Pricing power of businesses – holding power in the portfolio
by Naveen November 24, 2021
While 2020, has belonged to the digital, cloud, and tech-driven companies, it’s surprising to see Nike is up 34% this year, which is surprising for a retailer – Or is it?
1. Nike has been deploying a digital-first strategy for a little over 8 years now. What does that mean?
2. Nike took a conscious effort to build smaller stores called “Nike Live” which serve as pick up stores for its online orders. This meant cutting ties with many retail stores
3. Nike was very choosy in its strategic partners choice where they wanted to ensure they create a consistent, connected and digital-first experience where the customer journey was owned by the brand.
4. This not only helped drive higher margins (improved by 10% over 3 years) but increased the lifetime value of the customer, as Nike owns the customer journey
5. Nike in its previous quarter reported a 84% rise in digital sales where North America contributes to over 25% of its sales.
6. Bulk of its yoy growth came from their digital efforts in China
7. While Nike has been laying the base for this by acquiring 2 digital analytics firms over the last 4 years, this sets the trend for brands looking at an omnichannel customer experience looking at a digital-first approach.
8. We continue to see the trend of brands owning the customer journey aided by technology rather than purely relying on platforms where the brand loses the customer experience.
9. As we enter the next decade, an omnichannel retail model where brands own the customer journey would be the go-to for brands vs a platform-based model.