Nike Zones In on Consumer Engagement With Digital Approach: How Mobile Apps Drive Value and Membership Growth
Nike’s fiscal second quarter growth in 2022 was driven in large part by the brand’s culture of innovation, said John Donahue, president and CEO, in a recent earnings call with investors. Consumer-direct acceleration, he added, is fueling Nike’s marketplace approach, allowing the company to directly connect with consumers no matter where they shop. Key to this strategy has been Nike’s investments in digital experiences, primarily via its mobile apps.
Nike is taking feedback directly from the consumer that they wish for a consistent, seamless, and premium experience — both digitally and physically around its own brand and brand partnerships. Through these insights, the company has sought out mobile app strategies that build out “meaningful, direct, lifelong relationships” with the consumer, and they have been significantly more powerful within membership growth and retention.
Growing Loyalty and Membership
According to Donahue, membership was the key reason Nike’s digital business grew 34% in Q2. He reports the company currently has about 160 million active members who engage with the brand on a regular basis. The company is looking to increase engagement with this group through various platforms, including Nike Training Club, Nike Run Club, and its SNKRS app.
Another avenue is through Nike’s strategic partnership. The company is scaling its connected membership programs with DSG, JD Sports, Zalanado, and Topsports, providing consumers with personalized shopping experiences across multiple channels.
Through its digital efforts, Nike is able to collect key consumer data, which it said is elevating product creation, line planning, and its overall experiences. Retail partners are providing similar feedback, reporting that engaged members have improved traffic conversion.
“The ability to give consumers a personalized experience across channels, fueled by data and insight, opens up a whole host of opportunities for us,” said Donahue. “It positions us to empower consumers with their own choice while keeping the scalability and strengths in digital marketing, product creation, distribution, and more, which results from knowing them so well.”
Loyalty has been a key focus, as repeat-buying members are more engaged, spend more, and spend more frequently, said Donohue. The company reports that 50% of store demand comes from members, and they accelerated holiday shopping as well, driving over 85% of demand during Cyber Week.
Expanding on an International Scale
Nike has had such enormous success with its apps that it is duplicating and expanding its efforts in other markets, including China. There, the company launched China-specific versions of its app to elevate Nike experiences. Additionally, Nike created a China-specific member journey with Tmall, which led to a spike in new member recruitment and demand per member. The company also piloted connected membership with member-linked transactions to 42 of its partner stores across 18 cities in China. This led to increased conversions, member acquisitions, and retention of high-value customers.
“And our team continues to drive China-for-China capabilities, like delivering hyper-local product design and localizing marketing content creation,” said Donohue. “Thanks to this focus, we're now serving our consumers in China with an agile, dynamic, and personal way like never before.”
These combined efforts allow Nike to avoid the risk of disintermediation, said Donohue. “With a consumer base that comes directly to our apps, to our website, and to our owned and partner stores, we, alongside our partners, are in a position to control our own destiny.”
Ultimately, this allows Nike to better understand consumers so they can provide the right assortment, partner with the right companies, and connect at the right touchpoints.
- A Look at the Financials
“We delivered a strong quarter in Q2 with revenue growth of 17% on a reported basis, and 27% on a currency-neutral basis. And looking at the quarter's results, we delivered our Q2 expectations on revenue, profitability, and inventory.” — John Donahue, Nike President & CEO
Nike Direct increased by 25%, led by 34% growth in Nike Digital and 11% growth in Nike stores, with a strong season-to-date holiday results. Wholesale increased by 30%, driven by strong demand for seasonal products, higher shipments based on earlier supply availability, and lower shipments in 2021 due to supply constraints.
