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2017 NIKE, Inc. Investor Meeting | The Scale of Sport Highlights – A Detailed Breakdown

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Source: 2017 NIKE, Inc. Investor Meeting

NOTE: My comments are in parenthesis. This will be updated as I edit the pictures to insert them in the transcription. Check back throughout the day. I transcribed the presentation as best as possible from the Investor Meeting Livestream. Please ask questions about any abbreviations you don’t understand. I was typing fast.

Mark Parker discusses the consumption of sport.

NBA 1.3 Billion social media followers. Sports viewership is taking on new life through streaming.

The consumer is infinitely informed. 80% check their phone before purchasing

Point of contact should never be a point of friction.

Smart supply chains have redefined convenience.

Over 2 billion digital natives in China/India will join middle class.

Projected consumer base in China is ten times larger than North America.

CDO Consumer Direct Offense

2X Innovation Triple Double seeding to scaling faster, edit to amplify and new expectation for style. No tradeoff for sport and style. Nike has more room to grow.

2X Speed investment in digital. Supply chain has invested in leading robotics companies for manufacturing.

2X Direct Investing heavily in their own channel and with partners; Nike will better control distinct consumer experiences. (Watch out third party and smaller wholesale accounts).

Future of innovation: growth starts with great product.

Nike’s Portfolio Important Notes:

Jordan will begin to create women’s products.

Converse will renew its focus on authentic sports legacy aligned with Nike tech. Converse is also driving speed with its own Express Lane. (Will be interesting to see if Converse will Retro classic shoes like the Weapon with React Tech…)

Nike Women’s Category is now a stand alone business for running, sportswear and training creating a holistic point of view with more options for women. Including a plus size line with over 90 styles.

Running remains a strong focus (as expected Eliud Kipchoge is actually doing a running campaign in China and tweeting about it. – Not a part of the day, but I noticed this earlier today on his Twitter feed.) Running silhouette is fueling lifestyle.

  • 3 platforms within running:

Nike Zoom X – Pure speed and energy return. 85% energy return. Most responsive cushioning system by Nike. Will be featured in Pegasus.

Nike React – Widest range of service to consumers. (I predicted that Nike would move the tech to running and they will launch the Epic React.)

Nike Air – If Air was a standalone brand it would be the 3rd largest in the world. VaporMax will drive expansion and new demand. New platform Air Max 270 is lifestyle specific.

Nike will start sharing advancement of design technology in other performance shoes. LeBron 15 features Battleknit for performance, support and looks. In apparel the Flyknit bra will have a full range.

There is new footwear manufacturing featuring robotics to increase production in the U.S. (I discussed this on the site.)

 Flyleather was discussed in detail. Flyleather has a lower carbon footprint increases sustainability and profitability.

Performance Fit (Hyperadapt will be offered at a lower more accessible price in more shoes.)

Mark Parker introduces Kobe Bryant!!!! Discussion on Kobe being the first to go to China. The introduction of Kobe established the emphasis on China. Kobe is Jordan in China.

Kobe’s involvement in digital media. Digital is important. It goes beyond sport. How do you inspire the consumer? Leads to a discussion on the jersey connect feature. (I discussed this on the site. The dialogue with Kobe isn’t conveying as much as it could. Let’s get to the depth Matt and Kobe.) New Product with Kobe but won’t be unveiled: Kobe 360 a challenging duality: How can you create lightweight performance without compromising stability? Love and Fear/Balancing/Yin and Yang minimal with great strength was spoken of by Kobe and falls in line with all of his performance footwear.

It’s a smart shift for the brand from Jordan to Kobe as a brand.

Mark Parker finishes.

Trevor Edwards comes on: Serving the em/powered consumer

Laying out the key shifts and the new marketplace framework. (The brand remains focused on athletes and storytelling via athletes. As much as I like this, this could be a problem for Nike. If Kevin Hart or Drake doesn’t show up it could show a lack of understanding.)

Nike emphasizes they are number 1 with kids and athletes. (This was a direct rebuttal to shared post by media outlets discussing adidas’ taking market share from Nike)

#1 Brand With Kids

Trevor is establishing the importance of sport with youth. Wow! We don’t purchase our community!!!! Shots Fired! (NCAA Reference… Nike has to be careful though since EYBL is being investigated. I like the subtle aggression though.)

Focused Growth Approach with Key Categories and Key Cities

Performance sportswear and consumer opportunities.

