Nike Goes Local; Is It a Good Idea?

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“The future of sport will be decided by the company that obsesses the needs of the evolving consumer.”

Mark Parker, Nike’s chief executive

Nike has announced plans that it intends to focus its efforts on twelve cities: New York, Los Angeles, London, Paris, Milan, Mexico City, Tokyo, Seoul, Shanghai, Barcelona, Berlin and Beijing. Here is how Nike explains it in a press release:

NIKE, Inc. today introduced the Consumer Direct Offense, a new company alignment that allows Nike to better serve the consumer personally.. by accelerating innovation and product creation, moving even closer to the consumer through Key Cities, and deepening one-to-one connections.

According to New York Times writer, Micah Maidenberg, in his article "Nike, a Global Brand, Will Try Going Local": the companies anticipates that, as a result, 80% of its growth will come from these 12 cities.The company's belief is that by focusing on these major urban areas, and by using both physical and digital retailing and engagement, it can get a better sense of what consumers will want and react more quickly in a constantly changing fashion landscape. The expectation is that, as a result, shoe and athletic styles will become localized. The shoes you find in Beijing may be different than the ones available in Berlin or New York. 

This seems both revolutionary and peculiar. Though New York and Los Angeles may be major American cities, they together have roughly 38 million inhabitants, only 1/10th of the total U.S. population. Not only that, their demographics do not necessarily represent the broader American population, its mix or its tastes.  

I like the idea of getting closer to your consumer and I like the idea of focus, I am just concerned that it is too narrow a focus to pay off.  Let me know what you think of Nike's plans?

One thought

  1. Yes it absolutely does and see my Amazon comment for why. Nike cannot build a business around Foot Locker. Malls are dying. Nike is dependent on retailers who are trapped in an old dying model in the wrong locations for consumers today. Think about what the Apple Store has done for Apple. Nike is a lifestyle brand and yet they don’t own the last mile. They need to own the end to end experience.
    But look closely at their wording – this is not about retail in isolation, it’s about “direct consumer connections”. Think Bonobos for where this is going. Nike is hiring a massive digital team right now and doubling down huge on CRM. Smart people I know from Zynga, Storm8, Apple, and others. These guys are going to turn Nike into a data-driven direct marketing machine that offers not just products but services. They will know who you are, what your shoe size is, what sports your play, whether you are trying to lose weight, how you are doing with that, etc etc. Nike, like Apple, is going to become part of the fabric of your life. They can’t do that through Foot Locker.
    Nike is doing what frankly Mattel or Hasbro should do. And if that sounds nuts, I refer you to the Lego store, which itself could stand to evolve but nonetheless shows you what owning a brand end-to-end can do.

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