Nike changes strategy

What do Marc Cavendish, Renaud Lavillenie, Pascal Martinot Lagarde, and Julien Wanders have in common with Neymar, Robert Lewandowski, and France’s Raphaël Varane? They have all been ambassadors for the Nike brand on sports fields around the world. All these champions were under contract with the American equipment manufacturer until 2020. However, they seem to have been left behind for the 2021 season. But what is behind this marketing strategy? Jean-François Tatard attempts to decipher the communication strategy of the famous Oregon brand for us.

By Jean-François TATARD – Photos: Nike / DR

Nike has dominated the sponsorship sector for several years, leaving only crumbs for others. Or rather, it used to, as the tide seems to be turning and many athletes – and the list is long – under contract with the swoosh are now moving on to other horizons. Yet Asics, Adidas, and Puma seem to be reacting differently in terms of sponsoring high-level athletes. Could Phil Knight’s famous brand also have been overtaken by the Covid-19 pandemic? Is there something else to understand?

A pandemic that creates panic

One thing is certain, all the biggest companies in the sports sector have been hit hard by the Covid-19 crisis. The pandemic has had strong consequences on the entire economy and particularly on the sportswear sector. The main pillars of this industry are now affected by the effects of the epidemic. Retail is concerned, but also the supply of raw materials, production, product delivery, and of course events and product visibility. Immediately, from the end of the first quarter of 2020, all sports multinationals stated that a temporary decline was inevitable.

How to adapt?

No one is spared. Revenues fell at all levels in 2020 and for everyone… The penalty is general! Restructuring plans, layoff plans, goods that take time to sell, increasing inventories, etc. And if we look at the stock market, we see that the share prices for the actors concerned have fluctuated enormously. Clearly, the pandemic has created a lot of uncertainty for the giants of the sector. And Nike included… Impossible to make reliable forecasts. Nothing is certain! However, the crisis has benefited some. Especially e-commerce. During the first lockdown, there was an explosion in online spending. Amazon, for example, reached unprecedented levels. Between distance selling sites, digital (data analysis, data sourcing, etc.), medical obviously, and everything related to the environment: this has made it possible to compensate for lost revenues from other sectors. It was probably in these last four sectors that investments should have been made. But as far as we are concerned, the biggest sportswear brands have finally managed to adapt when we analyze in more detail. And Nike, first! It is probably the one that has best and most bet on digital.

The digital strategy

Even before Covid, since Nike’s new CEO took the helm of the brand, it was quickly realized that the former eBay boss had made online sales his strategic priority. Indeed, John Donahoe imported a model he already knew well, this time, into sportswear. And Nike’s direct-to-consumer online operations even significantly intensified in 2020 with this pandemic story. Nike has bet on a new digital transformation strategy. Thus, this strategy has meant putting the digital consumer above all else. And especially above what it had always highlighted the most, namely its ambassadors. And therefore its contracted athletes.

Three years ahead for Nike

When we review the year 2020, at first glance, it gives the impression that the first and second quarters of the year for Nike were catastrophic. With store closures, and the elimination of the most historic distribution points. And yet, over the same period, Nike showed a 75% increase in its online sales. E-commerce revenues reached 30% of their total revenues for the first time. And that was three years ahead of the forecast of the sports retail leader’s forecasters. Indeed, these are figures that Nike should have seen in 2023 according to projections. And even better: +80% in the third quarter. This spectacular growth in online commerce made it possible to compensate for the losses at the beginning of the year in a very short time.

Nike is doing well

Let’s look at NASDAQ… The value of the Oregon company’s shares has never been so good. +40% in 2020, while the shares of its main competitors are at best stagnant (-1% for Adidas and Asics, stable for Puma…). In a context where many are struggling and thinking about how not to die, everything finally seems to be going well for Nike. And the strength of the brand’s strategy, it’s hard to deny, lies in its ability to have transformed its model into a 100% digital one. A truly differentiating experience from its competitors. Including Asics and Puma. Who seem to have recovered for now a good part of the athletes who were under sponsorship contract with Nike until this year…

=> SEE ALSO : All our Mag articles