DTC Shoulders The Future Burden Of Nike In Retailing.

Last November 18th, it had 5 floors, 55000 square feet, and had been postponed because of the permit issue.

The SOHO store in New York officially opened. 5 days later, Nike's Jordan (Jordan) brand opened its first store in Europe in Paris; in January 21st, Nike basketball and Jordan.

Joint basketball experience shop settled in Beijing, Zhongguancun, Europe and America......

Behind this series of actions is Nike's vigorous promotion of DTC (Direct To Consumer, directly facing consumers' marketing mode).

According to the world clothing and shoe net, since 2012, the revenue of Nike DTC has increased by more than 20% for 5 consecutive years, and its revenue has reached 7 billion 860 million US dollars in 2016.

In 2014, due to a large backlog of stock and the cold response of consumers to new products, Nike tried out a new marketing concept in Greater China. The year-on-year store sales increased by 22% in the single quarter. This new concept also includes the importance of DTC business.

"DTC is very important for Nike," Fan Ousheng van Oossanen, vice president and general manager of Nike Greater China, told reporters. "In 2020, our goal was (total revenue) to reach US $50 billion." Dennis

We need retail, we need better retailing to become a better brand. DTC is the key strategy for our growth. "

Nike company 2009 -2016 DTC revenue growth changes (unit: $1 billion).

Although Nike's performance has been rising for 28 consecutive quarters, its competitive pressure in the world, especially in Greater China, is increasing.

In addition to traditions such as

UA, and other brands, many emerging brands and other clothing brands targeting the sports market are trying to get a slice of this.

In the case of traditional sports retailers' overall downgrades and successive bankruptcies, DTC undoubtedly shoulders the heavy burden of Nike's future in retailing.

Nike's DTC model can be divided into two types: the official website and offline outlets.

In addition to the traditional shoe and clothing sales, the online shop is also struggling with Nike's shop design and providing customized services.

Heidi ONeil, President of Nike global DTC (Heidi O) Neill, once said that Nike should lead the pformation of sports retail. "This store (New York SOHO store) embodies our commitment to personalized performance. It is not just a store, but also a personal experience of movement."

The personalized service provided by Nike is called "NIKEid".

Through this service, customers can design their favorite colors and words on the shoes purchased.

The customized service area has become an essential part of Nike's new offline stores. Taking Zhongguancun Europe and America's Nike experience shop as an example, customers can enjoy customized services with Beijing cultural characteristics. They can print the Beijing pattern on the T-shirt to produce exclusive personal products according to their preferences.

Zhongguancun Europe and America Nike experience store customized area

Compared with physical shops, the advantage of online sales is that they can sell goods to those areas that can not be touched by offline stores.

According to the world clothing shoes and hats net, Nike CEO Mark Parker (Mark Parker) told analysts that the two quarter of fiscal year 2017 (September 1, 2016 to November 30th) Nike's direct sales increased by 23%, of which official website sales accounted for 46%.

With the growth of demand for sports products in emerging markets, Nike also needs to take a favorable position to reach these areas, so online sales will be very important.

In August 2016, Nike released a new version of Nike+ App, which not only provides sales information to users, but also tracks users' habits and analyzes behavioral preferences.

"Many other App are focused on how to get users," said Niki Neuberger Neuburger, vice president of Nike global brand. "What we really care about is how to expand and deepen the relationship with users," said Nikki.

The rise in the number of mobile end users is a trend beyond doubt. Nike also hopes to ensure its advantage in the market by strengthening its input in the digital field.

"We have strategically increased investment in digital users and sports marketing," Nike CFO Andy Campion (Andy Campion) said.

Last August, Nike acquired the MEGA company of Virgin Group. The technical team of the 12 will help the former get more online community concerns and create different experiences for users.

According to the financial report, in the 2016 quarter of fiscal year fourth, Nike spent $873 million on the "creation of demand", up 7%, mainly for digital input. The daily operating expenses also increased by 7% to 1 billion 900 million US dollars, mainly for DTC business, infrastructure investment and consumer oriented digital functions.

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"Mobile terminal innovation and personal customization services are dominating this area, which is why we invest in integrating digital and physical stores," Mark Parker said.

DTC can sell goods directly to customers at retail prices, thereby eliminating the link to share profits with retailers, which can really bring Nike higher profits.

According to the world clothing and shoe net, from May 2012 to May 2016, Nike's gross profit margin and operating profit margin rose continuously for five years, while the net profit margin declined briefly in 2014, and nearly 1% years later.

However, in the steady growth of revenue, Nike's core basketball business growth is slowing down.

With the retirement of Kobe and the rise of Harden, such as UA's Kuri and Adidas's Nike, the market share of Nike's basketball business is being eaten up.

Trevor Edwards, President of Nike global brand (Trevor Edwards), promises that basketball revenues will pick up in the second half of fiscal 2017.

In recent two years, the Chinese market with amazing growth rate has become the engine of the company's growth.

The latest report shows that as of November 30, 2016, the second quarter of fiscal year 2017, Nike's sales in the Greater China region rose 12% to 160 million US dollars compared with the same period last year. If the effect of currency change was eliminated, the growth rate reached 17%. However, compared with the 21% increase in the first quarter of 2017 fiscal year, sales in Nike Greater China decreased significantly.

Against this background, it is self-evident that Nike put the world's largest and Asia Pacific's first Nike and Jordan basketball experience shop in Beijing.

For location in Beijing, Nike also "painstakingly".

"We think that Nike and Jordan are the two most important basketball brands. Precisely because China and basketball are so harmonious, we do not hesitate to shop in the center of this sport - Beijing," Craig Zano Zanon, Nike global general manager, told reporters. "Beijing has such a wealth of basketball authority. It may even be more important that the basketball culture here drives its own basketball energy. This is the perfect place to put Nike and Jordan in basketball experience." (Craig)

Zhongguancun Europe and America Nike basketball and Jordan experience store layout.

Autohao is editor of magazine, and also a senior player in sports shoes circles.

He thinks Zhongguancun's Nike experience shop has a strong basketball atmosphere.

"Whether you like James, Kobe, Jordan or Erwin, Durant, George, you can quickly find your favorite product, rich in variety.

What is most special is the layout of some local basketball characteristics in Beijing, which makes Beijing fans feel more cordial, and foreign friends can also come into contact with different cultures, "Autohao told reporters.

"Putting Jordan and basketball together is definitely the most special new attempt."

"This is a place where we can tell the brand story and product story in the best way, and we can communicate with consumers through T-shirt customization and other services," Fan said.

In fan's view, this shop not only promotes sales for Nike, "it also develops basketball business in Beijing and China at the same time, so such investment is an important step in Nike's journey.

If we look at the future, what will our potential be when we bring the NBA series here 7 months later?

NBA announced in 2015 that it would sign a 8 year contract with Nike for a total of about $1 billion worth of shirts. The contract will be formally implemented after the end of this season.

This is also a way to solve the slowdown in Nike's basketball business.

"Basketball is coming back," Reg Zano said. "We will start again from athletes, so that products can be closely linked with athletes and provide different consumers with the price points they can afford. For example, 120 dollars is a crucial price point.

To provide consumers with different ways to enter the market, which is what we are doing now.

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