際際滷

際際滷Share a Scribd company logo

Nike, The Innovation Machine

Helixa
Helixa

1. Nike has consistently strengthened its leadership position in the athletic footwear and apparel industries through pioneering innovation. 2. The company focuses on connecting with consumers through new technologies and experiences both online and offline. 3. Nike's deep innovation pipeline has resulted in products like Flyknit, FuelBand, Lunar foam, Flywire, Nike+, Nike Free, and advances in golf equipment and shoe air cushioning. This drives the company's continued growth and leadership.

1 of 37
Downloaded 1,832 times
Helixa 16, rue Brey -足 75017 Paris Crea7ve Commons License August 2012 v 1
Why Nike? 則р Nike is the global largest athletic brand retailer The company has delivered a +19% CAGR in revenues over the last 33 yearsfrom 1978 to 2011; to reach $21b in 2012 則р Nike has developed a leadership strategy outperforming its competitors both in footwear and apparel At Nike, we are leaders. When we fail is when we are followers. Tinker Hatfield, VP of Innovation Nike has maintained a clear leadership position since the 1980s outrivaling top sportswear companies and fashion leaders 則р Nike is consistently reinventing the way of retailing and branding thanks to innovation and resilience Sports created Nike, but design and innovation made it grow. Mark Parker, CEO Nike focuses on connecting with the consumer emotions and developing ways to turn transactional relationships into experiences: both online and offline, locally and globally. To achieve this ambition, Nike rests on a deep innovation pipeline 2
1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 3
Nike Inc.s History Timeline Net Sales top $21 billion Global expansion, including a strong growth in China, 2012 2006 Nike signs Brazilian football superstar Ronaldinho Nike sales top $3 billion 1991 Late Nike hit by allegations of sweatshop 1990 labour Niketown: the 1st home to a new 1990 retail-as-theatre experience, Nike signs basketball 1984 superstar Michael Jordan BRS officially changes its name to Nike and in 1980, Nike takes over from Adidas, capturing more than 50% of US 1979 market share 1973 Steve Prefontaine becomes Nikes first endorser BRS launches its own Nike shoe under the famous Knight and Johnson open the first BRS retail store in Santa Swoosh giving birth to Nike Brand 1971 1966 Monica, California. Knight approaches Jeff Johnson to sell shoes for BRS. Bill Bowerman and his University of Oregon runner Phil Johnson starts selling T-shirts as well 1965 1962 Knight form Blue Ribbon Sports (BRS) to distribute athletic shoes. 4
Nike Inc. Key Figures, The largest apparel & footwear company in the world HEADQUARTERS Beaverton, Oregon (The United States) 則р Net sales: $20,9 bn 則р Net profit: $2,1 bn 2011 KEY FIGURES 則р Operating profit: $2,8 bn (10% of net sales) (13% of net sales) 則р Employees: 38 000 則р The U.S: 36% of net revenues 則р Asia Pacific: 14% GLOBAL PRESENCE 則р Europe: 23% 則р Others: 27% Nike, Inc. (Nike), incorporated in 1968, designs, develops and markets athletic footwear, apparel, equipment and accessories primarily under the Nike brand Sources: Nike Annual report / 2011 figures 5
The Acquisition Timeline: Nikes wholly-owned Affiliates Brands 2002 Acquires Hurley devoted to 2008 action sports and youth Sells Starter for $60 1994 lifestyle footwear, apparel million 2013 Acquires Canstar and accessories 2004 Nike to sell Umbro and (Bauer Parent) for $400 Acquires Starter for Cole Haan to focus on million $43 million its core brands 1985 2013 1988 1998 Acquires Cole Haan, a Nike Golf established 2007 NYC-based luxury shoes, Acquires Umbro for $630 2003 million, a Manchester- 2008 handbags, accessories & Acquires Converse, the based soccer brand Sells Bauer Hockey for coats brand, for $80 classic and retro-style shoe $200 million million brand (founded in 1908) for $305 million with sales growing 20% per year from $200 million to $1 billion in FY 2011 under Nikes ownership to date Sources: Jefferies / 2011 figures 6
Nike Brand is the strongest brand of Nike Inc. brand portfolio 5475 M$ Footwear (55%) 則р $18.0 b Nikes sales Apparel (26%) 則р 86% of Nike Inc sales Equipment (5%) NIKE BRAND 1013 M$ 2881 M$ 則р $2.9 b Affiliates sales 則р 14% of Nike Inc sales Others 11 493 M$ 則р $1.1 b Converses sales $20.9 B +19% CAGR 756 $343M 2011 SALES (1978-2011) STORES Web Sales (2%) Sources: Nike Annual report / 2011 figures 7
Nike brands global expansion: China & Emerging markets are the two fastest growing geographic segment Europe Western Europe: 21% US of Nike sales North America: 42% (-2% vs.2010) of Nike sales Central & Eastern: Asia (+13% vs.2010) 6% of Nike sales Greater China: 11% (+4% vs.2010) of Nike sales (+18% vs.2010) Japan: 4% of Nike sales (-13% vs.2010) Others Emerging Markets: 15% of Nike sales (+24% vs.2010) Roughly 42% of Nike Brands sales is coming from the U.S. and 27% from Europe. Growth should be more heavily weighted to developing regions, with particular strength coming from Greater China and emerging markets Sources: Nikes Annual Report 8
1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 9
Nike Inc.s exceptional growth in 33 years 25,0 10,0 Revenues (USD in billion) Net income (USD in billion) 9,0 Compound Annual Growth Rate CRISES 20,9 20,0 8,0 CAGR Revenue: 1978-2011: 19% 7,0 1990-2000: 15% Turnover (USD in billion) 1978-2002: 23% 15,0 2002-2011: 9% CAGR Revenue 6,0 Net income (USD in billion) 2007-2011: 6% 78-11: +19% BOYCOTT 5,0 10,0 10,0 4,0 CHILD LABOR & SWEATSHOP 3,0 2,1 5,0 2,0 3,0 0,7 1,0 1,2 0,3 0,7 0,0 0,0 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Nike, Inc. (Nike) has grown at a rate of 19% year-to-year over the past 33 years despite the strong impact of Nikes sweatshops controversy and the financial crises. Nikes net income represents 10% of net sales in 2011 Sources: Nikes Annual Report The Promise and Perils of Globalization: the case of Nike by Locke 10
