been negotiations about a partnership.

Nike ended its cooperation with Designer Shoe Warehouse in 2021. This decision was one of the stages in the implementation of the strategy of activity approved in 2017 and provided for the gradual cessation of the practice of interaction with retailers. Since then, the manufacturer of shoes and clothing has stopped the operation of cooperation programs with about half of the partners.

The gradual change in Nike’s business strategy is also evidenced by the fact that last week it was announced the resumption of the brand’s partnership with Macy’s. Cooperation with this retailer was stopped in 2021 and will resume in the fall.

Nike is also resuming its commercial relationship with Foot Locker.

The shoe and clothing manufacturer’s D2C business was growing, but the overall figure was far from ideal values. Due to the brand’s refusal to interact with retailers, competing firms received additional space of opportunities and were able to increase their awareness in the market. Also, as a result of the implementation of the Nike strategy approved in 2017, buyers lost some of the ways to compare the company’s products with similar competitors’ products.

The brand switched to an inter-channel sales strategy combining the D2C format and sales through a chain of stores, after reducing the value of its shares by half by the end of 2021 and 2022. The company focused on efforts in the field of digital innovation, changes in distribution, and new retail concepts. By December last year, the firm’s digital business had grown by 34% compared to the results for the second quarter of the same year.

But at the same time, the state of affairs of Nike was not ideal against the background of undeniable, but still not comprehensive successes. A failure in the supply chain during the coronavirus pandemic caused an excess of product stocks in the company’s warehouses in the last few quarters. Against this negative background, the company turned to wholesale partners with a request to sell off stocks.

According to the results of the quarter that ended on November 30, 2022, Nike’s wholesale revenue increased by 19%. This indicator has become a kind of breakthrough after several quarters of stagnation.

Nike President and CEO John Donahue stated that strategic wholesale partners such as Dick’s Sporting Goods, Foot Locker, or JD matter because it is important for consumers to have access to physical interaction with products. Buyers want to have the opportunity to try on, touch, and feel. Donahue stated that the brand has invested to take measures to strengthen strategic partnerships with wholesale firms.

As we have reported earlier, Nike Presents New ‘Phygital’ Sneakers Collection.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.