Nike’s global strategy at large in ANZ

Nike-StoreNike aims to become a $50 billion company by 2020, and local franchise partner, Retail Prodigy Group, is innovating to grow the iconic sports brand in ANZ.

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Nike has set its sights on turning a $30 billion company into a $50b company by 2020. These are certainly lofty ambitions and the iconic sports brand aims to achieve them through a direct consumer strategy – a big part of which will involve monobranded Nike stores across the globe.

Retail Prodigy Group (RPG) is Nike’s retail franchise partner for stores in Australia and New Zealand. In five years, the company has amassed a network of 53 stores across ANZ.

RPG’s three-pronged store strategy – involving dual and single gender stores, plus concessions within Myer stores – has proven a savvy, successful approach at tackling the fragmented sporting retail landscape in Australia, an approach that aligns with the global direct consumer strategy being championed by Nike HQ.

Given that it can be difficult for established brands with a global following to continually attract new customers, the heritage of a brand can sometimes be a double-edged sword. Does being counted as one of the world’s most valuable brands necessarily mean Nike can rest on its laurels and simply keep doing the same old thing?

Speaking to Inside Retail Weekly, Stephen Younane, co-founder and CEO of RPG, said Nike’s head office was finding that local customers were not getting the true experience of the brand with products solely sitting on the shelves of a multi-branded retail environment such as Rebel Sport.

“We are elevating the experience so that it’s in line with the premium nature of the brand itself,” said Younane. “There’s a lot of amazing innovation and technology that goes into Nike products, so if its just sitting on a shelf on a wall the customer’s not going to know much about it unless they can engage with an educated, experienced sales specialist – that can actually help them understand the features and benefits of the product. And that’s really a big role that we play in that our staff are trained to be able to provide that level of knowledge to the customer.”

Wholesale distribution throughout a myriad of retailers across the globe remains an important part of Nike’s marketplace strategy, given it wants customers in multi-branded stores to still have access to its products. But the success of having monobranded stores has allowed that customer reach to become even wider.

“Nike have been able to segment the marketplace extremely well, so therefore we can be operating in a mall next to Foot Locker, Rebel, Athlete’s Foot and Hype DC and we can all live harmoniously. We are not competing, but working as one because our products are quite segmented and differentiated,” said Younane.

Though Rebel will have mixed feelings about having sales taken away, Matt Newell, executive strategy director from The General Store, said sports retailers in Australia will appreciate manufacturer brands that are building that bigger experience, which will ultimately add value to other retailers.

“I don’t think it will confuse shoppers at all, it will make it a richer and more exciting category to shop,” Newell told Inside Retail Weekly.

Nike-womenThree-pronged store approach

RPG plans for 70 per cent of its sales coming from performance categories and 30 per cent from lifestyle categories. The Melbourne-based group’s approach to the Australian retail market through three store concepts has enabled a broad cross-section of consumer to be targeted at multiple price points. This has also enabled the Nike brand to create holistic experiences that thereby make the wholesale network perform better.

There are two female only stores, both in Victoria, at locations outside of shopping centres, where dual gender stores typically reside, as a point of differentiation. “We see an opportunity in testing the women’s only concept in key shopping strips as a way to connect with the local community,” said Younane.

The introduction of Nike branded concessions within Myer department stores across the country nearly two and a half years ago, has also allowed different types of shopper to be targeted.

“Myer’s consumer is quite loyal through the Myer One program and are creatures of habit – so typically a department store shopper, but not as much a specialty shopper, so you can find the two concepts can work harmoniously within the same shopping centre,” said Younane.

This triumvirate of store concepts has also opened up the doors to attracting new customers to complement the old. Whereas the core enthusiasts and dedicated customers will be drawn to purchasing from the iconic brand, the monobranded stores will also attract peripheral, albeit curious, customers sitting on the fringes with a yearning to see what all the fuss is about.

“These sort of big experience lifestyle stores are really powerful for bringing dabblers in and drawing more people into that world because they mix not just the functional athleticism side of it, but they also mix that with the excitement that goes around that whole world so it can drag more people into the category,” said Newell.

With the strength of Nike’s name and heritage serving as an attraction point in and of itself, RPG is permitted one less cost of doing business – it have no marketing expenditure, as it doesn’t do any promotional activity.

“When we open a store, we don’t do any marketing,” said Younane. “We just open the store…and we have customers flock to the store, which tells you that there is demand and clearly also highlighted that the access to the brand was limited for the customer. So these stores have played a role in giving customers access to the brand and hopefully to motivate people to be fit and active.”

RPG work closely with Nike to build product assortments that are both premium in quality, while still retaining affordability for a wide cross-section of demographics wanting to access the brand.

“You can get product all the way through the price spectrum and that makes the brand very accessible, which is important for Nike because Nike’s whole company mission is to ‘bring inspiration and innovation to every athlete in the world’,” said Younane.

“The fact that the brand can work successfully within Myer, which does also target a middle mass market, again talks to the broad appeal of the brand itself.”

Nike-interior-KUALA-LUMPUR-MALAYSIA--MAY--134743238RPG looks beyond Nike

RPG is well positioned for the continued, though “sensible”, expansion of the Nike monobrand store network across ANZ, with Younane asserting a mass rollout of stores is not the company’s strategy. However, given the strong platform provided by Nike’s name in establishing the business, Younane said RPG’s next play would involve the acquisition of other brands or master licenses – outside the sporting space.

“We will obviously keep focused on our work with Nike,” Younane explained. “I think that we are now ready and positioned well with the team that we’ve got and the infrastructure we have in place to be able to adopt another brand.”

Retailer’s difficulties in maintaining relevance with today’s consumer is no different for major names, with Nike’s investment in trying to appeal to consumers of all walks indicative of the work that big corporates are doing to stay in touch with customers. That’s a reality that RPG and Nike are indeed cognisant of.

“I think just to even survive in retail today you’ve got to have a point of difference, you’ve got to be unique,” said Younane.

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