Something that's been on my mind - many companies, not just Nike, are cutting ties with retailers and shifting distribution towards direct channels. That's their strategy but, aside from layoffs, I wonder what negative consequences for Nike may result from prioritizing such an approach? What you guys think?
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Besides products made for celebrities and special collections the future product will not have the same energy behind it. Leaders are initiating a robot like process where all concepts and silhouettes are controlled in set teams. When your team needs a certain product they go to that team and pick off the menu. You can only pick your style from the menu, you can't create your own from scratch.
Then robot like teams will color and put logos on them. What will be missing is the uniqueness and passion of some products that have been making the company big money. It will dull any creativity, passion and talent left. This is their idea of consolidation, putting in controls by leaders that don't understand how creative products are really made. This was sloppy, rushed. The new structure is created by the same leftover leaders. And some new folks who never made these types of large company restructures before in their career. Not talking about JD, its the layers below. If you want to learn more google the layer below and check their work history, check their networks.
Take the rose petal goggles off that this new org is better. "Please know this is a fluid process, we might not get it right the first or second time". Yes if you need to say this you don't have the experience behind the restructure and you don't know what you are doing.
CDA and cutting the middleman is all upside for Nike. Leads to higher margins and fewer handling costs. What will suffer? Products....Employees who made this company great and created the magic are being eliminated, while they keep terrible people managers. The market place will be getting more of the same legacy products - with new exciting color ways perhaps.
they are only getting rid of some retailers and the ones they are keeping they are going to tightly integrate with...so if you are looking for a size 5.5 jordan 1 you will be able to go to nike.com and find it even if it is in a foot locker....plus bring all the nike membership features even if you only buy at footlocker.
Margins are way larger than going through external retailers, it is a risky play but with the way the consumer is going... having a strong website with a great user interface goes a long way. Look at amazon, apple, others. They all want YOU to go directly to their website and purchase those products. The margin is way higher on their end instead of you going to foot locker.
70% of Nike’s revenue comes from external retailers today. More if you correctly count some of the partners in China that they bucket under Nike Digital sales. The CDA is a huge risk. They will reset in 3-5 years once it fails.
years ago it would have been a risk, in today's world it makes perfect sense. make more money while minimizing the risk to retailers closing
Well, one benefit might be when that kid sews the last stitch, she gets to walk it over to the packaging/shipping side of the room. Next to the water fountain.
A little break, kinda.