Former Nike executives criticize the company's marketing strategy for failure. Is Nike wrong?
美少女994
发表于 2024-8-6 16:30:50
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At the end of July 2024, Massimo Giunco, who was reported by multiple self media outlets as a former executive of Nike, published an article on social media LinkedIn, stating that there were management decision-making errors in the Nike group, and the problem once again revolved back to the DTC strategy of Nike's leading sports brand.
It is not difficult to see from Massimo Giunco's LinkedIn page that he has been working at Nike Group for more than 20 years, mainly serving Nike Europe, from the group public relations manager of Nike Italy to the senior marketing director and general manager of football business of Nike Russia. When he left Nike in June 2022, his position was the senior brand director of Nike Netherlands.
In the article, Massimo Giunco believes that Nike Group's revenue of $51.4 billion in the previous fiscal year, a year-on-year increase of 1%, was due to the blind confidence of the management led by CEO John Donahoe. In order to enhance digital driving capabilities and optimize organizational structure, Nike changed its long-standing product category division structure to performance division. At the same time, he believes that Nike's DTC (direct to consumer) strategy is a strategic mistake.
Massimo Giunco LinkedIn screenshot.
It is currently unknown whether Massimo Giunco left the company due to Nike's previous round of layoffs.
On October 22, 2019, Nike announced that its CEO Mark Parker would officially step down from January 13, 2020, and be succeeded by Tang Ruoxiu as CEO.
However, DTC is not a new product after Tang Ruoxiu took office. Nike proposed the DTC strategy as early as 2017. With Nike leading the global revenue for nearly 20 years, other sports brands have followed suit with this strategy.
In the most recent full fiscal year, Nike's revenue of $51.4 billion (approximately RMB 373.57 billion) is more than twice that of Adidas and more than five times that of Lululemon. In the Chinese market alone, Nike's last full fiscal year revenue was $7.5 billion (approximately RMB 54.509 billion). Compared to Chinese sportswear giant ANTA, ANTA's ten or so brands recorded a revenue of 62.356 billion yuan in 2023.
In fact, sports brands experienced a "stall" phenomenon in the last full fiscal year. Li Ning Group, with a volume of around 27.5 billion yuan, has a growth rate of less than 7%, while Xtep, with a volume of less than 14.5 billion yuan, has a growth rate of only 10.94%. In terms of international sports brands, lululemon recorded a revenue of $9.619 billion with a growth rate of 18.6%. Adidas' revenue for the previous fiscal year was 21.427 billion euros, unchanged year-on-year.
On July 31, 2024, Adidas released its latest quarterly report. In the first half of this year, Adidas' global revenue was 11.28 billion euros (approximately 88.27 billion yuan), a year-on-year increase of 10%.
In mid August, the four major domestic sports brands listed on the Hong Kong stock market will gradually release their interim reports. According to the previous half year business flow, the year-on-year increase was lower than in the past.
Previously, McKinsey's report "Sporting Goods 2024: Time to Move" pointed out the global trend of cautious consumption. In the Chinese market, sports brands have also gained firsthand experience through this year's cold 618 shopping festival.
Nike's massive size is completely different from niche brands such as HOKA and On Run that focus on niche markets. If HOKA's revenue is around 2 billion US dollars this year, it can maintain a high-speed growth rate of over 20%. However, when its size reaches the billion dollar level of Lululemon, the year-on-year growth rate naturally drops to below 20%.
That's why, with an annual revenue of 1 billion yuan in the Chinese market, it is considered a "small and beautiful" sports brand that can live very comfortably. That's why achieving an annual revenue of billions of dollars is not an easy goal for all international sports brands.
In terms of DTC strategy, this may still be the most suitable strategy for the Chinese sports consumption market.
Chen Xiaozhe, General Manager and Senior Vice President of Sales Operations at Skechers China, told Interface News: "From the perspective of consumer behavior, Chinese consumers recognize brands and are more brand driven than channel driven. I believe that the DTC model is more important in the Chinese market. DTC has different business models, and Skechers adopts a joint venture model to do DTC and connect inventory. Brands and partner stores are interconnected. Skechers hopes to be closer to consumers and interact closely with them. DTC business is a very important direction for Skechers now and in the future
Skechers also released its Q2 quarterly report at the end of July, with Q2 revenue of $2.16 billion, a year-on-year increase of 7.2%; Calculated at a fixed exchange rate, the revenue is 2.19 billion US dollars, an increase of 8.7% compared to the same period in 2023. Among them, the sales of Skechers DTC business increased by 9.2% year-on-year; Wholesale sales increased by 5.5%.
In the Chinese market, where DTC strategy is considered more important, brands such as Nike also see the most important driver for maintaining growth. In early June this year, Nike CEO Tang Ruoxiu visited Tsinghua University and once again emphasized the importance of the Chinese market for growth.
Tang Ruoxiu said, "The growing love for sports and demand for high-quality sports equipment among Chinese consumers have provided tremendous development opportunities for Nike
In early August, Zheng Qinwen, who signed with Nike early, made history at the Paris Olympics and won the first gold medal in women's singles tennis for the Chinese team. At the same time, Nike's official WeChat account also interacts with Pan Zhanle, who created the history of Chinese swimming.
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