Can Nike's "Selective Abandonment" Plan Help Them Tide Over Difficulties?

According to the world clothing shoes and hats net, Nike The company said Thursday that Nike plans to cut about 2% of the world's workforce in response to the reality of a slowdown in sales, which will affect more than 1000 global staff. By the end of May, the company had more than 70 thousand employees worldwide.

According to the plan named "Consumer Direct Offense", Nike plans to reduce its business unit from six to four.

The four new business sectors will be North America, Europe, Middle East and Africa, Greater China, Asia Pacific and Latin America.

Nike also pointed out that footwear The style is reduced by 1/4, and the future will focus on core brands such as ZoomX, Air VaporMax and Nike React. That is to say, we should concentrate our efforts on building explosive funds.

Nike plans to focus on 12 major cities in 10 countries, which accounted for more than 80% of the projected growth in 2020. These cities include New York, Berlin, Paris and Barcelona.

Affected by the news, Nike closed down 3.22% on Thursday, at $52.9.

Over the past two years, Adidas's growth curve has been phenomenal, while Nike has entered a bottleneck. In 2016, Nike experienced 12 consecutive months of decline, and its share price fell more than 30%. market The company's futures orders slowed for four consecutive quarters.

Because Adidas and Nike have different ways of calculating the fiscal year, they can not directly compare their performance in the same period. However, Adidas's fourth quarter 2016 and Nike's Third Quarterly Bulletin released in March this year show that Nike's revenue is still ahead of ADI (US $8 billion 400 million vs.50.04 billion), but on the growth rate, Nike's 12.5% is far higher than 5% of Nike's gross profit margin, and Adi is 48.8% more than Nike's 44.5%.

Nike's global futures orders show that the number of goods ordered by retailers from Nike fell by 4% over the next six months, especially in the US market. They are tightening supply to give priority to the backlog of stocks.

Last month, the latest report released by Merrill Lynch showed that it had decided to maintain its rating on the Nike group's losing market, with a target price of only $42. The bank said that Nike's current inventory was too high, and its market share was gradually engulfed by Adidas, and its core high-end products were sluggish, making its advantage in competition with Adidas greatly reduced. A few investment banks lost confidence in the future potential of Nike group and began to turn pessimistic.

Nike's decline is also a reflection of the popularity of the shoe market. In January 2015, Nike's JordanBrand once occupied the 96% share of the resale market for shoes. At that time, Adidas did not even get 1%, and now adidas has taken up 45% of the sales of the sports shoes resale market. Its Yeezy and Adidas Originals Stan Smith series become the new favorites of the Sneaker trade and collection.

Earlier this year, Nike founder Phil Nate's autobiography Chinese version of "shoe dog" triggered a boom in China, from entrepreneurs to Nike fans almost one hand. In the book, Phil Nate started with 50 dollars, from almost bankrupt to the successful creation of a strong sports business empire, but it is a very classic business legend. Now, no one will deny that Nike is still one of the best and most technical sports brands in the world, but what has been done by the company in recent years?

Maybe speed. It's not that Nike is unhappy, it's not fast enough. In recent years, when people will wear tights and pants as fashion, the first choice is no longer a slightly bulky basketball shoes like Air Jordan. The slender and lightweight Stan Smith has become the most popular in basketball player. At this point, Nike has become the inventory burden because of its early Air Jordan dominance.

To clear up the stock means more discount, but Air Jordan is no longer the high margin product that users used to have.

At the same time, Adidas's supply chain reaction is extremely fast. They are updating their popular shoes at monthly, or even weekly rates, and constantly looking for the most recognized trend of global youth, icon. Data show that 80% of Adidas's sales in 2016 were contributed by the new products of the year.

From the perspective of new products, Nike does not have no innovation, but in comparison, they emphasize the application of technology, but these technologies are hidden in the inside and details of shoes. Compared with Adidas, which pays more attention to appearance and style, these products are less portable in the environment of fashion only.

Nike, of course, knows the importance of the speed of the supply chain. In the past five years, Nike has invested $2 billion 500 million in the research of supply chain and the development of high technology products. They used NOVA technology and 3D to print prototype shoes, trying to shorten the production cycle of shoes from 18 months to 4 months.

From this perspective, perhaps this time of layoffs is not a frustration of growth and cost savings, but a part of strategic adjustment. The automation of Nike's future supply chain may no longer require so much manpower. At the same time, the transfer of consumers to e-commerce channels also means the streamlining of physical stores and their staff.

Phil Nate has a phrase in "shoe dog": "sometimes you need to give up. Sometimes it's a gift to know when to give up and try new things. Giving up does not mean stopping.

Can Nike's "selective abandonment" plan help them overcome the difficulties?

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