Nike expects permanent shift to online sales as lockdown boosts ecommerce
Nike has seen a huge rise in online sales as it bounces back from a coronavirus slump and has witnessed digital sales rocket 82% during the June to August quarter, offsetting falling revenue in its stores.
The sportwear brand’s online sales surged during its first quarter as its direct-to-consumer strategy bore fruit during lockdown.
While Nike did not provide a figure for its bricks-and-mortar sales, it did reveal overall first quarter revenue of $10.6 billion (£8.3 billion) as many of its key markets recovered since various lockdown restrictions eased, including China.
The retailer and brand has been transforming its business in recent years to sell directly to customers while reducing its store presence and wholesale partners.
During the various lockdowns across all of its markets, it leveraged its website and app to release limited edition products and drive sales through online customer experience innovations such as interactive work-outs and games.
Part of Nike’s transformation strategy is to have half of its sales derive from direct-to-consumer online sales, and chief executive John Donahoe said this shift could be a permanent trend.
“We know that digital is the new normal. The consumer today is digitally grounded and simply will not revert back,” he said.
Nike now expects full-year profit and revenues to come in ahead of expectations.
Considering the shift to online sales could be a permanent trend, Michael Schirrmacher, UK MD at Bloomreach, said: “As we start to see the introduction of a second lockdown, physical stores will continue to struggle and online shopping will remain the most important channel. This is an ongoing trend and the State of Commerce Experience research study, conducted by Forrester and commissioned by Bloomreach, found that 90% of consumers have changed their behaviour as they try to avoid physical stores due to safety concerns and buy exclusively online where possible. While COVID-19 may have sparked this behaviour, these new habits and expectations will live on long after the crisis ends. Now that consumers have had a proper taste of the convenience, they are going to continue to use it. Retailers need to ensure they are adapting to fit into the new normal and continue to increase investments in core digital commerce technologies, such as online channels like web, apps, social, and third-party marketplaces that impact great experiences and keep one thing in mind that this isn’t just an initiative to get through the pandemic.
“It is also interesting to see Nike invest so heavily in direct-to-consumer (DTC), which is another trend that has been accelerated by COVID-19. Many brands are very focused on DTC due to the ongoing struggles of their wholesale accounts — retailers. There is a need for brands to control the relationship with the customer and drive their business without being beholden to an increasingly challenged model of wholesale-retail. The benefits of DTC are clear in increased margins, as well as having the customer relationship and data that gives them control over their future. This is a trend that looks set to continue.”