How Nike Runs The Sportswear Game

How Nike Runs The Sportswear Game

It's quite a surprise that the winged Greek Goddess of speed, strength, and victory became the number one, best-known sneaker and sports apparel brand in the world. But the story of Nike's growth sheds light on how it all came together and how two sports fans became the founders of what is now the largest sports fashion company.

We enjoy the "behind-the-scenes" stories of successful companies because there is so much to learn from them at every stage of their development. Nike's challenges in the early years are similar to the problems many small businesses face today, while there are some important lessons to be learned about how they approached marketing and sales as a multinational company.

A few interesting facts and data about Nike:

  • The name Nike is pronounced 'ny-kee', not 'Nike', as many die-hard brand followers pronounce it.

  • In 2020, the brand value of Nike was $34.8 billion, more than double that of Adidas (another global sportswear brand).

  • As the most popular brand of athletic footwear, Nike enjoys a market share of approximately 62%.

  • In 2020, Nike employed 75,400 people, a decrease of 1.69% from 2019.

  • Nike sells products in 170 countries.

  • The company has been a member of the Fortune 500 group since May 30, 1971.

  • Nike has more than 600 manufacturing partners around the world.

  • Like all sports retail companies that suffered from the global pandemic, Nike saw a 38% decline in sales in the fourth quarter due to physical store closures.

The Greek Goddess of sneakers - How it all started?

Nike founders

Nike is one of the most famous sneaker brands in the world. The famous logo, the iconic models from the Air Force to the Air Max generation, the countless collabs are all pointing towards one direction, even though the founders had no clue back then how powerful a brand they have created.

Did you know that the company wouldn't be called that if it had been up to its founder? Or that the sole of their first running shoe was made in a waffle iron? If you're interested in how the brand's story began and how Nike has made it to become the market leader in sports apparel today, read on to find out.

The Japanese Blue Ribbon

The brand, or its predecessor Blue Ribbon, was founded in 1964 by Phil Knight and Bill Bowerman. Knight had the idea of marketing Japanese-made running shoes in America: An academic paper he wrote demonstrated his belief that the distribution of cost-effective, high-quality Japanese running shoes would be profitable in breaking the German monopoly.

So he traveled to Japan that year to negotiate with Kiharchiro Onitsuka (later the founder of Asics). Knight was so surprised to be treated as a serious negotiating partner by the Japanese that he coined the name Blue Ribbon on the spot. The company's seed capital was just $1,200.

After successful negotiations, Tiger shoes began exporting to the United States the following year - the first shipment consisted of 200 pairs of shoes. The launch was financed by $500 each raised by Knight and Bowerman. Knight sold Tiger shoes at local and regional athletic competitions in his spare time for the first two years out of the trunk of his car. By the end of the year, the company sold all 200 pairs of shoes, had one full-time employee, and a sales volume of $20,000, resulting in a profit of $3,240.

The Nike Swoosh and the first sneaker

From the beginning, Bowerman was obsessed with shoe development. As a first step, he tried making the uppers lighter. In 1967, he created the famous "Marathon" model from nylon. For the shoe soles, the brand's co-founder found inspiration in a rather odd way. Bowerman and his wife were eating breakfast when he exclaimed over the waffle iron: Eureka! No, that probably didn't happen, but Bowerman was reportedly inspired by his wife's waffle iron. He then poured hot rubber into the oven to make the soles of the first Nike running shoes (and probably bought a new oven for the kitchen...)

Their first warehouse was opened in Santa Monica, CA, in 1966. In the years following, Nike expanded rapidly across the country, opening store after store. With 20 employees, the company had revenue of $300,000 by 1969. Within two years, it had 250 employees and sales of $4.8 million, thanks to the Waffle Trainer shoe's market success. By 1972, it had 45 employees and sales of nearly $2 million.

Nike logos through time

The organization adopted the name Nike in 1971. Originally, Knight wanted to rename his company "Dimension 6", but at the end (thankfully) an employee's idea, Jeff Johnson, prevailed. Nike is the god of victory in Greek mythology, hence the inspiration. It was also in 1971 that the brand's logo, the Swoosh, was born. It was designed by a student at the Portland Graphic Arts University for only $35. The amount paid out would be worth about $234.80 today because the cumulative inflation rate between 1971 and 2021 is a whopping 570.9%. Her work was recognized 12 years later by Nike when it awarded Carolyne Davidson an undisclosed amount of stock and a diamond ring with the Nike logo she designed.