1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 11
In the late 1990s, Nike already dominated its competitors GLOBAL ATHLETIC FOOTWEAR MARKET SHARE from 1991 to 1999 40% BOYCOTT 35% 35% 32% 30% 30% 27% 25% 24% 25% 23% 23% 20% 16% 14% 15% 10% 10% 10% 10% 10% 9% 10% 5% 0% 1991 1992 1993 1994 1995 1996 1997 1999 Since displacing Adidas in the early 1980s and Reebok in the early 1990s, Nike has become the largest and most important athletic shoe brand in the world. A clear soaring of Nike since 1994 Sources: HBS Case #9-299-084 "Nike, Inc.: Entering the Millennium, March 31,1999 and Footwear News, December 27, 1999 12
And Today, Nike Inc. is still the No. 1 sportswear company Sales $20.9 bn FY11 EBIT (% sales) FY11: 13% Sales $17.3 bn FY11 Net income (% sales) FY11: 10% Sales $3.8 bn FY11 EBIT (% sales) FY11: 8% EBIT (% sales) FY11: 11% Net income (% sales) FY11: 5% Net income (% sales) FY11: 10% * In 2006, Adidas acquiredReebok for $3.8billion 25,0 10,0 Nikes sales 20,9 9,0 CAGR 06-11: +7% EBIT 20,0 19,2 19,0 8,0 18,6 CAGR 06-11: +6% 17,3 Net income & EBIT (USD $billion) 16,3 7,0 Net income 16,0 15,2 15,0 CAGR 06-11: +9% 15,0 15,0 15,0 13,7 13,3 6,0 Adidas sales CAGR 06-11: +5% Turnover (USD $billion) 5,0 EBIT 10,0 4,0 CAGR 06-11: +2% 7,8 2,8 2,5 Net income 2,4 3,0 2,1 2,1 2,1 CAGR 06-11: +6% 1,9 5,0 1,4 3,4 1,5 1,3 3,8 2,0 1,2 3,5 3,5 3,1 1,2 3,4 0,8 3,0 Pumas sales 0,7 CAGR 06-11: +2% 0,5 0,5 0,5 0,4 0,4 0,4 1,0 0,2 EBIT 0,0 0,0 CAGR 06-11: -2% NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM Net income 2005 2006 2007 2008 2009 2010 2011 CAGR 06-11: -3% 13
A Strong Marketing Spend: a distinct advantage in an industry that is heavily reliant on sports endorsements ANNUAL DEMAND CREATION PEER COMPARISON ($ AND % OF SALES FY11) Nike has entered into endor- 3,0 16% sement agreements with some of 2696 the most famous athletes in the 13,4% 14% world, such as basketball icon 2,5 Marketing %net sales (USD, million) 11,4% Michael Jordan, golf legend Tiger Marketing Spend (USD, million) 11,2% 12% Woods, Swiss tennis phe-nomenon 2,0 1771 Roger Federer, and Brazilian 10% soccer super-star Ronaldinho, etc. 1,5 6,5% 8% 5,7% 6% 1,0 3,4% 539 4% 0,5 384 231 168 2% 0,0 0% Nike Adidas VF Corp. PVH Ralph Under Lauren Amour Nike invests heavily in brand-building efforts by spending $2.7B on demand creation (marketing, sponsorship) with help from its advertising partner, Wieden+Kennedy In FY11, Nike had $4.4 bn of endorsement obligations outstanding. Sources: Company data and Morgan Stanley Research 2012 14
1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 15
Pioneer & Innovative 16
An historic product Innovation pipeline 2012 Flyknit upper technology is introduced 2012 Nikes FuelBand is launched FLYKNIT FUELBAND PRO COMBAT 2009 Pro Combat performance apparel is launched 2008 Nikes Lunar foam is launched and Nike Flywire technology LUNAR FLYWIRE 2006 Nike+ is launched (currently 6 million members) 2006 Air Max 360 (new method of creating Air-Sole units) 2005 Nike Free is launched NIKE + NIKE FREE 2002 Nike introduces its first golf clubs 2000 Nike unveils its Shox technology NIKE SHOX AIR TRAINER HIGH SHOE 1987 The Air Trainer High shoe and the Air Max shoe Air Force 1, the first Nike basketball shoe to incorporate Nike 1982 Air cushioning AIR FORCE 1 AIR MAX SHOE 1979 the Tailwind, the first running shoe with Nike Air 1978 The first Air-Sole units are created (Nike Air cushioning) NIKE TAILWIND WAFFLE TRAINER 1974 The Waffle trainer is introduced Sources: Company reports and JMS Research May 2012 17
With (R)evolutionary Platforms that keep product pipeline full Nike Free Nike Air Max Nike Lunar Nike Flyknit Launched: 2005 2006 2008 2012 Innovative sole featuring siping Air platform that features Max Ultra-lightweight composite Revolutionary upper (deep slices) that allow for a Air a new design utilizing air foam 30% reduced weight construction made from a single more natural movement that throughout the midsole versus previous materials strand of yard (entire shoe resembles bare feet. weighs 5.6 oz) Estimated: $500M Business Estimated: $750M - $1B Estimated: $1B Business Estimated opportunity: $1B+ Sources: Company reports and JMS Research May 2012 18
Even in Apparel, Nike is taking performance to another level Nike Dri-FIT Nike Pro Combat Nike HyperElite Launched: 1991 2009 2012 Lightweight, moisture wicking apparel Football-specific apparel featuring Lightweight (shorts weigh only 5 and accessories cooling, warmth, and/or built-in ounces) and breathable basketball (tops, bottoms, hats) protection technology apparel made of recycled materials Nike aims to serve athletes across apparel segments with compelling choices for competing (Elite), training (Everyday), and leisure (Lifestyle) Sources: Company reports and JMS Research May 2012 19
The first to use digital technology for products to elevate the brand Nike ID Nike + Nike FuelBrand Launched: 2000 2006 2012 Allows customers to design Sensor based technology and 3-axis gyroscopic wristband that personalized and custom-built integrated social ecosystem that allows for real-time tracking of daily footwear, clothing, and gear allows for movement tracking movement Nike is positioning as a vanguard for premium athletic/consumer products. The Brand tries to establish deeper connections with the consumer Sources: Company reports and JMS Research May 2012 20
