Brief:
- Nike saw a 150% jump in demand on its app in Q1 2020, as announced in a conference call with analysts to discuss earnings for the most recently completed quarter. In addition, Nike saw an almost 200% increase in demand for its commerce app, with "triple-digit" growth in monthly active users.
- More than half of members of its Nike Training Club used its app to start a workout, a record high for the company, CFO Matt Friend said during the call. The training club app is separate from the Nike shopping app, and offers virtual workouts, yoga classes and health tips.
- Amid a consumer shift to digital and mobile amid the coronavirus pandemic, the Nike Run Club app posted its fourth consecutive month of more than 1 million downloads as more people followed its audio-guided runs. More women than men completed runs on the app for the first time in company history, Friend said.
Insight:
Mobile experiences have become a vital part of Nike's marketing strategy, providing a direct sales channel and a way to maintain one-to-one relationships with its most loyal customers. Nike's active members rose by nearly 60%, and it saw higher growth for buying members, CFO Matt Friend said. While most of Nike's brick-and-mortar stores were open during the quarter, many shoppers have avoided malls and stores during the pandemic. The growth in demand for its mobile apps has helped to support digital sales growth of 82% for Nike-branded products.
Nike likely boosted usage of its apps after dropping the subscription fee for its NTC Premium service in March, as pandemic lockdowns went into effect in many countries, including the U.S. The premium suite of services encompass the Nike App, the Nike Run Club app, the Nike Training Club app, social channels, nike.com and its "Trained" podcast. With more people stuck indoors, Nike revamped its marketing and debuted a new slogan, "Play inside, play for the world," along with corresponding hashtags on social media.
Nike has run a variety of mobile-based campaigns this year to help support its digital sales channels worldwide. In July, Nike published a custom magazine in Japan that let readers color black-and-white drawings of its Air Max sneakers and see their work in a 3D augmented reality (AR) experience on their smartphones. The campaign was targeted at Japan's design community, with only 1,000 copies of the magazine handed out at stores. In May, Nike set up a microsite that asked Brazilian customers to raise their phones to the sky to see an AR cloud shaped like an Air Max sneaker. After finding the digital cloud, they were given a chance to unlock exclusive digital content. The campaigns were a sign of how Nike has embraced mobile-based experiences to drive sales growth.
Digital sales were a bright spot for Nike, whose revenue slipped 1% to $10.6 billion in the most recent quarter from the prior year. Its net income grew 11% to $1.5 billion, as digital channels added $900 million in incremental revenue from last year. That increase met Nike's goal of reaching 30% of revenue from digital channels three years ahead of schedule. As stores reopened in China, Nike introduced a concept store called Nike Rise that supported brand interactions on mobile devices, such as the Nike Experiences feature in its app.
