Nike is implementing a Consumer Direct Offense, fuelled by the brands Triple Double strategy

Nike is implementing a 'Consumer Direct Offense', fuelled by the brand's 'Triple Double' strategy

Nike is to axe around 1,400 jobs or 2% of its global workforce and reduce its number of styles by 25% as part of a restructuring that will see the US sportswear giant move closer to the consumer.

The changes come amid softening North America sales and a challenging climate for retailers and brands, and will see Nike look to deliver product faster than ever by cutting production creation cycle times in half and streamlining its organisation.

Its so-called 'Consumer Direct Offense' is fuelled by the brand's 'Triple Double' strategy: 2X Innovation, 2X Speed and 2X Direct connections with consumers. In essence, the new alignment aims to allow Nike to better serve its consumers personally, at scale – or what the company calls "creating a local business, on a global scale."

The changes will lead to a reduction of around 2% of the company's global workforce, representing around 1,400 jobs. According to Nike's latest annual filing, the company employs around 70,700 people globally.

"The future of sport will be decided by the company that obsesses the needs of the evolving consumer," says Mark Parker, Nike 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."

Leveraging the power of digital, Nike says it will drive growth by accelerating innovation and product creation, with the aim of moving closer to the consumer through a focus on 12 key cities and countries that are expected to represent over 80% of Nike's projected growth through 2020: New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul and Milan.

The strategy is similar to one implemented by Adidas a few years ago when it announced a focus on six global cities – all of which are on Nike's list. Both companies have said global GDP is increasingly concentrated in these areas, thereby making them a prime focus for marketing and distribution.

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To reflect those changes, Nike will simplify its geographic structure, changing from six to four: North America; Europe, Middle East and Africa; Greater China; and Asia Pacific and Latin America.

The company will also reduce its styles by 25%, and offer "a deeper selection" of key franchises. It will also look to cut product creation cycle times in half. This will start with the 'Express Lane', which quickly creates, updates and fulfils products in response to consumer demand. Already operating in North America and Western Europe, a new Express Lane is expected to be activated this summer in China, serving Shanghai, Seoul and Tokyo – some of the world's most promising markets for sport, Nike says.

"Today we serve our athletes in a changing world: one that's faster and more personal," adds Trevor Edwards, president of the Nike brand. "This new structure aligns all of our teams toward our ultimate goal – to deliver innovation, at speed, through more direct connections."

Nike sees digital as a vital accelerator in reaching its goal of $50bn in revenues by the end of fiscal 2020, a sharp increase from the $30.5bn it achieved in 2015. Since then, however, athletic apparel sales have faced a number of headwinds as online sales challenge those of traditional brick-and-mortar stores. Department store sales, in particular, have softened.

Both Nike and Adidas are on parallel missions to turbocharge their supply chains, with analysts at Morgan Stanley recently forecasting that almost 20% of production for the two brands will move to more automated factories by 2023.

Adidas recently opened its first Speedfactory in Germany and is opening a second in Atlanta in the US, while Nike has several automated platforms in development.

Need for speed turbocharges footwear supply chains

As part of the new streamlining, Nike is creating a 'Nike Direct' organisation that will join with direct-to-consumer retail and Nike+ Digital products, to be led by head of Nike Direct Heidi O'Neill, and chief digital officer Adam Sussman.

Leading with mobile, the team is tasked with uniting physical and digital retail to "serve consumers with the best of Nike". Over the next few months, Nike will also launch its Nike+ and SNKRS apps globally to "energise the sneaker experience in new markets".