Nike Pivots, Embraces Wholesale Once Again

Amid faltering demand for shoes and clothing as well as slipping digital sales, Nike Inc. said last week that it will bank a lot more on the thing it has spent the past several years turning away from: other retailers. Executives discussed those plans on Nike’s earnings call, during which it announced that while fiscal third-quarter profit and revenue topped expectations, it missed on gross margin and cut its margin guidance for the current quarter. CEO John Donahoe said that Nike direct — the segment of Nike that sells things through its own stores and e-commerce platform — would still be important to the company, but as more people return to shopping in physical stores, “We must lean in with our wholesale partners and elevate our brand and grow the total marketplace.”

Total Retail's Take: This news represents a strategy shift for Nike, which saw it cut wholesale partnerships at the height of the pandemic in favor of growing its direct-to-consumer (DTC) business. The athletic brand has been trying to build out its own stores and digital network over recent years and rely less on outside retailers to drive demand and sales. In December, the company said efforts to expand that network “added complexity and inefficiencies” as competition increased. While growing its DTC business has proved challenging for Nike, it's return to wholesale provides a significant opportunity for retail partners such as DSW, Macy's, Zappos, among others. Having the global brand's products in their stores and on their websites can drive an uptick in traffic and sales. For Nike (and its retail partners), when one door closes another opens.