Focus: Nike, the pioneer of Mass Customization SPECIAL ORDERS MASS CUSTOMIZATION 1859 Nov. 1999 April 2000 2002 2006 2008 2008 2011 Mi Adidas was launched in April 2000 &Ms d Design y Bespoke d Burberr your Own ched My M E launche Shoe Barb an ecue Y launche n me nched Mo ngoli Monogram un nched Mo M&Ms la CONVERS BURBERR ITTON lau Louis Vuittons Special Orders Department for PUMA lau unique cutomers Nike ID (web first, then in store) LOUIS VU NikeID co-creation platform brought in over $100 million in revenue for the fiscal year of 2009 Nike Inc. dedided to bring Mass Customization to the web in November 1999 Then accessed in select physical branches. Nike was the first to make substantial profits employing mass customization Sources: The mi adidas Mass Customization Initiative by Pr. R.W. Seifert (IMD) 29.05.2006 21
The co-creation of value through customers experiences 則р Customers need no longer be mere passive recipients of value propositions offered by firms. They are now informed, connected and networked 則р ...Leading firms are then responding by engaging their customers in the co-creation of value 則р Co-creative interactions are an emerging strategy for value creation. By engaging with informed, connected, and networked customers around the globe, the shoe company Nike has found a new source of value Nikes Co-creation Examples Joga.com was in effect a thematic community that enabled individuals to share personal and collective soccer experiences (videos downloaded over 32 million times). With over one million fans participating in this innovative brand building effort, Nike had a unique opportunity to learn directly from its customers NikeID provided software tools to co-design and customize the shoe. Nike can tap into the collective creativity of its customer base. NikeID co-creation platform brought in over $100 million in revenue for the fiscal year of 2009 The Nike+ co-creation platform capitalizes firstly on the connection between running and music. The combination of innovative, mobile technology, online communities (currently 6 million members) and athletic gear expands the field for co-creation Nike is Building a Co-creative Organization to Generate New Strategic Assets through Valuable Engagement Experiences 22
A revolution in its relationship with customers (1/2) 束Nike is becoming a company that isn't just focused on products but is focused on products and services損 Stefan OLANDER, Nike's VP of Digital Sport PRODUCT SERVICES 23
A revolution in its relationship with customers (2/2) 束Before the product was the end point of the consumer experience now it is the starting point損 Stefan OLANDER, Nike's VP of Digital Sport PRODUCT SERVICES EXPERIENCES 24
Nike is always one step ahead, including on the Internet Nike Foot Locker Adidas Launched: 1999 2000 2006 Nike.com FootLocker / LadyFootLocker.com ShopAdidas.com NikeStore.com KidsFootLocker.com Miadidas.com NikeID.com Eastbay.com / Footaction.com Reebok.com ChampsSports.com / CCS.com Shop.adidasGolf.com 則р 2011 Web Sales: $343M 則р 2011 Web Sales: $457M 則р 2011 Web Sales: $78M (2% of Nike brands net sales) (8% of groups net sales) (1% of Adidas groups net sales) 則р CAGR 2004-2011: +28% 則р CAGR 2004-2011: +12% 則р CAGR 2004-2011: +21% 則р Monthly Unique Visitors: 4,1M 則р Monthly Unique Visitors: 2,6M 則р Monthly Unique Visitors: 0,9M 則р Monthly Visits: 7,5M 則р Monthly Visits: 8,0M 則р Monthly Visits: 2,6M 則р Total SKUs on Web: 30 000 則р Total SKUs on Web: 80 000 則р Total SKUs on Web: 6 000 Sources: Internet Retailer June 2012 25
Among the first of the major sportswear brands to embrace Social Media 9,3M fans 458 665 Followers 8,0M 279 216 1 7,4M 1 245 766 1,1M 64 077 0,6M 58 358 SOCIAL PRESENCE IN CHINA SOCIAL PRESENCE IN RUSSIA Nike uses social media with the most relevant ones in each country: Facebook and Twitter in the US, in China with Weibo, Ren Ren, QQ, and in Russia Vkontakte..which supports Nikes position as tech-led, early adopting and youthful Sources: Facebook and Twitter data 06/2012 26
Distribution channel: One of the first owned retail stores within Sport industry U.S. stores non-U.S. Total Nike factory stores 150 243 393 Nike stores 16 50 66 NIKETOWNs 9 3 12 57% of 43% total revenues OWNED RETAIL STORES 則р 1966: The first Blue Ribbon Sports retail store opened in California 則р 1990: The first Flagship NIKETOWN store opened in downtownPortland Compared to 則р 1986: First Flagship Ralph Lauren shop in NYC 則р 1999: First Flagship Foot Locker store in NYC 則р 2001: First Adidas Originals store BRANDED RETAIL COLLABORATIONS In FY15, Nike expects to exceed $5,5 billion in DTC sales, on 850 owned stores for the Nike brand across concepts and more than 300 affiliate stores. DTC= $3,2B in revenue in FY11 (in-line stores (+12%), factory stores (+15%) and e-commerce (+25%) Sources: Business week Nike: It's Not A Shoe, It's A Community july 2006 27
China : a first mover Represents 10% of Nike Incs Sales & 15% of Profits CHINA REVENUES ($ BILLION): NIKE & ADIDAS VS. CHINESE BRANDS 0,0 2 0,0 2010E China Revenues ($B) 1,4 0,0 1,3 0,9 Kobe endorsement Nike in 0,0 0,5 0,0 0,3 則р Nike is the market leader in China, home to 1.3 billion people, 0,0 300 million basketball fans Nike Adidas Li Ning Anta Peak Puma 則р Having been in China since the 1980s, its first-mover advantage has allowed the company to dominate its competition, generating $2.3B in sales in FY11 (11% of Nike Incs revenue; +18% vs. 2010), vs $1.3B at adidas and less than $500M at Puma 則р Given its position and strength in sports relevant to the Chinese consumer (particularly golf and basketball), Nike will continue to capitalize on growth potential 則р Nike has Kobe Bryant, the most popular basketball player in China Nike is far and away the largest athletic brand in the Chinese market. Sources: AlphaWise (July 2011), Morgan Stanley Research 2012 Jefferies Estimates and company data 28