The Air Cushioning technology was first used by the brand in 1979 in its Tailwind Stride. However, unlike today's air-cushioned shoes, it was not yet visible as the technology innovation was built into the inside of the sole of the shoe. Nike's sales peaked at $270 million by the end of the 1970s.

Key takeaway #1: understanding market demand drives growth

It’s easy to misunderstand the big picture as two founders having luck and starting their operation of a not-yet-matured market. The truth is that sports apparel was sold before Blue Ribbon and Nike, in fact, this was the main reason that Bowmann went to Japan to find a manufacturing partner in the first place.

Nike had multiple strong differentiators throughout its journey to becoming a market-leading company:

  • The founders had a strong vision.

  • They started with reselling another manufacturer’s products, which enabled them to have deep market knowledge and understanding of demand.

  • They only pushed towards developing their own product after the company has been financially profitable

How Nike became the market leader

Heavy growth fuelled by the 80s

The NKE IPO debuted in December 1980 at $10.50 per share. Nike's initial public offering (IPO) would have given you nearly $180,000 by June 2021 if you had invested $1,000 without reinvesting dividends.

When we talk about Nike’s world of sneakers, 1984 is one of the most important milestones for the brand. It was the year when the then 21-year-old star Micheal Jordan was signed. The young basketball player didn't want to hear about Nike at first, preferring Adidas or Converse, but eventually decided to go for the swoosh, and the first Jordan 1 was released. Since then, the model's success has continued unabated and it has become one of the most iconic silhouettes in sports.

The visible air shoe was born eight years after the aforementioned Tailwind model, in 1987, courtesy of Tinker Hatfield and David Forland, and debuted in Air Max 1. The innovation was a major novelty at the time. Today, the visible Air sole continues to make its mark on the sneaker world, albeit in a much more modern form compared to the past decades.

The next milestone in the Nike story was the motto "Just do it." being coined by Dan Wieden in 1988. According to the man, he was inspired by the last words of the serial killer Gerry Gilmore, who said before his execution, "Let's do it!"

During a storm in the Northeast Pacific in May 1990, more than 60,000 pairs of Nike sneakers fell into the ocean. Despite being accumulated with dirt, shells, and seaweed, the shoes were still wearable after they were cleaned, and fishermen who discovered the shoes organized meetings for matching them.

Everyday business life in a healthy enterprise

In 2000, they introduced their new cushioning technology Nike Shox, while the Nike Free, introduced last year, attempts to give the wearer a barefoot running experience with a deep-ribbed cross-sole design.

2003 was also a successful year for the company, as they signed such big stars as Kobe Bryant and Lebron James. That same year, they acquired one of their competitors, Converse, for $305 million. Besides signing Jordan, a major sneaker milestone is The Ten collection, a collaboration between Nike and Virgil Abloh's Off White.

Key takeaway #2: Nike became a pioneer in marketing

Since the 70s, Nike has always put a lot of energy into building a strong brand image. The naming, the logo, the tagline - they're all parts of a big marketing machine that contributed to growth even before the internet existed. In each decade, Nike pioneered the field of marketing.

Nike strategic buyer of the year

Nike’s Acquisition Strategy

The company has purchased and sold several sports apparel and footwear companies throughout its history. In 1988, the company purchased the high-end shoe company Cole Haan, followed by the purchase of Bauer Hockey in 1994. From Hurley International's founder Bob Hurley, Nike purchased the surfwear company in 2002. Converse was acquired by Nike for $309 million in 2003. During 2004 and 2007, the organization acquired Starter and football jersey maker Umbro.

As Nike refocused its business interests in the 2000s, it began divesting some of its subsidiaries. In 2007, it sold Starter and in 2008, Bauer Hockey, followed by Umbro and Cole Haan. As of 2020, Nike owns only one subsidiary: Converse Inc.

In February 2021, Nike restarted its acquisitions in light of the new strategy, lead by CEO John Donahoe. The company acquired Datalogue, a New York-based company focused on digital distribution and machine learning technology. The ultimate goal is to further develop Nike’s e-commerce capabilities and fuel revenue growth utilizing heavily on this segment. As a result of this move, digital sales for the fiscal year rose nearly 50% to $5.5 billion, softening the blow of COVID-19.

