We’re all familiar with how products have been created and distributed to us in the past: a product would go through multiple intermediaries before arriving at a retailer where we could buy it. This system stifled product innovation, ensured a lengthy, sluggish distribution network, led to inflated prices (all intermediaries wanted a “cut”), and, worst of all, it created a disconnect with consumers. As expected, this practice left many consumers feeling that they were being “sold” a product that wasn’t exactly what they wanted, wasn’t as good as it could be and at an inflated price. To combat these issues in their business, Nike introduced the “Consumer Direct Offense” in June of 2017, but just what does this phrase mean, how does it work, and, most importantly, is it working?
Breaking the term itself down, we can get a better idea of what this semi-confusing concept actually means. First is the term of focus, consumer, meaning ‘one who uses or wastes (without the negative connotation) a product, aka the end-user’, which comes from the Latin consumere via the Old French consumer and was initially used in this sense by John Locke in a 1692 letter to a Member of Parliament titled Some Considerations of the Consequences of the Lowering of Interest, and Raising the Value of Money, where he writes that: “Money may be considered as in the hands of the Consumer, under which Name I here reckon the Merchant who buys the Commodity, when made, to export.” Second is the term dealing with communication, direct, which, though originating from the Old French direct and the Latin directus, meaning ‘straight’, and first used in the understanding of something being done without the use of a middleman or intermediary in William Shakespeare’s Merchant of Venice (“That by direct, or indirect attempts he seek the life of any Citizen”), was first mentioned as a marketing technique where a manufacturer would sell goods directly to the consumer in 1912 via a statement issued by the Representative Committee on Markets, Prices & Costs of New York State Food Investigating Commission, noting that: “Direct Marketing. From an investigation as to what extent marketing is being developed directly between producers and consumers, of 292 farmers, 217 had had experience in selling direct to the consumer.” Finally, the term offense, though originally meaning ‘an affront, crime, or, literally, striking against’ and coming to English via the Old French ofense and the Latin offensa, utilizes the understanding of the term as a means of attacking – such as offensive marketing – that originated in Geoffrey Chaucer’s Clerk’s Tale (circa 1395), where Chaucer mentions: “you arch-wives, stand ready for battle…suffer not that men do offense to you.”
So, boiling down the concept to a single sentence, Consumer Direct Offense is a company-wide realignment that will allow Nike to better serve the customer personally, at scale. For Nike, this process involves several key initiatives to promote growth, which it refers to as Triple Double strategy: 2X Innovation, 2X Speed and 2X Direct connections with consumers. In application, this realignment and strategy involves streamlining the overall product offering while, at the same time, offering a deeper selection to meet individual consumer needs, cutting product creation cycle times, increasing innovation, and of the utmost importance, aside from funneling resources and efforts in order to deal with a core of 40 retail partners, focusing on developing a digitally-driven connection with consumers, specifically those in 12 cities and 10 countries which Nike expected to represent 80% of growth through 2020.
The results of a consumer-centric/direct-to-consumer strategy powered by e-commerce and digital technology are more than evident. Since the initiative began, Nike’s stock has risen 73%, and recent quarterly numbers show nearly USD 11 billion in overall sales with digital sales increasing by 42%. Providing more of a contrast, these numbers are happening at a time when one of Nike’s main competitors, Under Armor saw a drop in North American sales of 3.2%, due to declining store traffic. Beyond simple sales numbers, regardless of how good they are, is the shift that is occurring behind the scenes: by giving customers more innovation at a faster pace, at a more reasonable price, and developing a strong digital relationship with consumers, Nike is laying the foundation for future growth by establishing strong (and much-coveted) ties of brand loyalty.