and also Resilient Nike finally took the lead to become sustainable 29
A Heavy Burden 1970 Mid 1980s 1990s 則р Nike opened up its own shoe 則р Rising of US wages, closing of Nike 則р A series of public relations factories in Maine and New US Factory and outsourcing nightmares, involving: Hampshire manufacturing to Asia 端錫 Underpaid workers in Indonesia 則р At the same time, it also began to 則р 1982: 86% of Nikes athletic footwear 端錫 Child labor in Cambodia and cultivate potential suppliers in came from Korea and Taiwan Pakistan Korea, Thailand, China and Taiwan. 則р Then, it opened up manufacturing 端錫 Poor working conditions in plants in Indonesia, China and China and Vietnam Vietnam 則р Anti-Nike campaign and the film of 則р Already in the early 1980s, Nike had Michael Moore The Big One (1998) been criticized for sourcing its revealed the deplorable conditions products in factories/countries of Nikes suppliers where low wages, poor working conditions and human rights 則р Nike described as sweatshops problems Sources: Richard M. Locke (2001) The Promise and Perils of Globalization: The Case of Nike 30
Many Challenges to Face CONSUMER BOYCOTT LEGISLATION COMPANY PRESSURES IMAGE NGOs ATTACK COMPETITORS NIKE 31
Nikes Response forced to be the first- mover Mid 1980s 1990s Late 1990s BLIND SPOTS COMPLIANCE TRANSPARENCY 則р At first, Nike managers refused to 則р 1992: Nike formulated a Code of 則р Nike has increased monitoring of its accept any responsibility for the conduct for its suppliers (minimalist suppliers : SHAPE inspection various labor and environmental/ and not fully enforced) 則р Nike suppliers are regularly audited health problems found at their 則р Introduction of the Safety, Health, by external firms like Ernst and suppliers plants Attitudes of management, People Young, PWC, 則р According to Nike Workers at Investment and Environment 則р Relations with international and these factories were not Nike program (SHAPE) Non-Profit Organizations employees, and thus Nike had no 則р Nike has increased the minimum age 端錫 Involved in the UN Global responsibility towards them of footwear factory workers to 18 Impact and to 16 in apparel, equipment 端錫 Founded Global Alliance for (1998) Workers and Communities 端錫 Active in the Fair Labor 則р New staff and Training by creating Association several new departments: 端錫 Labor Practices (1996) 則р 束Transparency 101損 program 端錫 Nike Environmental Action Team (1993) Sources: Richard M. Locke (2001) The Promise and Perils of Globalization: The Case of Nike 32
...Reflected in Its offering: Nike sustainable innovations Recycle shoeswith Nike Trash Talk, Nike 束Reuse a shoe損 a basketball shoe made from manufacturing waste Sources: Nikeinc.com 33
Some of its latest remarkable sustainable initiatives 2012 The 2012 National Team Kit Nikes most Flyknit: a revolutionary upper A strategic partnership with DyeCoo environmentally-friendly construction made from a single strand Textile Systems B.V., a Netherlands- of yarn that is extremely lightweight based company that has developed and Kits are made with made with at least built the first commercially available 96% recycled polyester, each jersey is Flyknits aim: waterless textile dyeing machines. made using an average of 7 plastic - To cut labor costs and production time bottles. Each short is made using an (less waste, reduced labor) average of 6 recycled plastic bottles To increasing profit margins and adding up to 13 plastic bottles per kit opportunities for personalization 34
Integrating Sustainability into its Game Plan ...Nike rethinks its Value Chain NIKE INC. CURRENT VALUE CHAIN FINAL GOAL: FULLY CLOSED-LOOP Plan, Design, Make, Move, Sell, Use, Reuse Cradle-to-Cradle model 1. Using the fewest possible materials 3. Allowing them to be recycled into new product or safely 2. Designed for easy disassembly SUSTAINABILITY PILLARS returned to nature at 端錫 Creating a portfolio of sustainable materials the end of their life 端錫 Prototyping and scaling sustainable sourcing andmanufacturing models 端錫 Igniting and driving market transformation 端錫 Creating digital services revenue Sources: Nikeinc.com Cradle-to-Cradle 35
Strategic Innovation to reinvent businesses In a constantly changing world, To build such strategies, Helixa has companies can no longer do business devised a series of new tools and in the same way as in the past. Indeed, proceeds by combining creativity companies now have to steer a course with analysis to imagine for its through a world where everything is clients what has as yet never seen changing at a high speed . It is forcing light of day. them to rethink their strategic choices With its wealth of experience in such along completely different lines. Those sectors as luxury goods, media, firms able to rapidly identify disruptive retailing, chemistry, energy and innovation and take up adequate internet and given its design thinking strategies can gain the upper hand inspiration, Helixa can offer highly on competitors and become the next effective tailor-made solutions. winners. Helixas team mixes engineers, strategists and designers. 36
For more information, contact us: 16, rue Brey Paris 17竪me development@helixa.com (+33)1 45 72 55 89 This document is under Creative Commons License 37