The Converse acquisition

Nike acquired Converse for $315 million in 2003 - two years after Converse had filed for bankruptcy. The annual sales of Converse at the time of the acquisition exceeded $200 million. Converse had sales of approximately $200 million, so Nike paid $315 million for the brand in 2003, giving it a PE multiple of 1.6.

16 years later, Converse's sales hit nearly $2 billion in Nike's 2019 fiscal year. Converse's revenue growth of ten times over the years is just one of several indicators that Nike's acquisition of the athletic wear company was an excellent deal for the company. Nike's acquisition of Converse was a perfect match - it helped diversify its portfolio and gave Nike's footwear division a new slant.

Converse Revenue graph

Source: Statista

With year-over-year revenue growth of 18%, Converse was among Nike's fastest-growing segments. Sales for the classic sneaker brand again fell below $2 billion, hitting a low point in 2017-18. Converse's sales declined 8% to $1.886 billion, below the results of 2014-15, and the company hasn’t been able to get in shape ever since. To be fair, in 2018-2019 Converse finds its way en route to increased revenue, however, COVID-19 pushed back sales.

Key takeaway #3: acquisition as the engine of growth?

Let's face it, Nike is not the most successful company in the history of mergers and acquisitions. It began acquiring niche competitors in the 1980s, which seemed like the right approach at the time, and that mindset is still found in many similar-sized companies today. However, investors forced Nike to clean up its portfolio of companies, as none of the acquired businesses were bringing in the projected additional revenue over the years.

Acquiring slowly and with a clear strategy in mind is the key to finding the right value and ultimately profit within these partnerships.

Understanding Nike’s Market Position

Nikes market position

Nike financials in the last closed fiscal year (2020)

The revenue for the fiscal year 2020 was $37.4 billion. According to the company, the COVID -19 pandemic was responsible for the 4% drop. In comparison, the revenue in the fiscal year 2019 was $39.1 billion.

Nike's subsidiaries include Converse and Hurley. Convers is a manufacturer, marketer, and seller of athletic lifestyle apparel and footwear. While Hurley designs, markets, and distributes products for surfers, youths, and young adults.

According to Nike's fiscal 2020 sales distribution, the company had sales in the following areas:

  • The North American market accounted for 41% of revenue with $14.5 billion.

  • 6% or $9.3 billion from Europe, Middle East, and Africa.

  • The Greater China area accounted for 19% of all revenues with $6.7 billion.

  • The APAC region made up 14% of total sales or $5.0 billion

As a result of the company's revenue growth, increased gross margin, and lower effective tax rate, the company's net income rose to $4 billion in fiscal 2019 compared to $1.93 billion in fiscal 2018. A dividend increase of 88 cents to 98 cents per share was approved by the corporation's board of directors. This represents a more than 20% increase from 22 to 24.5 cents per share. Company revenues for fiscal 2020 were reduced by $2.5 billion as a result of the pandemic COVID-19.

Fierce market

Sportswear is a fiercely competitive industry. There are several companies providing athletic and casual footwear and clothing across the world in addition to Nike. There is stiff competition across all aspects of the business, including product offerings, technologies, marketing, pricing, manufacturing costs, and customer service. Despite strong competition, Nike has managed to remain the leading brand.

A major competitive pressure Nike faces is the location of its stores. A store's location is critical to be successful, which means companies are constantly looking for a store location that will generate the most sales. No matter whether it's a department store, retail store, big sporting goods store, or online, these businesses all cost money and need to compete for the best space.

A competition for celebrity endorsements is another competitive pressure Nike has to deal with. Despite Nike's dominance, there are many companies with superstar endorsements that create competition among the companies. Adidas sponsors events such as the FIFA World Cup and has endorsement deals with celebrities like David Beckham.

In addition to the constant battle for the lowest prices, Nike faces the pressure of consumers, who can now access many different kinds of stores and find a cheaper and better deal other than Nike with the technology available.

Comparing competitors

When it comes to revenue, profitability, market cap, number of employees, and other similar metrics, Nike is the absolute leader. Its revenue is more than the revenue generated by Adidas, Puma, Reebok, and Under Armour combined.

