International sportswear brand Nike says it will slash roughly 1,400 jobs, as part of a strategy to expand its direct to consumer sales online, as e-commerce continues to shake up the retail sector of the global economy.
Yesterday, Nike announced the job cuts will help reduce the number of sneaker and clothing styles it offers by 25%, while it also expects to sell more shoes directly to consumers online; this includes a restructure that will see 2% of its 70,000 employees globally, let go.
Leveraging the power of digital, the sneaker giant says it will drive growth by accelerating innovation and product creation, moving even closer to consumers online, and deepening one-to-one connections.
“The future of sport will be decided by the company that obsesses the needs of the evolving consumer,” says Mark Parker, Nike Inc’s chairman, president, and CEO. “Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever.”
Nike says it will make its sneaker selling apps available in more countries, in an age when online sales mean that many big retailers and department stores are closing stores. “We’re getting even more aggressive in the digital marketplace,” says Parker.
Nike will unite its online store Nike.com, direct-to-consumer retail, and Nike+ digital products to enhance and expand its membership experience on a larger global scale. Nike will also extend innovations to its strategic wholesale partners.
Leading with mobile, the company says it will marry physical and digital retail to serve consumers with the best of Nike. Two recent examples of innovative consumer connections are its app feature SNKR Stash, which unlocks access to exclusive Nike and Jordan products, using mobile geo-locations; and Shock Drop, surprise alerts for coveted sneakers that allow consumers to buy instantly through the app or at their nearest Nike or wholesale store.
Over the next several months, Nike will be launching its Nike+ and SNKRS apps globally to energize the sneaker experience in new markets. Trevor Edwards, president of the Nike brand, says he will drive its consumer direct offense through integrated category, geography, marketplace, product, merchandising, digital, and direct-to-consumer teams.
In the new alignment, the company will drive growth by deeply serving consumers in 12 key cities, across 10 key countries: New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan. These key cities and countries are expected to represent over 80% of Nike’s projected growth through to 2020.
Nike will also focus more on the hottest sneakers trending and reduce the number of styles it offers. The move will assist it in offering its merchandise to consumers faster, as it faces increasing competition from smaller brands and premium labels, including Adidas and Under Armour.
Today, with most people choosing fashion over function, research from the NDP Group indicates that sales of classic sneakers industrywide jumped 26% last year, meanwhile, the report also found that performance sneakers for running and basketball dropped.