More Related Content

Nike, The Innovation Machine

  • 1. Helixa 16, rue Brey -足 75017 Paris Crea7ve Commons License August 2012 v 1
  • 2. Why Nike? 則р Nike is the global largest athletic brand retailer The company has delivered a +19% CAGR in revenues over the last 33 yearsfrom 1978 to 2011; to reach $21b in 2012 則р Nike has developed a leadership strategy outperforming its competitors both in footwear and apparel At Nike, we are leaders. When we fail is when we are followers. Tinker Hatfield, VP of Innovation Nike has maintained a clear leadership position since the 1980s outrivaling top sportswear companies and fashion leaders 則р Nike is consistently reinventing the way of retailing and branding thanks to innovation and resilience Sports created Nike, but design and innovation made it grow. Mark Parker, CEO Nike focuses on connecting with the consumer emotions and developing ways to turn transactional relationships into experiences: both online and offline, locally and globally. To achieve this ambition, Nike rests on a deep innovation pipeline 2
  • 3. 1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 3
  • 4. Nike Inc.s History Timeline Net Sales top $21 billion Global expansion, including a strong growth in China, 2012 2006 Nike signs Brazilian football superstar Ronaldinho Nike sales top $3 billion 1991 Late Nike hit by allegations of sweatshop 1990 labour Niketown: the 1st home to a new 1990 retail-as-theatre experience, Nike signs basketball 1984 superstar Michael Jordan BRS officially changes its name to Nike and in 1980, Nike takes over from Adidas, capturing more than 50% of US 1979 market share 1973 Steve Prefontaine becomes Nikes first endorser BRS launches its own Nike shoe under the famous Knight and Johnson open the first BRS retail store in Santa Swoosh giving birth to Nike Brand 1971 1966 Monica, California. Knight approaches Jeff Johnson to sell shoes for BRS. Bill Bowerman and his University of Oregon runner Phil Johnson starts selling T-shirts as well 1965 1962 Knight form Blue Ribbon Sports (BRS) to distribute athletic shoes. 4
  • 5. Nike Inc. Key Figures, The largest apparel & footwear company in the world HEADQUARTERS Beaverton, Oregon (The United States) 則р Net sales: $20,9 bn 則р Net profit: $2,1 bn 2011 KEY FIGURES 則р Operating profit: $2,8 bn (10% of net sales) (13% of net sales) 則р Employees: 38 000 則р The U.S: 36% of net revenues 則р Asia Pacific: 14% GLOBAL PRESENCE 則р Europe: 23% 則р Others: 27% Nike, Inc. (Nike), incorporated in 1968, designs, develops and markets athletic footwear, apparel, equipment and accessories primarily under the Nike brand Sources: Nike Annual report / 2011 figures 5
  • 6. The Acquisition Timeline: Nikes wholly-owned Affiliates Brands 2002 Acquires Hurley devoted to 2008 action sports and youth Sells Starter for $60 1994 lifestyle footwear, apparel million 2013 Acquires Canstar and accessories 2004 Nike to sell Umbro and (Bauer Parent) for $400 Acquires Starter for Cole Haan to focus on million $43 million its core brands 1985 2013 1988 1998 Acquires Cole Haan, a Nike Golf established 2007 NYC-based luxury shoes, Acquires Umbro for $630 2003 million, a Manchester- 2008 handbags, accessories & Acquires Converse, the based soccer brand Sells Bauer Hockey for coats brand, for $80 classic and retro-style shoe $200 million million brand (founded in 1908) for $305 million with sales growing 20% per year from $200 million to $1 billion in FY 2011 under Nikes ownership to date Sources: Jefferies / 2011 figures 6
  • 7. Nike Brand is the strongest brand of Nike Inc. brand portfolio 5475 M$ Footwear (55%) 則р $18.0 b Nikes sales Apparel (26%) 則р 86% of Nike Inc sales Equipment (5%) NIKE BRAND 1013 M$ 2881 M$ 則р $2.9 b Affiliates sales 則р 14% of Nike Inc sales Others 11 493 M$ 則р $1.1 b Converses sales $20.9 B +19% CAGR 756 $343M 2011 SALES (1978-2011) STORES Web Sales (2%) Sources: Nike Annual report / 2011 figures 7
  • 8. Nike brands global expansion: China & Emerging markets are the two fastest growing geographic segment Europe Western Europe: 21% US of Nike sales North America: 42% (-2% vs.2010) of Nike sales Central & Eastern: Asia (+13% vs.2010) 6% of Nike sales Greater China: 11% (+4% vs.2010) of Nike sales (+18% vs.2010) Japan: 4% of Nike sales (-13% vs.2010) Others Emerging Markets: 15% of Nike sales (+24% vs.2010) Roughly 42% of Nike Brands sales is coming from the U.S. and 27% from Europe. Growth should be more heavily weighted to developing regions, with particular strength coming from Greater China and emerging markets Sources: Nikes Annual Report 8
  • 9. 1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 9
  • 10. Nike Inc.s exceptional growth in 33 years 25,0 10,0 Revenues (USD in billion) Net income (USD in billion) 9,0 Compound Annual Growth Rate CRISES 20,9 20,0 8,0 CAGR Revenue: 1978-2011: 19% 7,0 1990-2000: 15% Turnover (USD in billion) 1978-2002: 23% 15,0 2002-2011: 9% CAGR Revenue 6,0 Net income (USD in billion) 2007-2011: 6% 78-11: +19% BOYCOTT 5,0 10,0 10,0 4,0 CHILD LABOR & SWEATSHOP 3,0 2,1 5,0 2,0 3,0 0,7 1,0 1,2 0,3 0,7 0,0 0,0 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Nike, Inc. (Nike) has grown at a rate of 19% year-to-year over the past 33 years despite the strong impact of Nikes sweatshops controversy and the financial crises. Nikes net income represents 10% of net sales in 2011 Sources: Nikes Annual Report The Promise and Perils of Globalization: the case of Nike by Locke 10
  • 11. 1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 11