Revenue from footwear segment of Nike, Adidas, and Puma from 2010 to 2020 (in USD Billions)

footwear sales graph Nike Adidas Puma

Source: Statista

Nike's North American market is one of its most important, as half its global revenue in 2020 will come from the sale of shoes there. The company’s success is highly boosted by the brand popularity, marketing campaign, and sponsoring deals with both event organizers, professional sportspeople, and teams.

Nike versus Adidas

Adolf and Rudolf Dassler founded Gebrueder Dassler Schuhfabrik, which became Adidas and Puma. Two widely recognized sports brands were created from a disagreement between the two brothers. There are 20 billion euros in sales by Adidas every year and a brand value of $16.5 billion, making it the largest sporting goods company in Europe and the second-largest in the world, behind Nike. In 2020, Adidas employed 62,285 people worldwide. Adidas, like Nike, is most known for its footwear, and the Nike competitor generated nearly half of its net sales in 2020 through the footwear business.

Over the past few years, Nike has grown at a faster rate than Adidas. The average growth rate for the last five years has been 6.5%. Both companies spent a large amount of money marketing their products. Approximately 10% of Nike's sales were retained for marketing, resulting in a $3.8 billion budget.

Nike versus Puma

By 2020, Puma expects to generate nearly 75 percent of its consolidated earnings from Europe and the Americas. Adidas, which describes itself as the "blue mountains," has collaborated with celebrities such as Sergio Rossi, Alexander McQueen, and Rihanna to add more edge, creativity, and uniqueness to its designs.

Key takeaway #4: pioneering or following competition?

Many first-time entrepreneurs believe that there is no competition at all in their market, which is rarely true. Nike didn't start innovating right away, spending millions of dollars on research and development, but looked for opportunities that became revenue streams.

Once profitable, the company invested heavily in creating strong differentiators in its brand, products, and overall customer experience. An important lesson from Nike's story is the importance of creating revenue streams by following already successful companies while preparing for future investments.

A wide variety of products

Nike offers 643 products online and manufactures around 500,000 different product variations (differed by size and color). The company offers its products for women, men, and children. The main types of products are:

● Shoes
● Clothing
● Accessories & Equipment

Revenue share of Nike by product category chart

The legendary Nike sneakers - Nike Cortez

Nike Cortez

The Cortez was Nike's first running shoe and is considered the key to the brand's success. The sneaker was the brainchild of Nike co-founder and Olympic track coach Bill Bowerman, who felt that runners needed something more comfortable and durable than the shoes they had at the time. His claim was proven after the 1972 Olympics, as success was reflected not only in the fact that the majority of athletes trusted this model, but also in the 100 percent increase in sales in the first year.

As a running shoe, the Cortez doesn't have a glorious history aside from its success in '72, but it has enjoyed a renaissance and, as it should, made its mark on pop culture. West Coast legends Dr. Dre and Eazy-e from N.W.A, or the fabulous singer Whitney Houston, who performed on Super Bowl in Nike's first running shoe in 1991, have breathed new life into the shoe.

The legendary Nike sneakers - Nike Air Max

Nike Airmax

The first Air Max was launched by Nike in 1987. The shoe was the idea of Tinker Hatfield, who originally worked as an architect for the company, designing offices and stores. Nike Air Max shoes are known for the cushioning in the midsole and heel area, which is visible on the outside of most models: the design was based on the sole solution of 1978 Nike Air, which was further developed by the specialists.

Since 1987, the company has released numerous models, more than fifty in total, such as the Air Stab and Air Max Light in the 1980s, and Air Max Turbulence since 2000. The distinctive cushioning of the Nike Air Max shoes has changed slightly over the years. The 1993 model was the first to have cushioning on the heel and side of the shoe, while the 1995 model now has cushioning on the front. The 1997 version was the first to have full cushioning.

In 2006, the Air Max 360 was launched, with the Max Air cushioning running through the midsole of the shoe. In the same year, the three popular classic models Nike Air Max 90, Nike Air Max 95, and Nike Air Max 97 were revised, with the original sole being replaced by the 360.

The legendary Nike sneakers - Nike SB Stefan Janoski

Nike SB Stefan Janoski

Nike was unwelcome, to say the least, in its first attempt at the skateboarding world. However, through hard work and perseverance, they have built the Nike SB sub-brand, which is specifically designed to meet the needs and lifestyle of skateboarders. There was also the Nike 6.0 series, which has since been discontinued, but was more popular with BMX riders. But back to skateboarders: American skateboarder Stefan Janoski signed a deal with the brand in 2009 and the first model named after him was released. The advantages of the shoe are that it is simple, can be worn with everything, and is affordable.

