Marketing steps up in Nike's turnaround plan - here's where those dollars are going

"Nike has been on a downward trajectory; its share price tanked under the previous CEO, John Donahoe, who was ousted last September in favour of Elliott Hill, a 32-year veteran at the company who was brought out of retirement to lead it back to growth. At the heart of its problems was Donahoe's hyper-focus on growing direct-to-consumer sales. Before Nike, he was a leader in the tech space (eBay, PayPal and ServiceNow) and came in with a vision to have more shoppers buy directly from Nike.com."

"There were many other factors that contributed to Nike's sales decline. Nike focused on sneakerheads and spent less time catering to the growing womenswear and running market. Competitors took advantage with new product innovation and marketing focused on those markets. At the same time, Nike had to deeply discount inventory that wasn't selling, which hurt profit margins."

Nike pursued an aggressive direct-to-consumer strategy, cutting ties with as many as 50% of wholesale partners and shifting marketing spend from brand advertising to lower-funnel performance marketing. The strategy reduced shelf presence at retailers like Macy's and Footlocker and failed to win enough shoppers to Nike.com. Focus on sneakerheads and neglect of womenswear and running allowed competitors to capture market share. Heavy discounting of unsold inventory compressed profit margins. Elliott Hill returned from retirement to lead a turnaround. Third-quarter revenue fell 9% to £9.1bn, with North America down 4%, EMEA down 10% and Greater China down 17%. Efforts include clearing old stock and rebuilding wholesale partnerships.

Read at The Drum