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Nike CEO: 'Digital is the foundation' of retail now

Daniel Roberts
Senior Writer

On Nike’s third-quarter earnings call Tuesday, CEO Mark Parker declared that the typical retail consumer “has decided digital isn’t just part of the shopping experience, digital is the foundation of it.”

Well, duh.

Digital shopping has been disrupting brick-and-mortar retail for years and years. And if any consumer brand or retail chain is just now deciding that digital is now the bedrock of retail, not just an additive option, it’s far too late for them.

Sports Authority, City Sports, Eastern Mountain Sports, Sports Chalet, Bob’s Stores, and Golfsmith were all too slow to wake up to digital. Sears was too slow and now risks going out of business, though its mistakes extend far beyond just lack of online innovation. Teen apparel brand Bebe is shutting all its stores and moving online-only.

But other consumer brands adapted faster to digital retail. Nike, despite a number of dark clouds in its earnings report, appears to be one of them.

Nike CEO Mark Parker in Manhattan in 2016 (Getty)

Yes, Nike missed on revenues, sending its shares down 6%; its global future orders were down 4% overall; its stock fell nearly 19% in 2016 (it’s doing much better this year so far); its basketball performance sneakers are struggling (that is a category that has collapsed for the whole athletic footwear industry); it is facing brutal competition from Adidas, which is soaring.

Parker also cited the rise in price-promoting (i.e. discounting) by stores, which is hurting sales. (He said American retail is “not in a steady state,” which is quite an understatement.)

Nike, Adidas, and Under Armour stock in 2017 so far

But hidden amid the bad news were some encouraging digital details about Nike’s future.

Nike said it is seeing more sales through its Nike Plus mobile retail app than ever before, and that digital shoppers spend two times as much per transaction as brick-and-mortar shoppers.

Think about that: digital shoppers spend more.

You can see where the puck is headed: emphasize the ease of buying online, make stores experiential and glitzy but don’t expect them to be the focus.

And Nike indicated that’s what it will do now. “The consumer responds to a simpler, faster, and more personal connection,” Parker said on the call. Personal connection is what the Nike Plus app emphasizes; it gets to know you and your shopping habits. Today’s shoppers like that, clearly. Nike brand president Trevor Edwards added, “We see the opportunity to leverage Nike digital membership to elevate personal service broadly across the marketplace.”

So, yes, brick-and-mortar chains are in a slow, painful, public death march. But consumer brands (and a select few wholesalers, too) will survive if they’ve prepared for the move to digital—a move that is no longer “coming,” but now is here.

As Parker acknowledged, “Now is the time to rewrite the playbook of retail.” Yes: rewrite the playbook and move it online.

Daniel Roberts is the sports business writer at Yahoo Finance. Follow him on Twitter at @readDanwrite.

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