As department store sales wane Nike has unveiled a new distribution strategy as it prepares for a future where Amazon reigns supreme.
Nike will continue to invest in its vertical retail stores in twelve core urban markets (e.g. NYC, London, and LA), where 80% of its growth is forecast to come from through 2020.
In areas where Nike doesn’t have a vertical retail presence, Nike has historically relied on specialty retailers such as Footlocker and Dick’s Sporting Goods for distribution. But as those shoppers shift to online Nike is hoping its partnership with Amazon will offset losses in specialty and department stores.
Athleisure brands are all fighting for the same territory. For Nike, Amazon is piece of the puzzle they have been missing. According to L2’s Activewear 2017 DIQ, Nike is the most visible brand on 7 out of the 11 retailers searched, including Amazon. Yet, Nike only holds down 9 percent of Amazon’s first page search results, leaving a lot of room for competitors like Adidas, and Under Armour. That is because Nike has yet to supply Amazon with their product. When compared to Footlocker, which Nike makes up 72% of their merchandise, it is no surprise that Nike dominates in visibility and page real estate.
Adidas and Under Armour, Nike’s fiercest competition, have already established a relationship with Amazon. An open channel on Amazon will allow Nike to improve their Direct-to-Consumer plan and connect with a younger generation of shoppers that rely on the service- millennials.