How Can Nike Make Use Of Distributors To "Face Consumers" Under The Background Of "Guan Dian Chao"?

In August this year, Foot Locker opened a new store with 10 thousand square feet (about 929 square meters), called Washington Heights, and Nike, which also became the first distributor store equipped with Nike's digital technology related to shopping experience.

According to the statistics released by the analysis team of August 2018, nearly seven of Foot Locker's products are Nike's products. It is not surprising that Nike deepened cooperation with such a level dealer, but it is worth further thinking to open a large store at this time node.

According to CoStar Group, a commercial real estate consultancy, the total number of shops closed in 2018 was 155 million square feet (about 14 million 400 thousand square meters). Under the influence of "Guan Dian Chao", in the fourth quarter of fiscal year 2018, Foot Locker upgraded or relocated its 33 stores, and closed 56 stores. In addition, Nike announced two years ago to implement the strategy of "Consumer Direct Offense", enabling Nike to provide personalized services to consumers on a large scale, and closer to consumers in key cities.

In the case of the Washington Heights store, Nike showed its bigger and more advanced stores to consumers through its strong dealership's capital and strength with Foot Locker rather than proprietary mode.

As far as Foot Locker is concerned, Nike is their most important supplier. In the third quarter of 2018 fiscal year, while Nike grew in North America, the quarterly sales volume of Foot Locker also increased by 79%.

From this point of view, Foot Locker has been bound with Nike. "As one of Nike's largest distribution partners, Nike's sales increase is also good for Foot Locker." Christina Fernandez, an analyst at Telsey Advisory, a consultancy, said (Cristina Fernandez).

And big retailers like Foot Locker have enough new products to fill shelves and sell discounted products. This advantage and flexibility enable Foot Locker to emphasize both sales and shopping experience. Therefore, they have deepened their cooperation with Nike, opened a big shop with the latest technology, made some new attempts in retailing, and promoted their own business.

Nike, on the other hand, can expand at low cost and risk through cooperation with Foot Locker. "Working with partners like Foot Locker will enable our brands to reach more consumers, so that our members can buy our products no matter where they go or how they will go." Ann Herbert, vice president of Nike global sales, said Ann Hebert.

This model also helped Nike complete the task of expansion and delivery. According to the analysis team of the company, Nike can reach consumers who are not shopping on their official website through Foot Locker, because about 30% of Foot Locker customers will choose to pay cash.

At the same time, the digital technology of shopping in Foot Locker stores can enable Nike to collect consumer data on a large scale through direct stores and distributors' stores.

Take the newly opened Washington Heights as an example. There are notices beside the Nike product stand, which remind customers to check the size, color and other stock information of the favorite products through the NikePlus program. In addition, consumers can also make reservations on the NikePlus program and then pick up the goods at the Foot Locker store.

The store also has Nike Unlock Box vending machine, scanning the two-dimensional code, you can log on to your Nike+ account, and there are free raffle tickets every few weeks. Through this machine, Nike hopes to make consumers visit the shops frequently.

Through these applications, consumers can easily view inventory information or checkout at any time, anywhere, and do not need to communicate with staff. This will not only make consumers more convenient shopping, but also provide a large amount of data for Nike, so that they can understand consumers' shopping habits and preferences, and then meet the personalized needs of consumers. This is what we need to implement the strategy of "facing the consumer".

In the process of implementing the strategy of "facing the consumers", Nike did not substantially reduce the number and volume of distributors, but upgraded some of the distributors through screening so as to deepen cooperation with the distributors. Jenny Stic (Janine Stichter) and her team think that "Nike is actually trusting Foot Locker more, eliminating non core retailers, and co operating exclusive products and marketing activities is a good example."

In October 2017, Nike CEO Mark Parker (Mark Parker) announced that the company will make a big adjustment to the retail business, and funds and resources will be tilted to 40 important retail partners in the next few years. Nike regards these partners as "differentiated retailers" and distinguishes them from those "indifference retailers" that fail to provide high quality services or fail to tell product stories according to Nike's assumptions.

But from the current situation, Nike has a long way to go. According to Forbes's previous reports, in 2018, wholesale sales still accounted for about 70% of Nike's total sales volume, compared with 82% in 2014, the decline was not obvious. And in North America, more than 60% of Nike's performance is contributed by "indifferent retailers".

In order to achieve this goal, Nike adopted the "soft landing" method. They will provide the best sellers and promotional expenses for differentiated retailers to attract customers.

For the new store, Nike and Foot Locker said in an interview with the US technology website Engadget that the cooperation had been discussed for about two years, and now it is trial and error and learning stage. In addition, considering the needs of consumers for specific shopping experiences, they may also set up more similar stores in the United States.

In the future, there may be more "new" dealer stores equipped with Nike digital technology.