Running is a 5 billion dollar business.

Global Football (Aren’t these purchased community?) Football offers new segments with apparel growing 20%

Nike Basketball – seeing tremendous momentum and LeBron 15 sold out immediately in all digital channels

LeBron 15 featuring Battleknit

Nike Sportswear: collabs with influencers will be leveraged.

Nike has the largest sportswear business. 13 straight quarters of growth at over 8.5 billion.

Nike Women has significant growth opportunity. (I don’t think they know how to approach this market.) Women’s is outpacing men’s apparel.

Young Athletes Growing NDC faster than any other dimension.

Jordan Brand is expanding. International growth is surging with a growth rate in the teens. Physical and Digital stores in China.

The Marketplace – easy and frictionless the solution NCX – Nike consumer experience.  Nike Direct and partner in the Nike network. Product, service and environment: Branded Spaces

Focusing on the first two areas NCX and ND and removing the third area – Poor Retail Experiences. Trevor focuses on London first and the Key City Focus. London is a growth area so they created a women’s boutique.

Shoppable Instagram post being tested in London.

North America: Full price activity – create demand, more freshness and they want it now. We will bring more innovation to drive premium price. (Nike wants to get those margins back from the promo) At this point they talk show the 90 minute pop up customization. (Discussed on the site).

One of the greatest opportunities is in digital. Opportunity to serve the powered consumer. 72% of consumers expect brands to anticipate their needs. Half will switch brands if not met. SPEED

The Nike App is the number 1 monobrand app in the US. Nike digital is number 1 in the industry.

Members in Nike apps spend 3X more. Personal experiences produces retention.

Nikeplus Membership will deliver targeted value to the members. (Amazon Prime for Nike?)

(Is it a mistake to cater too much to the consumer?)

CDO envisions a future where Nike will serve the consumer as individual people. Trevor

Michael Spillane comes on:

Begins discussing Sport as shaping culture. Reinforcing the 7 Categories portfolio.

North America, EMEA, APLA, Greater China

Footwear, apparel and equipment (Women’s, Men’s and Young Athletes) More focus on women.

25% fewer styles by January. Edit to Amplify

Fe/Nom Flyknit Bra – 600 hours of biometric testing optimized

A discussion on React Running (Man I’m really starting to feel like a genius. I discussed this on the site in a design post.) Quantum Craft (Video not shown) Express Lane maximizes consumer demand Create (less than 6 months), Update less than 90 days, Fulfill (2 days). Always being stocked on favorites. New York, London and Shanghai are the Key Cities

The New Nike Shox

The New Nike Shox – unmatched appeal and performance coming back in the holiday season. Shox used 3D Modeling and came together in six months. Propulsion with Style.

Footwear – Digital is being deployed across all divisions.

Rapid Prototyping will be done in Portland Oregon. Digital rapid prototyping. T-Shirts from 90 weeks to 90 days will have better full price sell through and fewer mark downs with optimized inventory.

(Nike is really addressing those margins lost in promo.)

EPIC REACT is going to be huge! 17,000 miles logged with elite and everyday athletes.

Air will grow by several billion over the next few years. Heritage and new tech offerings. VaporMax accelerated by a full year.

Nike.com is a seasonless testing ground.  (It’s a pivot to real time.)

Eric Sprunk comes on

Leading with innovation by developing through automation and new manufacturers like Flex. Value Chain (picture) (Man they are really beating up Futures) Advanced Product Creation Center 125,000sq. ft. is where Nike dreams and innovates and creates the future of Nike. Many of the Key Cities have same day delivery  and one day delivery.

Tegra for Apparel Manufacturing Innovation for fans of NBA, NFL, NCAA (fan driven innovation for apparel).

Footwear Manufacturing – Digital Printing reduces water consumption and CO2 emissions. Delay color and print materials as late as possible for personalization.

Revolutionary Method of Make created in the APCC. (I discussed this on the site) Making an upper in 30 seconds. (video playing) Another discussion on Flyleather. Rolled good instead of imperfect hide. Reduces material cost. Will this reduciton be introduced to

Flex will deliver 3 Million pair in the next few years sold through Nike direct. Flyknit is now 12 weeks faster. Knit to order delivered in under 10 days. Many customers getting them in 3 or 4 days.

Modernized 1500 models manufacturing. Nike is deploying 1200 automated machines.

