Remember in 2020 when Nike told retailers such as Dillard’s, DSW, Urban Outfitters, and Shoe Show that it would no longer sell wholesale to them?
In June 2020, Nike rolled out its “Consumer Direct Acceleration” ([CDA] program, which involves zeroing in on DTC and digital channels and pulling out of some wholesale channels.
Fast forward two and a half years - and Nike is starting to rekindle its relationship with various retailers.
Why is Nike walking back its DTC focus?
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Nike believed that in 2020 the pandemic foreshadowed future purchase behavior. During the pandemic - consumers could not visit stores and bought directly from Nike and the various apps it operates. Nike wanted the inventory that was being sold via wholesale to retailers rather than be available for it to sell to consumers.
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Consumers are returning to stores, and if a consumer is inside a Dick’s or Footlocker location and cannot purchase a Nike product, the consumer will purchase shoes or apparel from another brand. Nike needs to be on the top of consumers’ minds and be available where customers purchase shoes and apparel.
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Nike’s DTC business has seemingly plateaued and is not sustainable. Customers have many brands competing for their attention online, whether via advertising or email - finding new consumers in the current economic climate is challenging. Nike had to use promotions heavily in 2022 to make up for the shortfall in sales between Nike Wholesale and Nike Direct. In 2023, Nike will likely use promotions to regain the share it has lost through its ending of partnerships with retailers.
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Or is this another brand with excess inventory that requires retailers to help them move this inventory faster? Will Nike reinstate retailers with the same level of access that they had previously? Nike will still control who can access new products.
Nike is clearly making wholesale more critical in 2023. Does this help the various retailers with more revenues from selling a different selection of goods vs. what can be sold via Nike.com?