Less is more approach in Nike restructure
A Nike restructure is taking a lean approach: cutting staff, reducing its global regions and focussing on 12 cities – four of them in Asia – in what it terms the “Consumer Direct Offense”.
Taking the digital highway, the US footwear giant aims to drive growth by accelerating innovation and product creation and moving closer to the consumer through the “key cities” – Tokyo, Seoul, Beijing, Shanghai, Barcelona, Berlin, London, Los Angeles, New York, Mexico City, Milan and Paris. These cities and their host countries are expected to represent more than 80 per cent of Nike’s projected growth through 2020.
“Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targetting key markets and delivering product faster than ever,” says Nike chairman/president/CEO Mark Parker.
Nike brand president Trevor Edwards will drive the offence through integrated category, geography, marketplace, product, merchandising, digital and direct-to-consumer teams.
Citing improved efficiency, Nike has trimmed its geographic structure from six to four regions – North America; Europe, Middle East and Africa (EMEA); Greater China; and Asia Pacific and Latin America (APLA). Asia’s leaders are Angela Dong, VP/GM of Greater China, and Ann Hebert, VP/GM of APLA.
The Consumer Direct Offense is fuelled by Nike’s “triple double” strategy – 2X innovation, 2X speed and 2X direct consumer connections.
To double innovation, Nike says it plans to accelerate the impact and cadence of innovation platforms. It aims to offer 25 per cent fewer styles, but a wider choice of “key franchises”.
Nike also aims to halve product creation cycle times, starting with its Express Lane, which creates, updates and fulfills products in response to consumer demand. The lane is being activated in China this summer, serving Shanghai, Seoul and Tokyo.
In the new role of president of categories and product, Michael Spillane leads the design-to-delivery service, including design and merchandising. The categories cover running, basketball, sportswear, training, global football and young athletes. A women’s team has been formed to complement each top-tier category.
For direct consumer connections, the new Nike Direct organisation united Nike.com, direct-to-consumer retail and Nike+ digital products. It is being led by Heidi O’Neill as president with chief digital officer Adam Sussman, and unites physical and digital retail.
Two new consumer-direct innovations are SNKR Stash, which unlocks access to exclusive Nike and Jordan product using mobile geo-locations, and Shock Drop, surprise alerts for coveted sneakers consumers can buy instantly through the app or at their nearest Nike store.
Meanwhile, the organisational changes are expected to result in a 2 per cent reduction of the company’s global workforce. In its annual report for the year ended May 31, Nike said it had about 70,700 employees worldwide, including retail and part-time employees. The 2 per cent cut would represent around 1400 jobs.
SGB Media says the move appears to be similar to an Adidas move last July to “disproportionately invest in marketing and retail experiences” in six key cities: Los Angeles and New York, London, Paris, Shanghai and Tokyo. Its aim was to double its business in each of these urban centres over the next five years.