Marketing Uncategorized

How Nike plans to reach $50 billion in 2020

Nike has some lofty goals for revenue growth and they have to hit different demos to reach $50 billion.

 

Nike plans to generate $50 billion in revenue by 2020. From 2010 to 2015 Nike increased sales revenue by $12 billion, going from $18 billion to $30 billion. That’s a $20 billion increase over the next 5 years, or a CAGR greater than 10% each year. To put it another way, that’s an average $4 billion hike in sales each year. In 2013, Nike set revenue goals for 2017 at $36 billion. Analysts expect sales to reach $35.6 billion for 2017, putting them right on target to reach $50 billion by the end of 2020.

In naming former executive from EA Mobile and Disney Interactive Adam Sussman as its first Chief Digital Officer, Nike plans to fast-track its digital strategy in the following areas. First, they plan to increase E-commerce revenue sevenfold, from $1 billion to $7 billion by 2020. Second, they will continue to measure and maximize consumer engagement through its interactive Nike+ running, training, and Fuelband apps. Moreover, Nike will continue to innovate as a digital brand by connecting its customers to a community of other likeminded athletes through top-notch digital products.

Nike plans to double its revenue in women’s apparel over the next four years, from $5.5 billion to $11 billion. Nike has partnered with Wieden and Kennedy to create an eight-part long-form video series entitled “Margot vs. Lily.” The premise involves a bet between sisters Margot and Lily wherein the generally sedentary Margot must make fitness videos while her fit, v-logging and less social Lily must make friends. Nike sees this investment as a way to engage millennial women. Click here to watch the trailer.

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For many years Nike struggled in China. Two years ago Nike implemented a strategy to grow its revenue in China by renovating its distribution and updating the fit of their apparel to appeal to the Chinese consumer. The result of that strategy is considerable: their most recent 10-k shows year over year revenue growth of over 20% and sales figures over $3 billion.

Many attribute much of Nike’s success to its innovative marketing. In their most recent financial reports, Nike spent an astounding $3 billion, or about 10% of total sales, on what they call Demand Creation. This term includes sponsorships of teams, colleges, leagues, and athletes, as well as advertisements and promotions. The vast majority of this investment goes to sponsorships of such flagship athletes as Lebron James and Cristiano Ronaldo.

As Nike expands its headquarters in Beaverton and grow its workforce, many wonder if Nike can stay on course. The brand is thriving in new areas across multiple geographies. It isn’t just one thing that sets Nike apart. Innovation and competitiveness is in its DNA. That fierceness grouped with near-perfect marketing, star power, and top-notch products is what has led Nike to become the world’s most popular brand. If Nike can continue to grow in women’s apparel, e-commerce, and China stabilized by the Jordan brand, they will reach that $50 billion mark without a hiccup.

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