  • 12. In the late 1990s, Nike already dominated its competitors GLOBAL ATHLETIC FOOTWEAR MARKET SHARE from 1991 to 1999 40% BOYCOTT 35% 35% 32% 30% 30% 27% 25% 24% 25% 23% 23% 20% 16% 14% 15% 10% 10% 10% 10% 10% 9% 10% 5% 0% 1991 1992 1993 1994 1995 1996 1997 1999 Since displacing Adidas in the early 1980s and Reebok in the early 1990s, Nike has become the largest and most important athletic shoe brand in the world. A clear soaring of Nike since 1994 Sources: HBS Case #9-299-084 "Nike, Inc.: Entering the Millennium, March 31,1999 and Footwear News, December 27, 1999 12
  • 13. And Today, Nike Inc. is still the No. 1 sportswear company Sales $20.9 bn FY11 EBIT (% sales) FY11: 13% Sales $17.3 bn FY11 Net income (% sales) FY11: 10% Sales $3.8 bn FY11 EBIT (% sales) FY11: 8% EBIT (% sales) FY11: 11% Net income (% sales) FY11: 5% Net income (% sales) FY11: 10% * In 2006, Adidas acquiredReebok for $3.8billion 25,0 10,0 Nikes sales 20,9 9,0 CAGR 06-11: +7% EBIT 20,0 19,2 19,0 8,0 18,6 CAGR 06-11: +6% 17,3 Net income & EBIT (USD $billion) 16,3 7,0 Net income 16,0 15,2 15,0 CAGR 06-11: +9% 15,0 15,0 15,0 13,7 13,3 6,0 Adidas sales CAGR 06-11: +5% Turnover (USD $billion) 5,0 EBIT 10,0 4,0 CAGR 06-11: +2% 7,8 2,8 2,5 Net income 2,4 3,0 2,1 2,1 2,1 CAGR 06-11: +6% 1,9 5,0 1,4 3,4 1,5 1,3 3,8 2,0 1,2 3,5 3,5 3,1 1,2 3,4 0,8 3,0 Pumas sales 0,7 CAGR 06-11: +2% 0,5 0,5 0,5 0,4 0,4 0,4 1,0 0,2 EBIT 0,0 0,0 CAGR 06-11: -2% NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM NKE ADI PUM Net income 2005 2006 2007 2008 2009 2010 2011 CAGR 06-11: -3% 13
  • 14. A Strong Marketing Spend: a distinct advantage in an industry that is heavily reliant on sports endorsements ANNUAL DEMAND CREATION PEER COMPARISON ($ AND % OF SALES FY11) Nike has entered into endor- 3,0 16% sement agreements with some of 2696 the most famous athletes in the 13,4% 14% world, such as basketball icon 2,5 Marketing %net sales (USD, million) 11,4% Michael Jordan, golf legend Tiger Marketing Spend (USD, million) 11,2% 12% Woods, Swiss tennis phe-nomenon 2,0 1771 Roger Federer, and Brazilian 10% soccer super-star Ronaldinho, etc. 1,5 6,5% 8% 5,7% 6% 1,0 3,4% 539 4% 0,5 384 231 168 2% 0,0 0% Nike Adidas VF Corp. PVH Ralph Under Lauren Amour Nike invests heavily in brand-building efforts by spending $2.7B on demand creation (marketing, sponsorship) with help from its advertising partner, Wieden+Kennedy In FY11, Nike had $4.4 bn of endorsement obligations outstanding. Sources: Company data and Morgan Stanley Research 2012 14
  • 15. 1 INTRO: Nike at a glance 2 Nike, a top brand with outstanding results 3 Strengthening its leadership position consistently 4 by being pioneer, innovative and resilient 5 Nike is facing multiple challenges 15
  • 17. An historic product Innovation pipeline 2012 Flyknit upper technology is introduced 2012 Nikes FuelBand is launched FLYKNIT FUELBAND PRO COMBAT 2009 Pro Combat performance apparel is launched 2008 Nikes Lunar foam is launched and Nike Flywire technology LUNAR FLYWIRE 2006 Nike+ is launched (currently 6 million members) 2006 Air Max 360 (new method of creating Air-Sole units) 2005 Nike Free is launched NIKE + NIKE FREE 2002 Nike introduces its first golf clubs 2000 Nike unveils its Shox technology NIKE SHOX AIR TRAINER HIGH SHOE 1987 The Air Trainer High shoe and the Air Max shoe Air Force 1, the first Nike basketball shoe to incorporate Nike 1982 Air cushioning AIR FORCE 1 AIR MAX SHOE 1979 the Tailwind, the first running shoe with Nike Air 1978 The first Air-Sole units are created (Nike Air cushioning) NIKE TAILWIND WAFFLE TRAINER 1974 The Waffle trainer is introduced Sources: Company reports and JMS Research May 2012 17
  • 18. With (R)evolutionary Platforms that keep product pipeline full Nike Free Nike Air Max Nike Lunar Nike Flyknit Launched: 2005 2006 2008 2012 Innovative sole featuring siping Air platform that features Max Ultra-lightweight composite Revolutionary upper (deep slices) that allow for a Air a new design utilizing air foam 30% reduced weight construction made from a single more natural movement that throughout the midsole versus previous materials strand of yard (entire shoe resembles bare feet. weighs 5.6 oz) Estimated: $500M Business Estimated: $750M - $1B Estimated: $1B Business Estimated opportunity: $1B+ Sources: Company reports and JMS Research May 2012 18
  • 19. Even in Apparel, Nike is taking performance to another level Nike Dri-FIT Nike Pro Combat Nike HyperElite Launched: 1991 2009 2012 Lightweight, moisture wicking apparel Football-specific apparel featuring Lightweight (shorts weigh only 5 and accessories cooling, warmth, and/or built-in ounces) and breathable basketball (tops, bottoms, hats) protection technology apparel made of recycled materials Nike aims to serve athletes across apparel segments with compelling choices for competing (Elite), training (Everyday), and leisure (Lifestyle) Sources: Company reports and JMS Research May 2012 19
  • 20. The first to use digital technology for products to elevate the brand Nike ID Nike + Nike FuelBrand Launched: 2000 2006 2012 Allows customers to design Sensor based technology and 3-axis gyroscopic wristband that personalized and custom-built integrated social ecosystem that allows for real-time tracking of daily footwear, clothing, and gear allows for movement tracking movement Nike is positioning as a vanguard for premium athletic/consumer products. The Brand tries to establish deeper connections with the consumer Sources: Company reports and JMS Research May 2012 20
