In an effort to expand their direct-to-consumer (DTC) offerings, Nike has continued to reduce their wholesale partner accounts.
Last year, the Oregon-based sportswear company began directing their distribution focus towards e-commerce and digital options in attempts to make their DTC channels more profitable. This move mirrors Nike’s largest competitors, including adidas and Under Armour, which have also closed many of their wholesale accounts. Just last year, Nike closed nine different accounts. Now, they’ve closed five more. Such accounts include large names like Macy’s and DSW. It’s clear that Nike is strategically focusing on only their core accounts.
Due to the impact of the Covid-19 pandemic and the shift in shopping habits, companies have been forced to adapt in their distribution methods. Many companies have formulated their strategy around increasing digital options and bolstering their e-commerce capabilities as online shopping becomes more popular, with Nike following suit.
This serves as an excellent opportunity for Nike to increase their consumer audience through an expansion of products and digital platforms, including their online raffle system SNKRS and their e-commerce store. Additionally, these moves cut the cost of maintaining wholesale account partnerships.
Alongside growing their web-based services, the brand can focus more on developing their own in-store. In replacement of these wholesale accounts, Nike is developing 200 small stores that is integrated with their new digital Nike Live platform. All in all, this effort will make their products even more accessible to online shoppers while also decreasing their overall expenditures. This has already been showing positive results, as evidenced by digital sales increasing by 35%.
It’ll be interesting to see whether Nike continues with a DTC focus going forward as this becomes an increasing trend among many major sportswear brands.