The legendary Nike sneakers - Air MAG

Nike Mag

This model stands out a bit from the rest of the shoes on the list because, unlike the others, we probably won't see many of them on the streets. And that won't be the case in the future either, because this is a thing of the past! The "Back to the Future" movie-inspired shoes was released twice, in 2011 and 2016, and both times they were limited editions, with 1,500 being produced in 2011 and only 89 in 2016. Accordingly, the shoes are also more expensive than a flying DeLorean, with the first series costing around $10,000 and the second series costing around $25,000-30,000.

The legendary Nike sneakers - The Air Force 1

Nike Air Force 1

The Air Force 1 is Nike’s most popular product of all time, including all sports apparel. Named after Air Force One, the plane that carries the US President. "Uptowns" refers to Air Force 1s originally worn by inner-city youth, particularly at Harlem, New York's Upper West Side residents.

It was introduced in 1982 and quickly discontinued in 1984. The shoe was reissued with the new cursive Nike logo in 1986, and a swoosh was added to the bottom on the back. Although the original stitching on the side panels of the Air Force One is no longer visible in modern versions, little has changed on the shoe since its creation in 1982. The company has since produced 1,700 colorways, generating an estimated $800 million in sales per year. Nike previously prohibited online sales of Air Force Ones by some retailers due to supply restrictions, which is now lifted.

While limited edition releases and exclusive collaborations may have given the AF1 prestige and widened its appeal to younger generations, it was the monotone colorways that kept sneaker fans interested over time.

Key takeaway #5: product or service portfolio

Nike has chosen a path of pioneering product design, pricing, and retail strategy, slowly building a strong product portfolio that is so much more than just running shoes. The company has only been able to do this through constant testing, surveys, face-to-face conversations with customers - aka gathering market knowledge. Follow this path and build your growth engine(s) on products or services that serve a clear demand.

A pioneering approach to manufacturing

Nike factory

Nike shoes are almost exclusively made outside the United States. China and Vietnam are the leading producers of Nike shoes, taking up 36% of the total production worldwide. Nike produces 22% of its shoes in Indonesia and 6% in Thailand. Overall 500,000 different products are manufactured by 785 contract factories employing more than 1 million workers. Nike's contract plants employ many more women than men (in China, 77.4% of workers are female, and 80.3% in Vietnam).

Among the first market players to completely outsource manufacturing was Nike. Several factors boosted cost saving through this strategy:

Nike outsources manufacturing into developing countries, where the workforce is extremely cheap.

  • Nike is not in direct contact with this tremendous amount of workforce (estimated around 1 million people), hence safety, regulation, payment, and many other types of related costs and risks are pushed on the contractors.

  • On the other hand, Nike utilizes the latest optimization and lean manufacturing techniques, enabling the supply chain to be as effective as possible in 2021.

  • Outsourcing the manufacturing process allows the company to quickly adapt capacities to its current needs, which has been one of the key factors in Nike’s ability to grow.

Nike manufacturing map

Source- European, African, and Asian countries, where Nike’s outsourced manufacturing is taking place

While apparel is manufactured in almost all Nike countries, footwear is only produced in Asia and Latin America (in total in 14 countries by a total of 623k workers).

Nike sweatshops

The Nike, Inc. sweatshop scandal dates back to the 1970s. The model was built based on locating the lowest labor costs, which resulted in child labor and exploitation. Jeff Ballinger published a report in 1991 detailing poor working conditions and inadequate pay for workers.

A decline in sales resulted from the negative perception of the brand caused by forced labor. Rather than continue to promote their model's competitive nature, Nike had to reassess its business and focus on ethics. It has vehemently denied all allegations of factory abuse in the past, saying it has very little control over the factories of its suppliers. Since 2002, Nike has audited its factories to ensure worker safety and health.

Distribution centers

There are six Nike U.S. distribution centers. There are four of them in Memphis, Tennessee, and two in Indianapolis, Indiana, and Dayton, Tennessee. Third-party logistics providers operate the latter distribution centers. A total of 67 distribution centers were located outside the United States at the end of the fiscal year 2019.