New Jordan Brand Manufacturing

13 Air Jordans are made with the new technology and they showed a video featuring Fung Ti (spelling) for the Air Jordan 13.  (Could Jordan Brand see a price decrease?)

A discussion on the outsole, breakthroughs deliver a pair of midsoles and outsoles (picture)

Midsole and Outsole Production Speed decreased

Product Creation, Manufacturing, Product Delivery = Speed

Nike has changed the paradigm from where, to how we make the product.

  • Heidi O’Neill and Adam Sussman come on

Nike Direct Discussion

2.8 Billion visits at 7000 doors.

In depth discussion on Nikeplus Membership (memberships has grown 30% at 100 million people) Nikeplus looks to grow by 3x members. Nike Direct will have member only products. (Hmmm) concept of exclusivity

Changing the merchandising ( a third of products will be exclusive to NDC). Freshness Through Express Lane Next 5 years 50% of seasonal products will be available via Express Lane. Member First will be personalized via algorithms and machine learning for personalized experience.

5 Platforms

Nike App, SNKRS, Nike Run Club, NDC, Nike Training Club (All Apps are omnichannel connecting through all 5 apps and to retail)

(This is why the flash sale was so important!!!!! It moved people from guest to log in)

(Nike better move their sites from Amazon Web Services! Amazon has access to all Nike data utilized on the brand registry. Then again Nike barely devoted time to Amazon which means it won’t be as important as I thought.)

New UX Experiences (Picture) Nike has a 2 click checkout.

User Experiences

Nike Connect (Augmented Reality) Snap n Buy (You will be able to use your phone to scan product and purchase it.

Nike App at Retail live this spring (AR) will instantly recognize you when you walk in store. You will be able to check out via the app.

Nike Hyperlive leverages Nike data for customers based on local analytics. Sneaker Bar (Nike’s going Apple!!)

Nike Experts on Demand provides one to one (Apple) service. One to One drives conversion. (Comparable to genius bar and one to one from Apple).

Build on Reserve For You (picture) introducing Reserved By You dropping next year. Nike just connected consumer to the athlete in a better way. (Discussed on site)

(This shifts Connected fitness from wearables to apparel and footwear that is already being used. Much smarter than companies delving into digital via wearables.)

Nike is literally building its own social network!

  • Elliott Hill speaks

Deeper dive into CDO: Nike Consumer Experience and Where we Serve Athletes.

Investment in Nike Direct has taught Nike about consumers and its company.

The Nike Network is a powerful portfolio of touchpoints. Focus on consumers, strategic partners (longstanding and new)

For Retail Nike will have about 40 partners. (This is important)

Categories

Basketball obsessed – Beijing largest Jordan brand store with product testing on a full size basketball court. One of Nike’s best doors.

Style & Fit Obsessed – Nordstrom is growing women’s for the brand.

Sport Inspired – The JD Group is the future of sport retail.

Sneaker Obsessed – Sneakerheads Foot Locker and the Nike at Foot Locker experience with nike trained sport experts. Sneakeasy will work in conjunction with Foot Locker and will launch this holiday season.

Strategic Wholesale Digital

TMALL – China’s largest online. Nike is the number one brand. Recently launched a Jordan retail store with TMALL

Zalando – Europe’s largest selection of footwear and apparel (Connected inventory program)

Amazon – A small pilot provides key learnings (but also provides amazon with key learnings; very Brief discussion. They even called it a small pilot)

Farfetch – influential global boutiques with NikeLab and premium personal service.

New Commerce Partnerships allows for putting products in the path of consumers.

Instagram – launched earlier this year. Nike Women’s and Nike SB is leading here.

WeChat – China has 1 billion MAU. Nike is integrating in spring 2018 Nikeplus Membership will be offered.

(Nike is mimicking Apple and Amazon)

Focused Growth – Where we connect? 4 Geographies

Asia Pacific Latin America (APLA)– Women’s growth and prioritizing curated collections for women.

EMEA (Europe Middle East Africa) 2/3 from Eastern Europe (UK, Paris, etc)

Greater China is being fueled by sports revolution through a digital integration. (Discussed on the site Nike’s delivery system in China using Bodegas).

North America was the last to be discussed and was given more attention via the Triple Double. WOW! CDO will be 80/20 in North America (picture)

CDO is a lot more important than retail.

Breakout rooms which will be launched at 1:30 pm PST 3:30 for CST.

CLICK TO READ THE TRANSCRIPTION FROM THE AFTERNOON SESSION by Andy Campion