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Nike Ups its Game: Understanding the Keys to Nike’s Sustained Success

Performance FY 2023

Like a championship athlete, Nike continues to reach new heights and break records, leaving its competition in the dust. According to its latest earnings report, Nike delivered mid-teens growth and exceeded $50 billion in revenue during the fiscal year 2023, adding $7 billion in total on a currency-neutral basis.  The revenue increase was broad-based across men’s, women’s, and kids; across performance and lifestyle; across all channels and geographies; and across the Nike, Jordan, and Converse brands.  Matthew Friend, NIKE, Inc. CFO, summed up the results: “Throughout the year, we drove competitive separation by doing what Nike does best: serve athletes with product innovation and rich storytelling amplifying our brand voice through key sport and consumer moments.”

The Playbook

Throughout the years, Nike and its portfolio of leading brands have continuously invested in innovation, developing a suite of curated collections with iconic products, convenient services, and personalized experiences for shoppers to choose from that accelerate engagement and build lifetime customer value. While the athletic powerhouse has placed large bets on its own online and offline channels with the Consumer Direct Acceleration strategy, the retailer is also incorporating its wholesale partners in its marketplace ecosystem in a meaningful way.

“Across our business, we continue to build a marketplace that addresses how consumers want to be served, giving them what they want, where they want it, and how they want it. Nike creates distinction across the marketplace by segmenting consumer experiences to drive deep, direct connections with consumers and grow the marketplace,” NIKE, Inc. President and CEO John Donahoe said in the recent Q4 2023 earnings release.

Beyond corporate ambition and motivation, what sets Nike apart and expands its competitive separation in a crowded marketplace? What is Nike’s playbook that differentiates its brands and creates added value for customers and shareholders?

In addition to leadership, teamwork, and competitive culture, some of the most critical ingredients of Nike’s successful strategy include:

    • Customer-centric strategy;
    • Unique brands and innovative products;
    • Purposeful journeys and interconnected experiences;
    • Broad market reach and omnichannel orchestration;
    • Cutting-edge retail environments;
    • Investments in digital platforms;
    • Scalable, sustainable supply chains and inventory management;
    • Strategic partnerships.


  1. Customer-Centric Strategy

Nike places a high premium on understanding, connecting, and serving its valued customers across all brand touchpoints to drive sustainable, profitable growth. Nike’s consumer insights and engagement model is fueled by its membership program, designed to simplify and elevate interactions, deepen valuable connections, increase recency and frequency of purchases, and drive long-term brand loyalty.

Nike has invested in implementing an insights-driven strategy supported by real-time analytics solutions that facilitate informed consumer-centric decisions, provide culture-changing benefits, build new audiences, deliver differentiated experiences, and intensify connections with its valuable customer base. Furthermore, they have invested heavily in developing various mobile apps focused on running, fitness, training, and shopping, designed to create sticky experiences and deepen customer connections.

John Donahoe said, “It’s these connections that serve as one of our greatest competitive advantages as we translate insight into innovation. Thanks to our consumers’ love of our brand, we enjoy a high rate of engagement, fueling richer, deeper understanding. This is all powered by our membership offense. We know our consumers better and are better able to serve them, with data-driven insights fueling the end-to-end value chain, including product creation, marketing and merchandising.”

Though its customer-centric strategy is focused on meaningful consumer connections, Nike has mastered creating compelling value propositions, designing differentiated experiences, implementing scalable operating models, and optimizing channel operations that deliver significant value to both customers and shareholders.

  1. Unique Brands and Innovative Products

High-quality goods, services, and experiences are table stakes in today’s crowded market. Nike takes it to the next level by positioning each brand within their portfolio with a unique offering that maintains relevancy, so consumers know what sets them apart. Matt Friend noted, “Our confidence is grounded in the power of Nike’s portfolio: deeply connected to the consumer, centered in sport and youth culture, fueling authenticity and distinction unrivaled in breadth and depth.”

Brand positioning is all based upon a value exchange. Brands provide products and services, and if those offerings and experiences add value to the customer, the customer provides information, money, loyalty, and advocacy in return. The secret to Nike’s success is grounded in its culture of innovation that fuels its engagement and experience model through the portfolio of leading brands, seasonally relevant product assortments, personalized and relevant communication, and innovative retail environments.

Matt Friend noted that one of Nike’s greatest competitive advantages is its relentless pace of innovation. “We innovate to make athletes better, to serve more athletes, and to make the world better for athletes everywhere. We have some great opportunities over this next fiscal year to showcase our latest innovations on the global sports stage.”

No brand connects people to sports by bringing innovative products to market like Nike. They dominate numerous athletic pursuits, introducing new and updated footwear platforms across categories including soccer, basketball, running, and lifestyle. Nike’s greatest advantage is its authenticity to “combine innovation, brand, and the culture around sport and do it all at a global scale.”

