As I commented in a previous post at fashion retail news, Strategic Acquisitions: Walmart vs Amazon, M&A is one of the main strategic options for companies that want to ensure their success in a very competitive and globalized market.
As digital technology continues to evolve and manufacturing 4.0 is reshaping the value chain of every industry, businesses are investing in the digital transformation. Walmart, for example, launched a Tech Incubator, Store No 8, in March 2017. Since then, Store No 8 hired Jenny Fleiss (Co-founder of Rent the Runway) and Bart Stein (CEO and Co-Founder of Wim Yogurt, Inc).
Another group that is investing in a start up ecosystem is LVMH. The French multinational luxury goods conglomerate has created (April 2018) an accelerator program at the STATION F startup campus in Paris. The LVMH program will welcome 50 international startups each year. This initiative will drive business acceleration between LVMH’s Maisons and startups to invent innovative new products and services for the luxury market.
What about Nike?
A few months ago, Nike maintained 44% of the US sportswear market share, but Adidas nearly doubled to 11% like-for-like, according to NPD data.
It seems that Nike is doing better and the Beaverton behemoth just published its latest results (Q3 2018). Revenues for NIKE, Inc. increased 7% to $9.0 billion. Revenues for the NIKE Brand were $8.5 billion, up 4% on a currency-neutral basis, driven by Greater China, EMEA and APLA, including double-digit growth in NIKE Direct and growth in Sportswear and NIKE Basketball. Revenues for Converse were $483 million, down 8% on a currency-neutral basis, as international and digital growth were more than offset by declines in North America.
Gross margin declined 70 basis points to 43.8% due primarily to unfavorable changes in foreign currency exchange rates, which were partially offset by lower product costs.
NIKE, Inc. introduced in June 2017, the Consumer Direct Offense, a new company alignment that allows Nike to better serve the consumer personally, at scale. Trevor Edwards, President of the NIKE Brand, will drive the Consumer Direct Offense through integrated category, geography, marketplace, product, merchandising, digital, and direct-to-consumer teams.
Leveraging the power of digital, Nike will drive growth — by accelerating innovation and product creation, moving even closer to the consumer through Key Cities, and deepening one-to-one connections. In the new alignment, the company will drive growth by deeply serving consumers in 12 key cities, across 10 key countries: New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan. These key cities and countries are expected to represent over 80 percent of Nike’s projected growth through 2020.
The Consumer Direct Offense is fueled by Nike’s Triple Double strategy: 2X Innovation, 2X Speed and 2X Direct connections with consumers. The sportswear brand is investing in startups to deliver innovations to the market and strengthen their digital tech platforms.
In 2018, Nike has acquired 2 companies in less than 2 months, as part of its “Consumer Direct Offense” strategy to strengthen its digital technology: INVERTEX and ZODIAC.
Invertex develops and provides a mobile application that allows customers to select, measure, modify and purchase custom fitting products. Invertex leverages 3D scanning to allow a customer specific e-commerce experience and create mass customization product lines. Their mobile applications instantly capture and analyzes a person’s anatomy in detailed three dimensions. This provides their clients with the capacity to tailor their existing products to their customers’ specific needs or create new, fully-customized product lines.
According to Nike news, “the acquisition of Invertex will deepen our bench of digital talent and further our capabilities in computer vision and artificial intelligence as we create the most compelling Nike consumer experience at every touch point,” says Nike Chief Digital Officer, Adam Sussman.
Zodiac develops a software analytics platform that forecasts the behaviour and value of individual customers and customer segments.
“The acquisition of Zodiac demonstrates our commitment to further accelerating Nike’s digital transformation and enhancing our consumer data and analytics capabilities to help us serve consumers globally,” says Adam Sussman, Vice President and Chief Digital Officer of NIKE, Inc. (source: Nike.com)
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