Welcome to the great reboot. Physical retail’s return to business was previously known as the “great reopening” or the “great resettling.” But it’s becoming apparent that the unprecedented business dynamics of the pandemic will be anything but a subtle reopening marked by subtle changes – it will be a restart. A chance to start over or revisit the basics if necessary.
A reboot is not surrender; it’s not even a compromise. It’s not as limited as a pivot. The reboot simply means accepting the market dynamics of the pandemic, understanding that some of them may be permanent and acting accordingly.
There’s no better example of the reboot in action than Nike. The financial press completely missed the news in CEO John Donahoe’s statements within and around its earnings last week, focusing instead on the company’s $790 million loss – which admittedly is worth a big headline. But more important than the scale of the loss is what Donahoe and his team are doing to reboot the company. And it’s stunning that Nike sees a need to reboot a brand that just took second-place to P&G in the Marketer of the Decade award during the virtual Cannes Lions International Festival of Creativity.
For Nike, the reboot is basically about three things. The first is the OneNike platform, which attracts consumers to apps, like its Nike Training Club or the SNKRS eCommerce app. Those apps do more than act as the top of the funnel for the company’s retail division – they also generate data about user experience and product and service preference. The second is the Nike Live concept, in which stores focus on local flavor (L.A. would zero in on the Lakers and LeBron, for example) and keep less than two weeks’ worth of inventory to keep shoppers coming in to discover what’s new. The third is what Donahoe calls ‘consumer direct acceleration.” In other words, Nike doesn’t care about Amazon sales, which it has started phasing out. Nike wants the whole customer to be involved in a holistic ecosystem. It’s a huge gamble.
To underscore this action, revisit one of Donahoe’s quotes from the Q4 earnings call:
“So what we’re talking about here is how do we take what might have taken us three to five … and make it happen in two,” he said. “And we think there’s some pretty fundamental shifts in consumer behavior that give us this opportunity to accelerate our progress. One shift is digital, right? As I said a minute ago, digital is now fundamental and central to everything consumers do, and we are the clear leader in digital. We’ll double-down on that. The second I just talked about was the marketplace of the future, right, where we believe we can drive toward [the] OneNike marketplace with our own capabilities and those of our partners.”
Note that Donahoe used the word “accelerate” without apology or preconditions. Other companies that have done well as a result of lockdowns or eCommerce spikes have led up to it with, “well, we wish this wasn’t the case, but…” The pandemic has replaced any need for apologies with the need for bold action. It has changed so many dynamics so quickly that retailers who think they will just saunter into a “new normal” are mistaken. It can be seen in the attitude of some retailers that are waiting to see if their customers are coming back to stores – and if they do, they’re waiting to see what the frequency will be.
Also evident in Nike’s actions last week is how accepting it is of the changing dynamics of the pandemic. Donahoe talks about the marketplace of the future – and that’s exactly what it will be for every retailer. The new marketplace may indeed be more than platitudes.
In fact, it could look like this:
- Split mobile apps between service-providing portals, top-of-funnel data generators and eCommerce engines.
- Use stores as experiential stages and local event-driven shopping occasions.
- Limit the amount of online partnerships for sales and marketing so that consumers will have to enter an exclusive ecosystem.
In short, the retail marketplace of the future looks a lot like Nike.
Selected by Fintech Tube