  • 21. Focus: Nike, the pioneer of Mass Customization SPECIAL ORDERS MASS CUSTOMIZATION 1859 Nov. 1999 April 2000 2002 2006 2008 2008 2011 Mi Adidas was launched in April 2000 &Ms d Design y Bespoke d Burberr your Own ched My M E launche Shoe Barb an ecue Y launche n me nched Mo ngoli Monogram un nched Mo M&Ms la CONVERS BURBERR ITTON lau Louis Vuittons Special Orders Department for PUMA lau unique cutomers Nike ID (web first, then in store) LOUIS VU NikeID co-creation platform brought in over $100 million in revenue for the fiscal year of 2009 Nike Inc. dedided to bring Mass Customization to the web in November 1999 Then accessed in select physical branches. Nike was the first to make substantial profits employing mass customization Sources: The mi adidas Mass Customization Initiative by Pr. R.W. Seifert (IMD) 29.05.2006 21
  • 22. The co-creation of value through customers experiences 則р Customers need no longer be mere passive recipients of value propositions offered by firms. They are now informed, connected and networked 則р ...Leading firms are then responding by engaging their customers in the co-creation of value 則р Co-creative interactions are an emerging strategy for value creation. By engaging with informed, connected, and networked customers around the globe, the shoe company Nike has found a new source of value Nikes Co-creation Examples Joga.com was in effect a thematic community that enabled individuals to share personal and collective soccer experiences (videos downloaded over 32 million times). With over one million fans participating in this innovative brand building effort, Nike had a unique opportunity to learn directly from its customers NikeID provided software tools to co-design and customize the shoe. Nike can tap into the collective creativity of its customer base. NikeID co-creation platform brought in over $100 million in revenue for the fiscal year of 2009 The Nike+ co-creation platform capitalizes firstly on the connection between running and music. The combination of innovative, mobile technology, online communities (currently 6 million members) and athletic gear expands the field for co-creation Nike is Building a Co-creative Organization to Generate New Strategic Assets through Valuable Engagement Experiences 22
  • 23. A revolution in its relationship with customers (1/2) 束Nike is becoming a company that isn't just focused on products but is focused on products and services損 Stefan OLANDER, Nike's VP of Digital Sport PRODUCT SERVICES 23
  • 24. A revolution in its relationship with customers (2/2) 束Before the product was the end point of the consumer experience now it is the starting point損 Stefan OLANDER, Nike's VP of Digital Sport PRODUCT SERVICES EXPERIENCES 24
  • 25. Nike is always one step ahead, including on the Internet Nike Foot Locker Adidas Launched: 1999 2000 2006 Nike.com FootLocker / LadyFootLocker.com ShopAdidas.com NikeStore.com KidsFootLocker.com Miadidas.com NikeID.com Eastbay.com / Footaction.com Reebok.com ChampsSports.com / CCS.com Shop.adidasGolf.com 則р 2011 Web Sales: $343M 則р 2011 Web Sales: $457M 則р 2011 Web Sales: $78M (2% of Nike brands net sales) (8% of groups net sales) (1% of Adidas groups net sales) 則р CAGR 2004-2011: +28% 則р CAGR 2004-2011: +12% 則р CAGR 2004-2011: +21% 則р Monthly Unique Visitors: 4,1M 則р Monthly Unique Visitors: 2,6M 則р Monthly Unique Visitors: 0,9M 則р Monthly Visits: 7,5M 則р Monthly Visits: 8,0M 則р Monthly Visits: 2,6M 則р Total SKUs on Web: 30 000 則р Total SKUs on Web: 80 000 則р Total SKUs on Web: 6 000 Sources: Internet Retailer June 2012 25
  • 26. Among the first of the major sportswear brands to embrace Social Media 9,3M fans 458 665 Followers 8,0M 279 216 1 7,4M 1 245 766 1,1M 64 077 0,6M 58 358 SOCIAL PRESENCE IN CHINA SOCIAL PRESENCE IN RUSSIA Nike uses social media with the most relevant ones in each country: Facebook and Twitter in the US, in China with Weibo, Ren Ren, QQ, and in Russia Vkontakte..which supports Nikes position as tech-led, early adopting and youthful Sources: Facebook and Twitter data 06/2012 26
  • 27. Distribution channel: One of the first owned retail stores within Sport industry U.S. stores non-U.S. Total Nike factory stores 150 243 393 Nike stores 16 50 66 NIKETOWNs 9 3 12 57% of 43% total revenues OWNED RETAIL STORES 則р 1966: The first Blue Ribbon Sports retail store opened in California 則р 1990: The first Flagship NIKETOWN store opened in downtownPortland Compared to 則р 1986: First Flagship Ralph Lauren shop in NYC 則р 1999: First Flagship Foot Locker store in NYC 則р 2001: First Adidas Originals store BRANDED RETAIL COLLABORATIONS In FY15, Nike expects to exceed $5,5 billion in DTC sales, on 850 owned stores for the Nike brand across concepts and more than 300 affiliate stores. DTC= $3,2B in revenue in FY11 (in-line stores (+12%), factory stores (+15%) and e-commerce (+25%) Sources: Business week Nike: It's Not A Shoe, It's A Community july 2006 27
  • 28. China : a first mover Represents 10% of Nike Incs Sales & 15% of Profits CHINA REVENUES ($ BILLION): NIKE & ADIDAS VS. CHINESE BRANDS 0,0 2 0,0 2010E China Revenues ($B) 1,4 0,0 1,3 0,9 Kobe endorsement Nike in 0,0 0,5 0,0 0,3 則р Nike is the market leader in China, home to 1.3 billion people, 0,0 300 million basketball fans Nike Adidas Li Ning Anta Peak Puma 則р Having been in China since the 1980s, its first-mover advantage has allowed the company to dominate its competition, generating $2.3B in sales in FY11 (11% of Nike Incs revenue; +18% vs. 2010), vs $1.3B at adidas and less than $500M at Puma 則р Given its position and strength in sports relevant to the Chinese consumer (particularly golf and basketball), Nike will continue to capitalize on growth potential 則р Nike has Kobe Bryant, the most popular basketball player in China Nike is far and away the largest athletic brand in the Chinese market. Sources: AlphaWise (July 2011), Morgan Stanley Research 2012 Jefferies Estimates and company data 28