  1. Purposeful Journeys and Interconnected Experiences

For many consumers, their purchase journey can be fragmented and disconnected, leading to a high level of frustration during the consideration process.

Investment in innovation is the cornerstone of a frictionless consumer journey and a successful omnichannel experience strategy. As consumers’ expectations and demands continually increase regarding their shopping experience, the ability to be innovative and adapt online and offline has become a must-have capability in the fluid retail landscape. Nike is actively involved in a race with competitors to adapt to the evolving needs of consumers. This competitive battle will continue to accelerate rapidly as shoppers continually seek more value, greater convenience, and a personalized experience.

Nike understands the importance of innovation and personalization and has invested in, designed, and implemented best-in-industry unique, elevated, and interconnected experiences. These experiences are seamlessly coordinated across digital and physical, commerce and social, owned and partnered touchpoints.

They have identified and developed solutions to alleviate their target audience’s pain points in the shopping mission and provide a frictionless and personalized experience that builds brand loyalty and lifetime value. Nike has successfully crafted and integrated personalization across the entire shoppers’ journey, from in-store offline browsing and consideration to online retargeting ads, email, and text messaging, to website user experience.

In addition, Nike has a suite of game-changing mobile apps linked to its membership program, with more than 150 million active members, serving as the foundation of its sticky experience ecosystem. Nike’s digital platform meets customers where they are and allows them to get what they want when and how they want it. The SNKRS mobile app announces the releases of highly coveted new sneakers to customers, notifies them when their favorite shoes drop, and allows them to reserve select sneakers when launched with SNKRS Pass.

  1. Broad Market Reach and Omnichannel Orchestration

It has been well documented that Nike has captured surging demand due to its significant investment in building an omnichannel ecosystem to support the steady and consistent shift away from wholesale and toward a higher mix of direct-to-consumer sales. However, like most digital-savvy retailers, the pandemic accelerated e-commerce growth and put its well-timed strategy on a fast track. Nike’s Consumer Direct Acceleration strategy “continues to unlock our future growth potential by powering up our holistic offense across innovation, brand engagement, and marketplace, all fueled by consumer insight.”

However, its wholesale partners and the connected membership program remain important to Nike’s ongoing strategy. This is amplified by John Donahoe, “Our whole marketplace strategy is to allow consumers to get what they want, when they want, how they want it across our own digital, across our own retail and across our wholesale partners, all tied together with our membership program, which is 150 million active members.”

As Nike has developed its strategy and scaled its business, they have successfully built its market presence, grown its audience, and provided consumers with expanded choice, access, and convenience. They harmonized the balance between broadening brand reach for greater accessibility and consistently orchestrating how it intersects and engages with its target customer.

Matthew Friend amplified this point, “Our strength begins with our scale, from our investment in innovation to our sports marketing portfolio, our digital platforms, and our global reach. We create value for consumers around the world, leveraging Nike’s scale and competitive advantages to drive sustainable growth and strong returns to shareholders over the long term.”

Nike has clearly and purposely defined roles for each digital and store channel to deliver its products, services, and experiences, designed to optimize the shopping mission and journey. They clearly understand that omnichannel customers who engage across a seamlessly coordinated omnichannel ecosystem are considerably more valuable than single-channel shoppers who utilize only one transactional touchpoint.

  1. Cutting-Edge Retail Environments

The company’s DTC strategy starts with integrating its digital and physical channels by constantly creating innovative tech-heavy store environments to go beyond simple showcases for new products and transaction hubs. Nike’s concept stores are the physical manifestation of the brand. They are a critical marketing tool to drive engagement and build community with loyal customers by utilizing unified commerce digital tools and mobile apps that take their cutting-edge in-store experiences to the next level.

From opening its 68,000 sq. ft. six-level House of Innovation concept store in NYC to the responsive digital Nike Live concept launched in LA in 2018 and the Nike Rise concept in Guangzhou, China, in 2020, Nike has placed a high premium on rolling out new engaging and exciting retail environments. The brand also introduced the Nike Style retail concept with curated collections in Seoul, Korea, last summer with gender-agnostic lifestyle product zones and a social media content development studio. The Jordan brand launched its World of Flight in Milan, positioned as the intersection of basketball and streetwear culture, at the end of 2022.

Furthermore, as of last month, Nike has revamped their store strategy with all Nike Live stores that have now become Nike Well Collective stores that showcase holistic fitness, highlighting movement, mindfulness, nutrition, rest, and connection. John Donahoe explained, “We continue to invest in Nike store concepts that create new distribution and serve growth opportunities not currently being addressed by our wholesale partners. The recent unveiling of our Nike Well Collective which responds to deep insight from our female consumers rebrands Nike Live and creates an elevated approach to retail. Nike Well Collective brings new energy and sharpens our focus on serving the opportunity we see with women.”

