Even if it is a world-class large company, some company-level structure or personnel adjustment is also a normal thing, but this incident can still attract a lot of attention in Nike. Although Nike's performance has been lower than analysts' expectations in the past two years, the performance of the stock market has continued to slump, but this did not affect Nike's position in the field of shoes and even pan-fashion. A few months ago, Nike’s brand valuation was still ahead of the “2017 Top 50 Most Valuable Fashion Brands†published by Brand Finance, the UK brand assessment agency. However, compared to Adidas and Zara, the value growth rate was hidden. .
For Wall Street's continued failure, Nike CEO Mark Park's usual attitude is unmoved, thinking that everything is within reasonable control. However, at the moment, Nike couldn't hold back anymore. He had to perform surgery on the company's core level. On Thursday, Nike released the latest corporate restructuring plan "Consumer Direct Offense". On the surface, Nike under the new plan will face consumers more directly, increase the proportion of personalized services, and shorten the distance between products and consumers. .
With the establishment of the new plan, some changes in the company's architecture have been inevitable, mainly as an organizational adjustment and personnel reduction. According to reports, Nike is preparing to lay off 2% of its staff. According to the latest statistics, Nike’s total number of employees exceeds 70,000. This time, the number of layoffs is about 1,400. This is actually a big move.
In the future, Nike will increase the number of outlets for branded direct stores, thereby reducing the sales ratio of third-party dealers. In addition, Nike is also preparing to streamline its product line, which is expected to reduce its footwear by 25%. It will focus on several series such as ZoomX, Air VaporMax and Nike React. And Nike also intends to shorten the product production cycle from 18 months to 4 months, it is expected that this move can save at least 10% of the cost.
In fact, Nike's layoffs are not targeted at grass-roots employees, and some unnecessary regional executive positions have also been revoked. First, the company will reorganize the global regional structure from six to four, namely the North American market, Europe, the Middle East and Africa markets, the Greater China market and the Asia Pacific and Latin America markets, and each area will only have one vice president. This change will be reflected in the financial report for the 2018 financial year.
In fact, from this series of actions by Nike, we can easily see that improving the operating efficiency and saving costs is the main theme. Trevor Edwards, the Nike brand president who led the reorganization plan, said that the current competition in the footwear and clothing market is particularly fierce. This poses new challenges for Nike. Fastness and flexibility have become an essential element of brand marketing. . Nike needs to have more direct interaction with consumers. In particular, some innovative ideas and products need to be delivered to consumer terminals faster.
In fact, Nike has already made such a strategic adjustment has been a sign. According to the financial report of Nike released in the third quarter of fiscal year 2017, total revenue still failed to reach expectations, and the best-performing Greater China market failed to shake off the slowdown in growth. From the beginning of the 2016 fiscal year, Nike has experienced a drop in the growth rate for seven consecutive quarters. From the market feedback point of view, Nike can not control the problem of surplus products, especially in the North American market, the problem is the most serious, and in a short period of time, the company's orders in North America will continue to decline.
At that time, there were reports that Nike was ready to cut off some poorly performing product lines. Mark Parker also recognizes that consumers' shopping habits are changing, and this change has impacted traditional sales methods. Nike is also preparing to increase customer-specific personalized consumer services. In addition to direct purchases, it also includes value-added services. "Private, changeable, and unique" will be the three criteria that drive the company's business development, Parker thinks.
The rise of Under Armour in North America hits not only Adidas but Nike, but Nike’s deep roots in the region are not as serious as those of Adidas. However, Adidas painstakingly made a series of market-leading products and marketing strategies, quickly out of the trend, and then recover in North America.
At that time, Nike should have been able to feel the pressure. Since the beginning of fiscal 2015, Nike has encountered performance growth problems. In fact, it is said that it has suffered a cliff-fall, which is more than 50%. In fiscal 2016, Nike’s revenue growth capacity has recovered, but it is still far from before FY2015. In short, in the past three years, Nike's performance is not very bright, it can be said to eat old books, Mark Parker does not say the mouth, the internal adjustment is inevitable, so we do not have to surprise the arrival of this day.
In front of the 50 billion U.S. dollar revenue target in 2020, Nike has apparently slowed down. The 2017 fiscal year has passed and the days of Nike’s announcement of its annual performance are getting closer. It is expected that this will not be a beautiful transcript. Nike needs to give investors confidence, so it is necessary to introduce a change plan before this.
As for the specific ways of reforming, there is not much innovation, because Adidas has already made the best model, certainly not that Nike will copy Adi's practice, but it cannot deny Adidas's product strategy success. This is their recovery. The key point. Adidas brought the retro style even Nike's position in the North American footwear market has appeared a little loose, although the two sides in the footwear market share is still a big gap, but some of Adidas's retro shoes really lead the fashion trend today.
In this process, Nike has almost no change in thinking, many analysts believe that Nike has missed the best time for transformation, this step is to step down after all. Of course, compared to product-level changes, the change in marketing methods will be relatively easy. North America's retail industry has entered into a cold winter, and the impact on local sports brands is not small. Increasing the proportion of online sales is inevitable.
If you want to quickly establish contact with consumers, the most direct way to get online and offline channels is to get through. In fact, Nike has also made remarkable achievements in the field of e-commerce in recent years, but it is still far from enough. Nike wants to use e-commerce to speed up transactions to solve the high inventory problem, but also actively communicate with consumers to purchase experience, in order to understand the consumer's willingness to buy the first time.
In addition, Nike has also identified key developments in the core markets, including New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, ​​Seoul and Milan, across 10 countries in four regions. It is not difficult to see that Nike is ready to face up with Adidas.
Nike still has advantages in the North American home market, but it is unrealistic to hold the treasure in this market. Nike needs higher performance growth. In the past two years, they have already found a pit in this indicator. Now it is. Need to redouble our efforts. Nike must admit that he has been left behind by Adidas in the Greater China market, which should also be Nike's most important weight to impact 2020.
When Adidas constantly impacts the eyes of consumers, Nike is too calm, which is definitely not a wise move. In the United States, Nike can rely on sports and competitions to find target customers. In China, we need to change our mindset. For example, experience stores with special functions and digital advertising have proved to be a good way.
There are investment institutions that believe that Nike's adjustment at the product and marketing level is certainly necessary, but how much the direct impact on consumers remains to be verified. Nike also needs to do some articles on brand marketing to make consumers feel that their changes at the brand level will be more effective. In any case, the next fiscal year is crucial for Nike. Crossing this hurdle, with Nike's brand heritage, it is not difficult to get out of the low post.
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