Nike runs quickly to outpace industry in China
Initiative to drive novelty, enhance connections with younger buyers around the world
Global sportswear brand Nike is doubling down on the Chinese market by leveraging a responsive and localized creative platform as well as innovations centered on its patented Air technology.
The initiative — to drive growth — aims to bring in freshness, solidify its dominant position in the sportswear industry, and enhance its connections with younger consumers globally.
John Donahoe, president and CEO of Nike Inc, said the sportswear brand will continue to invest steadily in China.
“China is a very important market for Nike. It always has been and always will be. We’re committed to investing in China. We believe in China. We’ll keep doubling down on our proven playbook for success in driving innovative products in China,” he said.
Nike Inc posted a 6 percent yearon-year growth in sales in China to $2.08 billion in the third quarter of fiscal year 2024, the sixth consecutive quarterly increase here for the sportswear company.
This was powered by its Dragon Year collection during the Spring Festival holiday and innovations in running, basketball, women and kids categories.
The company has leveraged its global innovation platform to drive novelty in China.
“You will see us increasingly bringing exciting innovations all over the world based on Air technology,” said Donahoe. “We can hyperlocalize them for markets in China and other markets.”
For example, the global launch of Air Max DN shoes is expected to have a China-specific version, featuring local colorways, collaborations, campaigns and engagements with athletes, he said.
Nike has invested more than 2 billion yuan ($276 million) in its technology center in Shenzhen, Guangdong province, and an automated storage and retrieval system in its China logistics center in recent years.
Nike is also investing in local innovation capabilities, as demonstrated by the establishment of its Nike Sport Research Lab this year.
The lab works with Chinese athletes and consumers to gain insight and develop innovations driven by, and unique to, the Chinese market.
The company is also investing in hyper-localizing its storytelling and brand through Icon Shanghai, which plans to be a creative studio program aimed at translating global messaging into locally resonant content, responding rapidly to the dynamic Chinese market.
Donahoe said it is crucial to stay close to consumers, particularly in China, where consumer preferences evolve quickly.
“We’re doing things to accelerate how quickly we can respond to the consumer. China’s really the market where we’re doing that the most. We’re leaning in, trying new ways to pull forward innovations and get them in the market.”
“We are going to speed up the innovation cycle for each season and each product based on the market feedback,” he said. “We want Nike to be a global brand for Chinese consumers and it’s of China.”
The CEO emphasized the dynamic nature of the Chinese market, describing it as “innovative and progressive, in style and the digital world”.
“We’ll continue to innovate in China, enhancing both online and retail experiences across over 6,000 retail stores,” he said.
“We believe that Chinese consumers are ahead of the rest of the world in many ways. We take learning from China to the rest of the world.”
Donahoe said both the Nike brand and the Jordan brand have several potential opportunities in China.
The company opened its World of Flight, a top-end retail concept of the Jordan brand, in Beijing last month. Nike has run mono-brand stores such as the Nike Rise, Nike Style, and the House of Innovation, its flagship store in Shanghai.
Digitally, the company operates its own applications, as well as stores on e-commerce platform Tmall and short-video sharing platform Douyin.
“What’s interesting is you don’t have a digital or physical consumer. Sometimes you shop online. Sometimes you go into store. We need to be there with both,” Donahoe said. “Nike is a premium brand and we’ll try to drive and deliver a premium experience in China.”
Innovation on Air
Competition in the sportswear sector in China has intensified, with new players capturing significant market share in their respective categories.
Kemo Zhou, consultant researcher
at Euromonitor International, said in 2023 the overall sportswear market in China remained under the dominance of leading sportswear groups. However, intensifying competition from fast-growing brands has been a significant impetus for the growth of the overall sportswear category.
Zhou cited outdoor brands such as The North Face, Camel and Salomon emerging as major contenders.
Meanwhile, Lululemon has maintained its remarkable growth trajectory, Zhou added.
“Initially associated with yoga apparel, the brand has witnessed a surge in popularity transcending its core market segment. Consumers increasingly integrate Lululemon’s products into their everyday wear,” he said.
Zhou said the increased consumer interest in equipment-free exercise,
particularly running and hiking, has fostered demand for sports footwear brands specializing in specific activities, such as niche running shoe brands Hoka and On.
To gain market share quickly from advanced sports categories, Nike has changed its priority this year, from direct-to-consumer initiatives — an approach adopted during the pandemic to build a strong direct business in terms of market execution — to a return to innovation and technology.
The shift “marks the beginning of a multiyear innovation cycle”, said the company.
This cycle is centered around Nike’s patented Air technology. This is exemplified by the recent launch of Air Max DN, featuring Dynamic Air technology across all product categories.
“With AI and digital tools, we can shape Air in new and creative ways that still maintain the performance dimensions of it,” Donahoe said.
To boost the innovation cycle, since the beginning of this year, Nike has worked on a project called A.I.R, which stands for Athlete Imagined Revolution.
The objective is to bridge athletes and designers with new technology and digital capabilities. The team listened to the voices of 13 top athletes around the world. The result is 13 footwear concepts that showcase the future of air technology.
On the lack of novelty over the last several years, the CEO acknowledged the difficulty of driving freshness during the pandemic when everyone was working from home.
“We are now back on the offensive, with our team back together in person. When that all comes together, that’s the magic that differentiates Nike,” Donahoe said.
Olympics as catalyst
The upcoming Paris Olympics will serve as a stage for sportswear brands to present their latest innovations and branding principles.
Nike on April 12 showcased its latest pipeline of innovations together with 40 world-class elite athletes, including the sculpted Air unit in the new Pegasus Premium during the “Nike On Air” event at the Palais Brongniart in Paris.
The company recently rolled out a diverse range of products, including the new Alphafly 3 marathon shoes, basketball shoes, track spikes, football shoes and break-dance shoes.
“Digital tools have allowed us to do things with Air we’ve never been able to do. We will continue to invest in Air, both for performance and everyday life,” Donahoe said.
On imitations of Nike’s Air technology, the CEO said it is important to distinguish between genuine innovations and mere replicas.
“Sometimes, you may see things that are simply cosmetic, trying to copy Nike. Those are not real Air. There are no performance dimensions to it,” he said.
New sports in the Summer Olympics Games, such as breaking and dancing, will change the way people perceive sports and will expand the definition of sports to include where the younger generation spends their time, said the CEO.
“As those things go from being an activity to becoming a sport, they connect with youth because they see themselves in a different way,” Donahoe said.
“Sportswear brands will usher in opportunities with more brand exposure, coupled with increased sports penetration, in the context of Healthy China 2030 in the forecast period,” said consultant Zhou.
“In the context of heightened competition in the market landscape of China’s sportswear market, brand sponsorship of the event presents a significant opportunity to enhance brand visibility,” he added.
This year, for example, brands have geared up to be seen. Adidas on April 18 announced its offering extends to the 2024 athlete pack — a 49-strong footwear collection that equips athletes across 41 different disciplines — more than 20 of which may be seen during the field of play this summer.
Puma on April 10 revealed the 17 federation kits that will be worn by athletes at this summer’s Olympic Games.
Lululemon on April 16 revealed its first-ever summer athlete kit for Team Canada ahead of the Games.
The Olympic Games are also expected to generate increased interest in certain niche sports within China, and stimulate the robust development of trend-driven sportswear for categories that have yet to achieve significant market share, said Zhou.
The Olympic Games in Paris are expected to trigger consumer enthusiasm for sports, considering this will be the first Olympics after the pandemic, which helps bring back the buzz into the sportswear market as well, Zhou added.