Is Nike Increasing Focus On Its Digital Initiatives?

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When  Nike (NYSE:NKE)  announced a revenue target of $50 billion by the end of fiscal year 2020, it set an ambitious goal of increasing its e-commerce sales nearly seven fold to reach $ 7 billion in the next five years. [1] The company is taking concrete steps to achieve this target and recently appointed its first Chief Digital Officer by moving Adam Sussman, its erstwhile head of global strategy and development, to this new position. [2] We believe that, as e-commerce becomes a significant part of retail sales in future, Nike’s digital initiatives would be crucial for the company to reach its revenue goals for 2020.  In tandem, “integrated commerce” will become a key driver of Direct To Consumer (DTC) sales in the industry.

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Nike Is Emerging As A Leader In Digital Competence

In a study conducted  to “quantify the digital competence” of 59 U.S. sportswear brands, Digital IQ identified Nike as one of the leaders in the digital space based on its ability to creatively interact with consumers on multiple devices and online environments. [3] While digital initiatives would boost e-commerce sales, companies such as Nike are also using these initiatives to create tighter bonds with their customers, thus driving overall profitability.  Nike is adopting an “integrated market place” strategy which provides consumers easy access to its products (in the form they want, online and in its stores), integrating the overall shopping experience. Reports suggest that while online retail sales will grow by more than 57% by 2018, nearly 60% of all transactions will involve digital channels in some form or the other. [3] Focusing on digital initiatives such as social media marketing and fitness apps, which Nike has already successfully implemented, will be key to drive sales in future. The company is also investing in 3D printing technology which will allow consumers to design their shoes online and print them on a 3D printer at home or at a Nike store. [4] While Nike is continuously innovating in the digital space, the appointment of a Chief Digital Officer cements the company’s focus on these initiatives.  This will support its efforts to reach its ambitious goal of $50 billion in revenues over the next five years, which is higher than our estimate of $ 40 billion in revenues by 2020.

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Nike’s brand appeal and  innovative digital initiatives can enable the company to reach its target of $ 7 billion e-commerce revenues by 2020. Yet we believe the seven fold increase will be challenging but not impossible. As an increasing number of consumers globally seek digital channels for researching,  shopping, and buying merchandise, Nike’s an integrated marketplace experience prove to be a catalyst for its e-commerce sales growth.

 

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Notes:
  1. NIKE Inc., Announces Target OF $ 50 billion In Revenues By End OF FY20, Company Press Release, October 2015 []
  2. Nike Names Adam Sussman first chief digital officer, Bizjournals.com, February 9, 2016 []
  3. eCommerce and The User Experience : What Can We Learn From the Activewear Industry, Business To Community, April 2015 [] []
  4. Nike exec says we’ll be 3D printing sneakers at home soon, Fortune, October 2015 []