Offering differentiated consumer experiences, direct-to-consumer sales were responsible for about half of Nike's total growth in the past year, and digital sales jumped by 35 percent, driven by Nike's mobile apps. Nike says that the digital channel – its own online sales combined plus those of partners like Amazon and Zalando – should represent 35 percent of its revenues by 2023, and more in the future.
The number of Nike Plus users reached a higher-than-expected level of 170 million consumers in the past year. SNKRS saw a greater usage increase than any other Nike app and represented 20 percent of the brand's digital business. Acquired from Virgin Media two years ago, it generated sales of more than $750 million in 22 countries.
The more comprehensive Nike App enjoyed triple-digit growth in the fourth quarter of the last financial year, and the company plans to launch it before the end of 2019 in China and in 13 new markets in the Europe, Middle East and Africa region.
Meanwhile, the company has started connecting its Nike App with some of its physical stores, beginning with more than 30 in the U.S., the U.K. and France. It is driving memberships and in-store product scans, particularly for exclusive offers, and they can translate into online purchases later. The Nike App at Retail will be considerably expanded this year. Later this year, the company will roll out its new Nike Fit program in North America and the EMEA region. It enables consumers to find the right size for their shoes through a smartphone camera, minimizing returns of digital orders.
In terms of the supply chain, the management indicated that it was on the way to cutting lead times in half by optimizing the use of data to respond more quickly to the demand of a more engaged consumer. The group will add a new Nike Air manufacturing facility in the U.S. this year, as the demand for the line is outpacing the supply.
Nike is installing RFID chips in all its new footwear and apparel products during the present quarter to give it a comprehensive view over the entire inventory, and it will start using them in 20 stores before scaling the program across its whole store network. The information will be fed into Nike's Express Lane process, which is already used in 20 percent of the EMEA business, to drive a higher proportion of full-price sales.
