In a quarterly report, Nike.com observed a jump of 50 per cent in business, and an increase of 26 per cent in direct sales. Nike plans to double its direct-to-consumer sales to US $ 16 billion by 2020, and account for one-third of its revenue, from roughly one-fifth, today.
Nike, world’s largest sportswear has been making renewed efforts to boost its direct-to-consumer sales that is making the smaller sportswear retailers face a difficult time. Already struggling to cope up with the expansion of online sales and industry consolidation, sportswear companies are now facing trouble competing with brands like Nike.
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The presence of athletic gear across the global market is not helping the specialty retailers, as with the athleisure movement of wearing sporty clothes for non-sport activities means sportswear has moved beyond athletic retail to fashion boutiques and department stores. Ray Pugsley, Co-owner, Potomac River Running chain in the Washington, D.C., said as Nike ramps up its direct-sales business, he is seeing other brands in the sportswear industry, like Brooks and Saucony, attempt to follow suit. “They’ll tell us with a straight face that online sales really doesn’t do that much volume and it is to increase awareness of the brand, that we shouldn’t be afraid,” said Pugsley.
However, wholesale ordering process is advantageous for small businesses as most of the athletic retailers operate on a future-ordering system, whereby retailers place bulk orders for products from manufacturers like Nike upward of six months ahead of delivery. But with quickly changing fashion, smaller stores face problems in keeping up while the larger chains like Foot Locker Inc. can afford to ship products directly from Nike or vendor’s factories to their own facilities.
Few of the sportswear retailers have also been facing the heat due to Nike’s logistics issue, as they’ve been facing product-shipment delays. Nike’s growth is being speculated to come at the expense of other retailers. Nike already controls roughly 60 per cent of the US market for all athletic footwear.