  • 29. and also Resilient Nike finally took the lead to become sustainable 29
  • 30. A Heavy Burden 1970 Mid 1980s 1990s 則р Nike opened up its own shoe 則р Rising of US wages, closing of Nike 則р A series of public relations factories in Maine and New US Factory and outsourcing nightmares, involving: Hampshire manufacturing to Asia 端錫 Underpaid workers in Indonesia 則р At the same time, it also began to 則р 1982: 86% of Nikes athletic footwear 端錫 Child labor in Cambodia and cultivate potential suppliers in came from Korea and Taiwan Pakistan Korea, Thailand, China and Taiwan. 則р Then, it opened up manufacturing 端錫 Poor working conditions in plants in Indonesia, China and China and Vietnam Vietnam 則р Anti-Nike campaign and the film of 則р Already in the early 1980s, Nike had Michael Moore The Big One (1998) been criticized for sourcing its revealed the deplorable conditions products in factories/countries of Nikes suppliers where low wages, poor working conditions and human rights 則р Nike described as sweatshops problems Sources: Richard M. Locke (2001) The Promise and Perils of Globalization: The Case of Nike 30
  • 31. Many Challenges to Face CONSUMER BOYCOTT LEGISLATION COMPANY PRESSURES IMAGE NGOs ATTACK COMPETITORS NIKE 31
  • 32. Nikes Response forced to be the first- mover Mid 1980s 1990s Late 1990s BLIND SPOTS COMPLIANCE TRANSPARENCY 則р At first, Nike managers refused to 則р 1992: Nike formulated a Code of 則р Nike has increased monitoring of its accept any responsibility for the conduct for its suppliers (minimalist suppliers : SHAPE inspection various labor and environmental/ and not fully enforced) 則р Nike suppliers are regularly audited health problems found at their 則р Introduction of the Safety, Health, by external firms like Ernst and suppliers plants Attitudes of management, People Young, PWC, 則р According to Nike Workers at Investment and Environment 則р Relations with international and these factories were not Nike program (SHAPE) Non-Profit Organizations employees, and thus Nike had no 則р Nike has increased the minimum age 端錫 Involved in the UN Global responsibility towards them of footwear factory workers to 18 Impact and to 16 in apparel, equipment 端錫 Founded Global Alliance for (1998) Workers and Communities 端錫 Active in the Fair Labor 則р New staff and Training by creating Association several new departments: 端錫 Labor Practices (1996) 則р 束Transparency 101損 program 端錫 Nike Environmental Action Team (1993) Sources: Richard M. Locke (2001) The Promise and Perils of Globalization: The Case of Nike 32
  • 33. ...Reflected in Its offering: Nike sustainable innovations Recycle shoeswith Nike Trash Talk, Nike 束Reuse a shoe損 a basketball shoe made from manufacturing waste Sources: Nikeinc.com 33
  • 34. Some of its latest remarkable sustainable initiatives 2012 The 2012 National Team Kit Nikes most Flyknit: a revolutionary upper A strategic partnership with DyeCoo environmentally-friendly construction made from a single strand Textile Systems B.V., a Netherlands- of yarn that is extremely lightweight based company that has developed and Kits are made with made with at least built the first commercially available 96% recycled polyester, each jersey is Flyknits aim: waterless textile dyeing machines. made using an average of 7 plastic - To cut labor costs and production time bottles. Each short is made using an (less waste, reduced labor) average of 6 recycled plastic bottles To increasing profit margins and adding up to 13 plastic bottles per kit opportunities for personalization 34
  • 35. Integrating Sustainability into its Game Plan ...Nike rethinks its Value Chain NIKE INC. CURRENT VALUE CHAIN FINAL GOAL: FULLY CLOSED-LOOP Plan, Design, Make, Move, Sell, Use, Reuse Cradle-to-Cradle model 1. Using the fewest possible materials 3. Allowing them to be recycled into new product or safely 2. Designed for easy disassembly SUSTAINABILITY PILLARS returned to nature at 端錫 Creating a portfolio of sustainable materials the end of their life 端錫 Prototyping and scaling sustainable sourcing andmanufacturing models 端錫 Igniting and driving market transformation 端錫 Creating digital services revenue Sources: Nikeinc.com Cradle-to-Cradle 35
  • 36. Strategic Innovation to reinvent businesses In a constantly changing world, To build such strategies, Helixa has companies can no longer do business devised a series of new tools and in the same way as in the past. Indeed, proceeds by combining creativity companies now have to steer a course with analysis to imagine for its through a world where everything is clients what has as yet never seen changing at a high speed . It is forcing light of day. them to rethink their strategic choices With its wealth of experience in such along completely different lines. Those sectors as luxury goods, media, firms able to rapidly identify disruptive retailing, chemistry, energy and innovation and take up adequate internet and given its design thinking strategies can gain the upper hand inspiration, Helixa can offer highly on competitors and become the next effective tailor-made solutions. winners. Helixas team mixes engineers, strategists and designers. 36
  • 37. For more information, contact us: 16, rue Brey Paris 17竪me development@helixa.com (+33)1 45 72 55 89 This document is under Creative Commons License 37