Nike attributes digital revenue growth to on-demand mobile apps

Diving Brief:

• Nike saw the highest traffic for its commerce app to date with a campaign celebrating the sportswear giant’s 50th anniversary, chairman and chief executive John Donahoe said this week on a quarterly call on the results. The campaign featured a short film called “Seen It All” directed by and starring Spike Lee.
• Nike attributed the 18% annual revenue growth of its digital business to consumer demand on its mobile apps, which include its Nike shopping app, the Nike SNKRS app for sneaker collectors and the Nike Training app. Club for home workouts and wellness advice. The growth of Nike Digital helped fuel an 11% year-over-year gain to $4.8 billion for Nike Direct. This increase contrasts with a 1% drop in total revenue to $12.2 billion.
• During the period, the company 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, chief financial officer Matthew Friend said on the call.

Overview of the dive:

Nike’s results show that its mobile connections to consumers are key to supporting revenue growth and customer retention. The company’s family of apps helped drive nearly half of its total digital business, putting it on track to achieve a longer-term goal of generating 40% of total revenue through channels of e-commerce.

“Increased digital engagement translates to more repeat buyers, higher purchase frequency, and increased average order value, ultimately leading to higher lifetime value through membership,” Donahoe said during the call. “As retail consolidation continues and consumers converge on fewer digital platforms, a distinct Nike customer experience drives more direct connections, which positions us well for long-term growth.”

Creating cultural moments with star athletes is one of the defining elements of Nike’s advertising campaigns, as seen in Spike Lee’s short film which 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 titled “No Off-Season” focusing on mental health and featuring athletes. such as NBA star Karl-Anthony Towns and Olympic gold medal-winning gymnast Laurie Hernandez.

As the company expands into the higher-growth regions of Asia-Pacific and Latin America, its apps are emerging as a hub for digital sales. Nike SNKRS, for example, hit new records in Japan, South Korea and Mexico, CFO Friend said. As for China, Nike plans to release a new group of commerce and activity apps with localized functionality over the next six months.

Nike is working with software company Adobe to create more personalized app experiences for customers, including their shopping preferences. These mobile interactions have become an important part of Nike’s strategy to increase revenue as consumers seek greater flexibility in how they shop.

“This is consumer-led change as they seek the most personalized shopping experience Nike provides,” Donahoe said. “We don’t take lightly consumers’ choice to place us in the most prized real estate there is today: their phone’s home screen.”