Nike CEO John Donahoe Admits Too Much Focus on Online Stores, Renews Wholesale Partnerships to Expand Market Reach

By John Lopez

Apr 12, 2024 04:34 PM EDT

Nike CEO John Donahoe has publicly acknowledged a major shift in the company's strategy, admitting to an excessive focus on its own online stores to the detriment of wholesale partnerships (via CNBC). 

In a recent interview with CNBC, Donahoe conceded that Nike had "over-rotated away from wholesale a little more than we intended," but reassured investors of corrective measures. The sportswear giant is now renewing its emphasis on wholesale partnerships, signaling a strategic pivot to expand its market reach.

Slowing Digital Sales Push Nike to Return to Wholesale Partnerships

The move marks a notable departure from Nike's recent trajectory, where the company aggressively pursued a direct-to-consumer model, primarily through its own retail channels and website. 

Over the past several years, this strategy propelled Nike's digital business to significant heights, with mobile and digital sales tripling from approximately 10% to 30% of overall sales. 

However, the decision to sideline wholesale partners had drawbacks, including increased pressure on margins and a potential setback in innovation and product development.

This photograph shows a Air Zoom sneaker during a Nike event, in Paris, on April 11, 2024. (Photo by Emmanuel Dunand / AFP)
(Photo : Photo by EMMANUEL DUNAND/AFP via Getty Images)

Analysts have been critical of Nike's shift away from wholesale partnerships, arguing that it undermined the brand's competitive position and contributed to a loss of market share to emerging competitors like On Running and Hoka. 

Furthermore, the decision had ramifications for key retail partners such as Foot Locker, which relied heavily on Nike's products to drive sales.

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What's Next for Nike?

In response to these challenges, Nike has begun reevaluating its approach, reinstating partnerships with retailers like Macy's and DSW. This renewed focus on wholesale collaboration comes amidst broader restructuring efforts within the company, including cost-cutting initiatives to reduce expenses by $2 billion over the next three years.

Despite facing market headwinds, Nike remains optimistic about its prospects, particularly in light of the upcoming Olympics. Reuters reports that the company is gearing up for a substantial marketing push surrounding the Paris 2024 Games, with executives highlighting it as "the biggest moment for Nike in years." 

With total marketing expenses reaching $1 billion in the latest quarter, Nike is doubling its investment in high-impact campaigns, aiming to stimulate demand and regain momentum in a competitive sportswear landscape.

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