Nike Deploying New ERP In July
Nike expects to realize value from its new enterprise resource planning (ERP) system this year — the biggest investment the apparel and footwear company has made in its digital transformation.
Though Nike revenue dipped 1% year over year in fiscal Q4 primarily due to COVID-related disruption in Greater China and elevated freight costs, it remains bullish on the potential of its digital investments.
“As we shift to an increasingly direct-to-consumer future, an ERP will be foundational for increasing speed and agility across our supply chain,” said Matthew Friend, Nike CFO, in an earnings call. “This will give us real-time visibility to inventory across our network, plus dynamic transactional capabilities to optimize consumer demand and inventory productivity.”
The new ERP will go live in Greater China in July, with plans to build and test in North America for deployment in fiscal 2024.
[See also: Nike Ramps Up Data Science for Member Personalization]
The No 10 consumer goods company is also readying new consumer marketing initiatives that include new capabilities activated through a partnership with Adobe. This is expected to increase additional productivity and demand creation, as well as member retention across the Nike ecosystem.
They’ve begun testing audience segmentation in North America with real-time data and personalized journeys on the Nike mobile app and have plans for further expansion in the coming months.
Nike is additionally scaling its Express Lane supply strategy, which is designed to combine hyper-local consumer insights with improved responsiveness and speed to market. The strategy increases portfolio agility by creating locally relevant products on shorter lead times and leverages a shared inventory pool across the marketplace.
Express Lane drove approximately 25% of total Nike brand revenue in fiscal 2022, with higher profitability, and the company plans to build it into a larger portion of the business moving forward.
Nike’s owned digital business that grew 18% in the fiscal year, and the digital share of its business reached 24% in Q4, propelled by its app ecosystem.
“This is a shift being led by the consumer as they pursue the most personalized shopping experience Nike provides,” said John Donahoe, Nike president and CEO, “and we do not take lightly the choice made by consumers to put us in the most prized real estate that exists today — the home screen of their phone. No other brand occupies that space globally like Nike, and it remains one of our biggest competitive advantages.”
In China, the company is accelerating its digital capabilities through a new suite of commerce and support activity apps in fiscal 2023. It’s anticipated to deepen consumer connections via enhanced user experiences, including locally relevant features across apps, services, and owned and partner retail stores.
Physical Retail
Higher levels of connectivity across physical and digital are driving a better consumer experience in Nike-owned stores, said Donahoe. “We know that consumers expect us to know who they are online or offline and across the full array of mono-brand stores, Nike digital, and our wholesale partners.”
All stores in North America now offer either buy-online-pickup-in-store or ship-from-store, and though the company didn’t provide figures on its partnership with Dick’s Sporting Goods, consumers are responding to the benefits they’re testing, said Donohoe.
[See also: Dick’s Sporting Goods' New Way to Share Data and Manage Demand]
The company will continue to extend Nike benefits to members across the marketplace and have additional partners and expanded services planned for fiscal 2023.
“[O]ur growing participation in new digital platforms continues to expand access points to Nike across the digital ecosystem,” he added.
Supply Chain Headwinds
Transit times remain elevated relative to pre-pandemic levels — at about two weeks longer in North America — which is having a significant impact on Nike’s in-transit inventory and the flow of goods into the marketplace.
Though some improvement in the West Coast ports backlog was seen at the end of the quarter, Friend said, they're not planning for planning for a significant increment in transit times in the fiscal year ahead given all of the variables.
As a result, Nike is managing its inventory accordingly, he said. "We're making decisions about our assortment, product life cycles. We're taking some of our styles to season-less that we can manage it on more of a rolling basis. And we'll continue to leverage the experience that we've had over the last two years, navigating through this environment from a supply chain complexity and congestion perspective."
