Nike’s consumer direct offense strategy: A hit or a miss?
Publication Type
Case
Publication Date
3-2025
Abstract
Set in 2024, this case examines Nike’s adoption of the Consumer Direct Offense (CDO) strategy to accelerate the growth and impact of its direct-to-consumer (DTC) model. Through CDO, the company sought to deepen its consumer connections by offering a direct and curated shopping experience, as well as increase its profitability. Nike implemented several measures, including restructuring and re-organisation of its operations, acquisition of new digital capabilities, development of an omni-channel supply chain and direct retail network, radical cut back on its long-standing wholesale distribution and ramping up of the product innovation pipeline.
Early signs of success were evident in fiscal years 2021 and 2022, with the rise in Nike’s net income and gross margin primarily on account of growth in direct revenues. However, over 2022-2023, Nike faced an unexpected slowdown in consumer demand, resulting in significant inventory accumulation of both seasonal and off-season products. In fiscal year 2023, the company gross margins declined, while its net income fell for the first time, with a 16% year-on-year drop. While Nike was not alone in this challenging time, unlike others, it did not have enough representation in third party retail to alleviate its inventory, and its absence from the multi-brand retail shelves led consumers to opt for competitor brands that they could try out and compare before buying.
In fiscal year 2024, with the downward trend continuing, Nike needed to pause and reflect on its CDO strategy. Should the company continue with this approach or adjust certain elements to better align its marketplace with customer preferences? What was the ideal long-term balance between DTC and wholesale distribution that Nike should target moving forward? Alternatively, should Nike abandon the strategy entirely and return to its earlier ‘lean and flexible’ model, refocusing on product innovation and brand marketing?
The case helps students understand the complexities of building a DTC channel, integrating omnichannel capabilities, and balancing existing and new capabilities. Students will assess the impact of CDO on Nike’s key stakeholders, particularly its wholesale partners and the implications for the model’s sustainability. They will also examine the evolution of customer journeys, where digital interfaces seamlessly connect all touchpoints, and analyse how customer empowerment influences brand loyalty.
Keyword(s)
Direct-to-consumer, digital platforms, footwear, distribution strategy, direct marketing, total customer value
Discipline
Marketing | Strategic Management Policy
Area of Excellence
Digital transformation
Research Areas
Marketing
Data Source
Published Sources
Industry
Retail and consumer goods
Geographic Coverage
United States
Temporal Coverage
2024
Education Level
Postgraduate; Undergraduate
Publisher
Singapore Management University
Case ID
SMU-24-0037
Additional URL
https://cmp-shop.smu.edu.sg/products/nike-s-consumer-direct-offense-strategy-a-hit-or-a-miss?variant=42672342630442
Comments
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