Nike Expands Deals With Some Retailers Amid DTC Shift in Strategy

  • Nike is striking new deals with retailers as brands realize the DTC model isn’t all it’s cracked up to be.
  • Designer Brands, Macy’s, and Foot Locker have each announced expanded relationships with Nike.
  • The company recently said wholesale would be “integral” to its strategy moving forward.

Nike is rebuilding its relationships with retailers ahead of the winter holidays as cracks in the direct-to-consumer model begin to show.

The sneaker and apparel brand had spent the last four years shedding retail partnerships  — it cut 50% of its wholesale accounts since 2018 — as it focused on selling products directly to consumers through its website, apps, and stores.

But, more recently, Nike has expanded partnerships with retailers, including Macy’s and DSW owner Designer Brands, the Wall Street Journal reported.

Nike did not immediately respond to Insider’s request for comment outside of business hours. 

Designer Brands announced on Thursday it would begin offering in Q4 an expanded lineup of men’s, women’s, and kids’ athletic wear as part of its “newly elevated Nike relationship.” Macy’s also said in June that Nike apparel and accessories would return to its department stores in October following a roughly two-year hiatus. And sneaker chain Foot Locker said in March that it was “revitalizing” its partnership with Nike and their efforts would start rolling out during the upcoming holiday season.

These new deals may be part of the “next phase” of Nike’s marketplace strategy outlined in March.

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CFO Matt Friend said “wholesale partners” would play an “integral role,” “first, to authenticate our brands and then to create scale of distribution through a consistent consumer experience across a larger retail footprint.” 

In a May presentation, Daniel Heaf, vice president of Nike Direct, said, “People always ask me: Are you a direct business or a wholesale business? And the truth is we’ve chosen both.” 

Nike’s direct strategy has been largely successful, helping the company boost sales — and beat analysts’ expectations for sales and earnings during its most recent quarter.

But the company’s shift in thinking comes as it and other retailers have changed their views on wholesale.

Nike’s wholesale business grew faster than its direct business between September and November, showing it’s still key to the overall business. Nike competitors, including Adidas and Allbirds, among other brands, have recently renewed their commitments to wholesale. And more DTC-native brands have sought retail partners as they chase profits.

In a recent note, Simeon Siegel, a managing director for equity research at BMO Capital Markets, told investors DTC is “not all it’s cracked up to be,” explaining that added costs could offset advantages like more data and higher revenue.

“Despite widespread belief to the contrary, the push to DTC from wholesale appears to hurt, not help, overall company profitability,” Siegel wrote.