Abandoned shopping malls and desolate High Streets: Over the years the death of bricks-and-mortar retail has become a well-worn industry trope.
If Nike’s ongoing travails – highlighted this week in a fresh earnings call for its fiscal Q1 – are any indication, there’s life yet in the old-fashioned shop.
Sales across the company’s NIKE Digital channel cratered 20% even as NIKE Stores edged down just 1%. CFO Matthew Friend said “we expect NIKE Digital to decline double digits in fiscal '25 versus the prior year.”
Does that mean there’s been some huge shift away from direct-to-consumer digital sales in favour of a more tactile experience?
It’s not that simple: Nike is making a tactical decision to slash supplies of three “classic” franchises across its digital channels as it refocuses.
The digital decline, said Friend, was “largely driven by the three classic franchises being down nearly 50% versus the prior year. The sales trends for those franchises in the wholesale channel was substantially better.”
But as The Stack has covered in more detail previously, a renewed focus on retail partners is seeing a big drive towards rethinking bricks-and-mortar.
See also: Did a digital obsession ‘Just Do It’ in for Nike’s John Donahoe?
“The multi-brand environment is very competitive today and it will take time to expand market share” said Friend on the Q1 call late October 2.
“We are investing with our partners to elevate and differentiate our brand in retail. For example, last year, we partnered with DICK'S Sporting Goods to introduce an elevated women's fitness concept, which is generating impressive year-over-year comparisons in pilot doors. We also teamed up with Foot Locker to introduce a new concept, HomeCourt, in their doors… to deliver a fresh, new multi-brand basketball experience.”
“Digital is still and Direct is still an important part of our overall marketplace strategy” he told analysts. “Having direct connections with consumers is strategically important. But our consumers want to connect directly with NIKE, whether it's in our own channel or with a partner.”
As a 2023 retail technology report by Klarna noted, simply filling physical stores with technology is unlikely to be the answer to retail success: "The jury is out on a lot of retail technology it seems with 31% of consumers not wanting to use smart mirrors in the
future and 32% not wanting to browse via an online persona or avatar. That being said, refreshingly consumers' main focus was to see more sustainable fashion which is achievable and delivers an important benefit for both ourselves and the planet."
"Reassuringly for the high street, 69% of consumers would choose a real life physical store over virtual reality today, and predict that even in 2041, 58% still think they’d choose the same. Shopping in the future will be about consumers wanting personalisation. Whilst Augmented Reality and Virtual Reality will certainly be present in stores of the future, according to this consumer research, the overriding factor is consumers will not tolerate
bland generic shopping experiences..."
In May 2024 meanwhile Nike appointed its first Chief Data and AI Officer (CDAO), Alan John, as The Stack first reported, and continues hiring widely for a range of technology roles despite some recent downsizing. Change is clearly afoot – and not just at the CEO level. How much of it will be visible in retail stores soon is an open question.
