On one hand, Nike has been hit by the pandemic like every other retailer. On the other, it’s kept its eye on the ball. This week, the brand announced a round of layoffs and executive restructuring. As part of its broader strategy to streamline the business and focus on digital, Nike has shuffled leadership roles and will recoup $200-250 million from layoffs. The company didn’t specify how many roles were cut, but a spokesperson told CNBC that cost cutting was not the goal, but rather part of a strategic move to focus in on higher-growth areas of the company.
That’s digital and direct retail. For years, Nike has been shifting emphasis away from retail, effectively creating a tiered wholesale model. Premium partners like Nordstrom and Bandier get a different spate of Nike products than Amazon does, and Nike’s new store concepts, website and apps also offer a different experience to customers. Doubling down on this strategy – and even having it in place from the jump – is an effective way to protect the brand when a pandemic is rattling retailers. While Nike was, as of March, on track to lose a third of its revenue or $3 billion as foot traffic has fallen, it’s also leaned into long-term efforts and expenses that other brands may have cut. Earlier this month, it introduced a new store concept that reflects both the long-time emphasis on experiences with a more self-driven retail model. Through its apps, Nike is building a third ecosystem in addition to its stores and site. Customers can build their own way of shopping that’s personalized and gamified – two golden standards in retail right now.
Nike is not an untarnished success story of the pandemic. It suffered lost revenue and layoffs. Even the true purpose of its Nike Rise store investments won’t be fully apparent out of the gates. But it’s a slow burning strategy that proves out the difference between retailers on the brink and retailers that will be able to come out of this period not necessarily stronger, but intact.
By Hilary Milnes