Nike's Growth Rate In Greater China Is The First: It Comes Down To Digitization And Three Or Four Line Sinking.

If elephants can dance, Nike is trying to give an answer in China.

Since 2009, Nike's share price has gone out of 10 years and 10 times that of the world's largest consumer and sports industry. It has also become the Tenbagger (ten times share) pursued by Peter Lynch.

Not long ago, Nike released its report card in 2019, benefiting from double-digit growth in Nike's main brand sports shoes and apparel business, and the growth of wholesale channels, achieving a total revenue of $39 billion 117 million for the whole year, up 7% over the same period last year.

Unlike the steady rise in revenue, net profit growth has exceeded market expectations: an increase of 108% over the previous year, reaching $4 billion 20 million.

Gross profit margin reached 44.6%, and Buffett's most valued index, ROE (net assets yield), was 42.74%.

For the growing consumer company, most of them are not increasing profits. However, the industry giants who have built up competitive barriers will increase substantially while their revenues increase slowly, and the net profits will rise sharply through raising prices and controlling costs.

Analysts said that in the 2019 fiscal year, Nike's "increased profits" lie in the increase in the average selling price, the rapid growth of NIKEDirect and the significant reduction in the effective tax rate.

For investors in Wall Street, Nike's biggest bright spot in 2019 was not only a sharp rise in net profit, but also a double-digit growth in 20 consecutive quarters in Greater China.

Greater China revenue for the first time exceeded 6 billion U.S. dollars, reaching 6 billion 200 million U.S. dollars, an increase of 24% over the same period, and sales of e-commerce channels increased by more than 60% over the same period last year.

Pre tax profit reached $2 billion 370 million, an increase of 31% over the same period last year.

It can be seen that the growth rate of Greater China has been almost the first, driving Nike's global revenue growth.

Investors are curious, apart from the external factors of the broad consumer market, what is the difference between the Greater China region? What has Nike done in Greater China?

In this regard, Tencent "periscope" interviewed Nike global vice president, Nike Greater China General Manager Dong Wei.

China's experience is global.

For the performance of the Greater China region, she gives three answers.

First of all, we need to grasp the marketing management thinking of C end demand and keep close to the younger generation of consumers.

"Our market activities and marketing strategies are made with the insight of our customers." She said, for example, the recent "basketball proof" activities for the basketball world cup are closely linked to the current sports events.

In addition to the widely watched sports events, Nike also focuses on community experience to strengthen the relationship between brands and consumers.

Take Beijing 99 shirt competition as an example, "this is a very local color marketingcampaign." Combined with street culture in Beijing, it is very close to local young people.

Secondly, to create a comprehensive marketing channel.

In Dong Wei's view, omni-directional means to cover key cities, key categories and key shops.

Third, digital transformation is combined with China's platform.

At present, the data products provided by Nike for consumers include SNKRSAPP, Nike.com, NRC, NTC and so on, which can provide specific data services for specific populations.

For example, SNKRSAPP is for fans of shoes, NRC is a runner for love, NTC focuses on fitness groups.

The key is to integrate into China's social networking and e-commerce platform.

"We have WeChat's small program, and consumers can keep abreast of Nike's new developments and new products in the state of social." You can get customized shopping experience on top.

In short, the core is to connect Nike's global digital strategy with China's digitalecosystem, thereby promoting sales growth.

Dong Wei stressed the need to adjust measures to local conditions.

In China, many consumers are indigenous people of mobile Internet. The popularity and utilization rate of smart phones and APP is very high, and it is also the first tier in the world.

This also determines the process of Nike's digitalization. Not only many projects originated in China, but also for China.

The global market is used.

For local brands to connect consumers, Nike also provides a sample of change: combining traditional channels with emerging channels to create a comprehensive marketing model, and use sports events, community experience and digital platform to enhance emotional ties with consumers.

Looking back at the history of brand marketing, Nike is not officially sponsored by some events, and can not directly use tournament resources. But Nike is good at using unexpected marketing tools to connect brands, events and spectators to consumers.

A very effective marketing strategy also means a significant reduction in the cost of publicity and promotion, and is reflected in the stock price.

As far as promotional expenses are concerned, Nike, which has more revenue, should have been ahead of its rival Adidas in terms of marketing costs. In fact, Nike's promotion fee rate has been stable at around 10%, less than half of Adidas's.

　　 Digging three or four lines: solving the sinking problem Online

Constrained by the fluctuation of domestic macro-economy, many industries have seen the phenomenon of consumption atrophy and demotion, forcing local brands to turn to the users of the three or four tier cities and work hard to sink the market.

How does Nike seize the three or four line opportunity? Dong Wei's methodology focuses on online and partners.

She believes that we should give full play to the role of the digital platform.

The digital platform is not affected by the geographical boundaries of the city, and can touch more consumers.

"For example, socialplatform (social platform), whether we do brand activities, live or inspirational stories, all consumers can see."

Therefore, from the interaction and participation of consumers and brands, Nike has no regional obstacles.

On this basis, we should give full play to the role of digital platform and e-commerce platform.

"Wherever you go anytime, anywhere, you can find Nike and find your favorite product."

She concluded that it was still necessary to solve the sinking problem through the online solution.

The strong domestic partnership network also makes Dong Wei confident.

"Both direct employees and retail partners have rich experience in product retail service."

Nike Greater China is also working with partners to play the retail experience in a more subsiding city.

National fitness has risen to the national strategy. No matter from the one or two level market, the sports industry is also a few raceway still in the draught.

From the investment point of view, clothing and footwear belong to high-frequency consumer goods, and the industry space is trillions of markets, especially sports products, which superimpose sports attributes and are favored by investors.

For Nike, a more efficient supply chain integration capability and cost advantage under scale effect will help to enhance competition barriers in China.

Nike also continues to prove itself through financial data: it has firmly grasped the largest potential sports market in China.

At present, Nike has more than 8000 employees in Greater China. "I hope to be able to lead the Nike team and the whole ecosystem of Nike to contribute to the national fitness program and the Chinese sports industry." Dong Wei finally said.

Author: Wu Chuan