Key takeaway #6: outsourcing manufacturing

Nike had gained a serious competitive advantage by pioneering the outsourcing of the production process. Shoe production is done in Asian and Latin American countries where labor is much cheaper compared to the US.

While this business model brought financial benefits to the company for the first 2 decades (from the 1970s to the 1990s), Nike's reputation was seriously damaged when the public was informed about the disastrous working conditions in these factories.

The key takeaway from Nike's production model is that while outsourcing can be financially beneficial, one must ensure that the quality produced is consistent and sustainable while the working environment is also acceptable by today's standards.

The robust marketing strategy of a market leader

A very strong marketing strategy is part of Nike's success. In the sporting goods industry, they are the #1 brand and it is the 14th most valuable brand in the world. To succeed, Nike invests in building its brand through emotional marketing and celebrity endorsements, develops products with market-leading technology, and makes strategic acquisitions.

Nike commercials

Nike Kobe Bryant Ad

The new advertising agency Wieden+Kennedy (W+K) created the first three Nike national television commercials during the broadcast of the 1982 New York Marathon. As the first company to win the award twice, Nike was recognized as the Advertising Medium of the Year at the Cannes Advertising Festival in 1994 and 2003. Both in 2000 and 2002, Nike won an Emmy Award for Best Commercial.

Strong online presence

The company was an early adopter of online marketing tools and techniques. Due to the new e-commerce focused strategy, marketing is also shifting heavily towards being digital.

Nike’s strong online presence consists of the following elements:

  • A strong website with almost 200 million monthly visitors.

  • More than 46 million backlinks pointing towards nike.com.

  • Paid advertising on Google Ads and across all social media platforms. Google Ads provides 6.7 million monthly paid views.

  • Remarketing on both Google and Facebook.

  • Frequent email marketing campaigns: 3.34 emails/week, 15% of the emails

    Nike sends includes a discount or promotion, Sunday is the most popular day Nike sends emails, 32 characters is the average subject line length of Nike emails.

  • Nike is one of the most followed brands online as it has 318 social media profiles catering to a variety of products and geographies. All major social media platforms such as Facebook, Twitter, YouTube, Pinterest, Instagram, and LinkedIn have Nike profiles. Separate pages were created for each of the brand's products to cater to different target audiences. For quite some time now, Nike's Facebook page has not been active.

  • Undoubtedly, Nike has some of the biggest sports stars as spokespersons. Nike is associated with sports legends such as Roger Federer, LeBron James, Michael Jordan, and Cristiano Ronaldo, just to name a few. Nike has earned its place in the sports world by personifying the brand and putting these sports legends' faces on their products.

    Roger Federer Ad
  • Social media influencers: Nike is one of the earliest adopters of using the power of social media influencers. They took the concept of brand ambassadorship by popular sportspeople and adapted it on average people who are only known by a smaller number of follower base (still speaking about tens of thousands of people). You can find the list of top 10 Nike influencers here.

Nike’s marketing campaign highlights from 2020

  • "Heroes" is a Nike campaign created by Wieden & Kennedy's Amsterdam division based on real stories from real people. An inspirational three-minute film focuses on a new generation of German athletes - individually and collectively - advancing society through sport.

  • This song makes people cry: "Mamba forever" (a tribute to Kobe Bryant), "Don't do it" is an advocacy song against racism.

  • Kylian Mbappé's first Nike collection features the tagline, "Love your dreams until they love you back."

  • A campaign to honor Women's History Month: "Further than ever". With its advertisement from Wieden & Kennedy Shanghai, the agency is taking on the stigma that Chinese women cannot be ambitious.

  • Delhi's very first "Just do it" campaign, "Da Da Ding," garnered three million views for its music video that fuses sports with culture. Ishita Malaviya and national hockey player Rani Rampal star in the video set to a track designed by French DJ Surkin especially for Nike.

The present-day strategy driving revenue

The story dates back to 2017 when the company unveiled a new strategy called "Consumer Direct Offense" that focused on cultivating direct relationships with customers through various digital portals such as apps, websites, and official stores around the world.

In June 2020, this strategy was taken up and reimagined by CEO John Donahoe, who introduced a new and improved strategy called “Consumer Direct Acceleration”.

