Nike’s brick-and-mortar network
Nike (NKE) is expanding its store footprint quickly. In the last quarter, it opened several stores in the US and abroad. These include community stores in New York and Washington DC, and a women’s only store in London. Nike also opened a refurbished 20,000 square foot store in Santa Monica, California.
DTC (direct-to-consumer) revenue contributed 20.3% to Nike’s brand revenue in fiscal 2014. That’s up from 16.2% in fiscal 2012. In the first three quarters of fiscal 2015, Nike’s grown DTC contributed to 23% of the total revenue.
The company is attempting to grow DTC sales to $8 billion by fiscal 2017 from $5.3 billion in fiscal 2014. That’s a CAGR (compound annual growth rate) of 17.5%.
Online sales forecast
Nike’s online sales are included in the DTC revenue. They’re growing even faster. Web sales grew at a CAGR of 31% from 2010 to 2014 to $767 million in fiscal 2014. Nike is aiming at $2 billion in web sales by 2017[1. Company financials, Internet Retailer].
Product customization through NIKEiD, an exponential growth rate in the number of fitness apps users, and a vibrant social media presence are some of the ways that Nike is looking to achieve this.
Social media savvy
According to a report by L2, Instagram could make it easier for brands to drive sales through online channels. Instagram may soon make it possible for ads to become shoppable.
Nike is the leading sportswear brand with over 15.4 million Instagram followers, followed by Adidas (ADDYY) with over 4.1 million. Vans from VF Corporation (VFC) came in third with ~2.8 million followers. Under Armour (UA) was sixth with ~0.9 million followers, as of May 2015.
More importantly, brand following is growing at a strong rate. Both Nike and Adidas grew their following by more than 200% over the past year.