  1. Investments in Digital Platforms

In fiscal 2023, Nike accelerated direct consumer relationships across its digital platforms, achieving YOY digital growth of 24% fueled by double-digit increases in traffic on mobile and apps, increasing the overall digital share to 26% in FY23, compared to 10% in FY19.

Nike’s digital business has unlocked significant strategic and financial benefits by focusing on reaching, acquiring, and serving high-value customers. The retailer has also seen strong consumer responses as they continued to innovate the coordinated shopping journey across the website, mobile, and app, leading to increased traffic, new member acquisition, intensified engagement, and a higher average order value. The digital channel should drive outsized growth and provide a tailwind that powers future topline e-commerce escalation and accretive margin expansion, including its owned digital channels and retail partners like Foot Locker and Dick’s Sporting Goods.

John Donahoe stated in the recent Q4 2023 earnings release, “Today, in the industry, with digital and physical growth converging, we’ve accelerated investment to create a truly distinctive digital experience through our own platforms. Every year, we serve traffic in the billions, which delivers strong digital growth, as both conversion rate and average order value continue to improve.”

Matt Friend provided additional details, “We’ve been talking for some time about how our consumer-led digital transformation is transforming NIKE’s financial model. You really see it both in terms of revenue and gross margin. And if you look at the momentum that we’ve been driving from a top-line perspective, I would say that we’ve benefited from a higher mix of business going through our digital and our direct channels.”

  1. Scalable, Sustainable Supply Chains and Inventory Management

Nike has gained a competitive advantage by innovating the supply chain, improving speed to market efficiency, and responding quickly to market trends and shifts in consumer behavior. Nike is leveraging automation and supply chain technology to forward-position high-demand frequency products to deliver faster, more precisely, and without compromising sustainability.

In addition, Nike is transforming its digital-first supply chain to power long-term growth by accelerating the opening of several regional distribution centers across the United States and Europe that increase capacity, speed, and precision. Advanced demand-sensing and inventory optimization technology platforms support its multi-node regional distribution network.

Also, Nike continues to make progress in inventory management, as their “decisive actions” in response to changing conditions in the supply chain and the marketplace have enabled them to “navigate through shifting dynamics with continued improved efficiency.”

Matt Friend stated, “NIKE is more agile, responsive, and resilient than before the pandemic, with operational capabilities and an experienced team that enable us to create competitive separation. We enter 2024 with clear advantages: strong consumer momentum, a robust product innovation pipeline, healthy inventory, and a normalized flow of supply.”

  1. Strategic Partnerships

Nike’s shift away from wholesale retail has been a well-documented story. Over the past few years, Nike has “created greater focus and differentiation by working with fewer multi-brand partners.”

However, while Nike’s digitally powered direct-to-consumer initiative remains the key strategic driver of near and long-term growth, the wholesale channel continues to be an essential part of its strategy to gain access to key consumer segments and achieve scale in points-of-sale across the marketplace. “Wholesale partners play an integral role in our future marketplace, first, to authenticate our brands and then to create scale of distribution through a consistent consumer experience across a larger retail footprint,” said Matthew Friend.

Nike places its partners into three complementary groups that each serve distinct needs in the marketplace ecosystem:

    • Large multi-brand partners with the scale and willingness to invest in retail experiences and connected digital membership to drive long-term growth;
    • Neighborhood authenticators that provide brand access and drive energy and deep consumer connections in the local community;
    • Accounts that provide access to consumers across different segments and price points.

The partnership connected membership strategy appears to be working and “beginning to bear fruit. We feel very good about as the sales momentum that we continue to see from Nike Direct and our top strategic partners – including DICK’s Sporting Goods, JD, Sports Direct, and our City Specialty partners.”

Nike and Dick’s Sporting Goods recently launched a new connected partnership that enables Nike Membership and Dick’s Scorecard members to connect their accounts. Nike values Dicks as one of its “important strategic partners,” Donahoe said, and this program represents a way to keep consumers of both stores connected.


Due to strategic vision and continuous investment in innovation across all areas of its business, Nike has successfully differentiated its portfolio of brands and created significant value for both customers and shareholders. Their leadership, competitive culture, iconic products, convenient services, personalized experiences, and connected marketplaces continue accelerating sustainable growth and set Nike apart in a highly crowded and competitive marketplace.

Shawn Cox

Shawn is a Strategic Planning Subject Matter Expert whose management consulting expertise includes strategic planning, consumer experience, retail innovation, digital commerce, omnichannel operations, and enterprise optimization. Shawn has over 35 years of leadership experience as a strategic consultant and omnichannel general manager. Before working with McMillanDoolittle, Shawn was responsible for the direct-to-consumer business at Columbia Sportswear, Liz Claiborne, Samsonite, and Tommy Hilfiger. Shawn holds a BBA from Abilene Christian University.

1 Comment
  • Anthony

    April 19, 2024 at 7:41 pm Reply

    Nice shoe but kind of Nike is it?

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