Blog: Leonie BarrieNike focuses on retail experience

Leonie Barrie | 20 November 2007

Announcing a 51% jump in first quarter profit in September, Nike reiterated its plans to focus “on investing our resources where we will achieve the greatest returns, both within the Nike brand and within a strong portfolio of complementary affiliate brands.” Its decision to buy football brand Umbro is perhaps the most significant move in shoring up its position in key sectors, but in the last seven days we’ve also seen several more steps in this strategy start to unfold.

The decision to sell its Starter brand is especially significant, since it not only signals Nike’s move away from the lower end of the market, but also severs its relationship with discount retailer Wal-Mart. Nike bought the Starter brand in August 2004 for $43m, with the specific aim of entering the value end of the market. However, with sneakers selling at less than $40, the company has since decided that the area lacks growth potential.

Opening its first House of Hoops by Foot Locker store, a joint venture with Nike’s largest customer Foot Locker, is yet another milestone. It’s the first joint venture between the two companies, and launches headlong into Nike’s strategy of offering “more elevated retail experiences” for consumers, with areas to hang out, watch sports clips, read magazines, interact with the brand…oh, and hopefully buy something while they’re at it.

It’s a neat idea. Athletic footwear sales in the US are going through a tough patch, so by differentiating itself by appealing to hard-core fans, Nike hopes to score new consumers and new business. Other initiatives already underway include NikeID Studios at its flagship Niketown stores, where shoppers can personalise their Nike shoes.

And expect to see more. The House of Hoops idea is the first of many partnerships with other retailers, and also the first sport-specific concept. Football (soccer), women’s fitness and skateboard versions are all thought to be in the pipeline.


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