Nike restructures to focus on digital transformation

Nike also plans to cut 2 percent of its global workforce and eliminate a quarter of its shoe styles in order to boost its agility.
Written by Natalie Gagliordi, Contributor

Nike's flagship store in Miami.

Athletic apparel brand Nike is launching a new digital offensive as part of a broad organizational effort designed to help the brand build a closer connection with customers. Nike also plans to cut 2 percent of its global workforce and eliminate a quarter of its shoe styles in order to boost its agility amidst increasing competition.

The Beaverton, Ore.-based company said the moves will allow Nike to offer more products to customers faster. "We're getting even more aggressive in the digital marketplace," said Nike CEO Mark Parker.

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Core to the strategy is what the company calls its Consumer Direct Offense, under which Nike will focus on 12 key cities across 10 countries, which combined are expected to represent over 80 percent of its projected growth through 2020.

The effort will be led by Nike brand president Trevor Edwards and supported by a new internal structure that's designed to unite Nike's website, direct-to-consumer retail stores, and its Nike+ digital products under a single strategy. Operationally, Nike wants to reduce supply chain delays and cut product creation cycle times in half.

"This new structure aligns all of our teams toward our ultimate goal -- to deliver innovation, at speed, through more direct connections," Edwards said in a statement.

Nike is basically reciting the modern retail mantra, saying its teams will "unite physical and digital retail" to better serve customers. Cutting through the marketing speak, Nike's digital plans include a heavy focus on mobile, with two key apps that rely on geo-location tech to target product offers to consumers. Nike is also planning to launch its Nike+ fitness app globally to expand into new markets.

Nike's digital push comes at a pivotal time for the sneaker maker. The brand is still the leader in its category, especially when it comes to annual sales, but rivals like Under Armour and Adidas are gunning for market share.

Under Armour is one of Nike's most technically savvy challengers. The brand is working to hone its retail expertise through an ongoing digital transformation, and its using data to better target customers. Like Nike, Under Armour sees apps as the primary source of consumer data, which it needs in order to move closer to the customer and increase sales. Under Armour has also partnered with IBM and its Watson analytics platform.

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