Dive Brief:
- Nike saw the highest traffic for its commerce app to date with a campaign celebrating the sportswear giant’s 50th anniversary, President and CEO John Donahoe said this week during a quarterly earnings call. The campaign featured a short film titled “Seen It All” directed by and starring Spike Lee.
- Nike attributed the 18% annual revenue growth in its digital business to consumer demand across its mobile apps, which include its Nike shopping app, the Nike SNKRS app for sneaker collectors and the Nike Training Club app for at-home workouts and wellness tips. Nike Digital’s growth helped to fuel an 11% gain from a year earlier to $4.8 billion for Nike Direct. That increase contrasted with a 1% decline in total revenue to $12.2 billion.
- The company during the period also began testing audience segmentation in North America using real-time data to personalize the customer experience in the Nike app. Nike plans to expand those efforts in the coming months, CFO Matthew Friend said during the call.
Dive Insight:
Nike’s results show that its mobile connections to consumers are key in supporting revenue growth and customer retention. The company’s family of apps helped drive almost half of its total digital business, putting it on course to reach a longer-term goal of generating 40% of total revenue through e-commerce channels.
“Increased digital engagement is translating into more repeat buyers, a higher buying frequency and increased average order value, ultimately driving higher lifetime value through membership,” Donahoe said during the call. “As retail consolidation continues and consumers converge around fewer digital platforms, a distinct Nike consumer experience is driving more direct connections, positioning us well for long-term growth.”
Creating cultural moments with star athletes is one of the defining parts of Nike’s advertising campaigns, as seen with the Spike Lee short film that includes clips of Michael Jordan, Tiger Woods, Serena Williams and Cristiano Ronaldo. During the quarter, one of its campaign songs went viral on social video app TikTok, and the company launched a podcast called “No Off-Season” focusing on mental health and starring athletes such as NBA star Karl-Anthony Towns and Olympic gold medal-winning gymnast Laurie Hernandez.
As the company expands into the higher-growth Asia Pacific and Latin America regions, its apps appear a linchpin for digital sales. Nike SNKRS, for example, reached new records in Japan, South Korea and Mexico, CFO Friend said. As for China, Nike in the next six months plans to release a new group of commerce and activity apps that have localized features.
Nike is working with software company Adobe to create more personalized app experiences for customers, including their shopping preferences. These mobile interactions have become a significant part of Nike’s strategy to increase revenue as consumers seek greater flexibility in the way they shop.
“This is a shift being led by the consumer as they pursue the most personalized shopping experience Nike provides,” Donahoe said. “We do not take lightly the choice made by consumers to put us in the most prized real estate that exists today: the home screen of their phone.”
