Nike invested over $1 billion in its fiscal 2019, including significant investment in its mobile apps, new store concepts leveraging digital, its NIKE Plus membership platform, and enterprise-wide data and analytics capabilities. But the leap is paying off.
The athletic retailer’s digital revenue grew 35% overall in the year, the company reported, and “we're just getting started,” CEO Mark Parker proclaimed during the company's earnings call.
Digital commerce is on track to comprise at least 30% of Nike’s business by 2023 and long-term Parker said he sees digital driving the majority of the retailer’s business.
“Speed remains an incredible opportunity, and we're well on our way towards cutting our product creation cycle in half and we're investing in responsive manufacturing, connected inventory and optimizing data to capitalize on real-time consumer demand,” Parker noted.
Nike Mobile Apps
Currently, Nike apps are driving online growth for the athletic retailer, especially the Nike SNKRS app, a shoe-release app that facilitates shoe “drops.” For the fiscal year, the app more than doubled its business, doubled its number of monthly active users, and now accounts for roughly 20% of Nike's overall digital business.
“The sneakers app has become an incredible asset to our brand, with users checking in daily, and has acquired more new members than any other digital channel for NIKE,” Parker noted.
The app has accelerated from less than $70 million in revenue in fiscal 2016 to an annual run rate of over $750 million based on Q4 fiscal year 2019 performance.
The NIKE app, the retailer’s comprehensive one-stop-shop for NIKE products, saw triple digit revenue growth in the retailer’s fourth quarter 2019 in North America. Going forward, Nike plans to roll out the app in China and in 13 new markets in Europe, the Middle East and Africa (EMEA) in the first half of its fiscal year 2020.
“This will be an incredible addition to our business through a potential pool of hundreds of millions of new members,” said Parker. “The digital opportunity alone is tremendous. But just as promising is how digital and physical environments are intersecting and amplify each other.”
To this end, Nike has been rolling out its Nike App at Retail, live in over 30 store across the U.S., the UK and France, and plans to continue to scale it throughout the next year. The app links features of the NIKE app to physical retail experiences.
“A few of the insights that we gained in our early pilots are that physical retail can be an exponential driver of membership,” revealed Parker. “Product scans in-store often fuel online purchases later. And in-store exclusive offers through mobile tend to drive higher conversion rates and outsized spending.”