At its core is a three-component focus:

  • The first is a marketplace essential for the future that is transparent and much more relational with consumers.

  • The second is building a buying structure that differentiates not between elite and amateur athletes, but between men, women, and children, allowing for more specific targeting.

  • And third, a tightly integrated technology platform to accelerate digital transformation.

This new strategy has been a breakthrough for Nike since June 2020. Not only has it given stability to the stock, but it has also instilled confidence in investors, encouraging people to buy more shares, which has further boosted the stock price - somewhat even countering the downward pressure of the global pandemic.

Key takeaway #7: strong marketing, strong brand

While Nike has a nearly unlimited marketing budget, you too can embrace their "quality over quantity" approach and create compelling stories that make your company image stand out in the marketplace.

HR is an engine of growth too

Since 2018, Nike is reportedly working on removing the bias from hiring and tries to balance the gender ratio within the company. By enabling blind resume reviews and eliminating the collection of salary histories, the company began eliminating bias from critical stages of the hiring process. Additionally, all employees will receive mandatory training on unconscious bias.

The company realized that if it wants to keep the market-leading position, hiring methodologies should be updated. As part of the process, there was a change in multiple senior executives roles during the second half of the 2010s.

As Nike manufactures in 477 factories around the world and offices in 49 countries, it was important to set up internal regulations about payment equality. The Yue Yuen Industrial Holdings Dongguan shoe factory, which produces shoes for Nike and others, was the scene of one of the largest strikes ever seen in mainland China in April this year. For 20 years in a row, workers at the factory have been significantly underpaid.

More and more enterprise companies realize around the world that gender balance, payment equality, and fair treatment of employees are much more than simple words. A company can only thrive if there is strong loyalty, powerful employee retention, and an unbiased hiring policy in place.

Key takeaway #8: healthy HR leads to strong revenue

Multiple studies are confirming that organizations that aim for gender balance on all levels of employees have a higher chance for success. Nike is on the road to change its biased processes, which is one of the most important takeaways. Unfortunately, there is much more work to be done, as in early 2021, women made up only 5.8% of CEOs and a mere 26.5 % of officers and managers at senior levels at Fortune 500 companies.

Key Takeaways of Nike's Growth Story

To achieve its business goals, Nike takes a unique approach to its markets, products, manufacturing, and marketing. Bowerman and Knight's clear vision has allowed the company to thrive from the beginning. It has grown from a reseller of Japanese footwear to a powerful sportswear giant in the US, leading and pioneering the market in every way. With the rapid shift of commerce towards online, the challenges and opportunities for Nike in the next decade will be different, for which they are already prepared through their new direct-to-consumer strategy.

Growth by numbers

Year

2020

2015

2009

Availability 

170+ Countries

170+ Countries

170+ Countries

Revenue

37.4 Billion USD

30.6 Billion USD

19.2 Billion USD

Number of employees

75,000+

62,000+

34,000+

Number of retail stores

1,096

931

674

First party e-commerce net sales

5.218 Billion USD

1.643 Billion USD

208 Million USD

 
 

Key takeaways from Nike’s story:

  • Founders with a vision: the vision of founders must go beyond dreaming of a hefty profit after the first year of business. If the goal is to build a profitable, long-term business that employs lots of talent and provides a living for many families, the vision of the business is paramount.

  • Start by following others and become a pioneer later: most entrepreneurs find early on that their market is fragmented, crowded, and busy. However, to stand out in a noisy market, you need a substantial budget, so it makes sense to follow your competitors and start generating revenue early. After the business is profitable, you can move from being a reseller or selling a Minimum Viable Product to coming up with innovative ideas.

  • Data is king in e-commerce: It's no surprise that Nike, despite selling most of its previously acquired businesses, has invested heavily in data analytics. In e-commerce, you can only grow if you understand the underlying drivers.

  • A strong brand is the ultimate goal in marketing: all your marketing efforts must be focused on building a recognizable, strong brand for consumers and employers. Prioritize quality over quantity.

  • Only a well-balanced team can adapt to change: As Nike slowly evolves into a gender-balanced company, you need to adopt this mindset from the start.

As Phil Knight summarized perfectly, “Ultimately, we wanted Nike to be the world’s best sports and fitness company. Once you say that, you have a focus. You don’t end up making wing tips or sponsoring the next Rolling Stones world tour.”

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