Is Nike the Next Big Tech Giant?



Nike has dominated the sports world by aiming to connect with every athlete* through innovation in product and marketing. But to get to Nike’s $50bn sales goal by 20201, it’s using digitization to enhance value by changing how they deliver customized experiences and products to customers.

From Shoeware to Software

In 2006, to expand their shoe ecosystem and become part of their customer’s journey, Nike entered the digital gadget realm by introducing a small sole-insertable chip. Having Tim Cook, then Apple’s COO, on Nike’s board allowed an effortless partnership with Apple by leveraging its hardware as the chip’s receiver to track users’ distances and speed2. In 2012, Nike created the Fuelband that users wore on their wrists and worked in parallel with Apple’s iPhone. Nike developed Apple mobile applications that worked in conjunction with iPhones’ built-in accelerometers and sensors to determine user fitness metrics. Nike recognized that Apple hardware was more sophisticated and the adoption rates of mobile phones were higher than fitness wearables, so 2014 was the end of the Fuelband3. Leaving the hardware to Apple and developing its own software, Nike’s mobile app platform, Nike+, came out as the winner.

Nike Fuelband and Nike+ app.
Nike Fuelband and Nike+ app.

Nike+ Expansion

Having built an in-house digital team, Nike has launched a myriad of Nike+ mobile application platforms that collects users’ real-time data while integrating themselves into users’ fitness lives. From running to training apps, Nike + has evolved into a personal assistant that not only tracks workouts but also creates digital and physical communities that connect users and suggests local events. It connects users with tailored fitness regimes and pro-athlete led workouts that in parallel drive awareness to the Nike brand.

Nike+ Apps in 2016.
Nike+ Apps in 2016.

All the while, Nike is gathering data for insights into user behavior and interests4. What sets Nike+ apart from competition is their network of in-house pro-athletes, long fitness background and increased strength in software development to design a seamless user interface. This harmonious integration into the lives of the customers makes users forget that what they are logging into is a personalized virtual store.

The Custom Retail Experience

Certain flagship stores now blur the line between physical and digital worlds. Sensor-activated content triggers nearby tablets to educate customers with product reviews, videos and messaging. Large displays take customers into digital product ‘test drives’ while others allow customers to beam associates for help or for instant product purchasing. In-store kiosks digitally present the entire Nike portfolio as well as shoe customization options. Using technology, Nike is immersing customers into their world and automating former human functions to give them personalized, on-demand service that gives each customer a unique experience5.

Nike's digital wall.
Nike’s digital wall.

Revolutionizing Manufacturing

Nike is looking to be a leader in mass customization through their manufacturing revolution initiative. It aims to be as efficient in producing thousands of the same shoe as it is producing thousands of ‘one-of-a-kind’ shoes. It has recently partnered again with the supply chain innovator, Flex, to develop a process to do just that6. Although this partnership first began with Nike’s Fuelband, they are now working together to disrupt the supply chain. They have already began piloting digitized laser beams that seamless cut materials to specified dimensions regardless of order size. Because production no longer needs labor to swap out machining tools between orders, they reduce labor and equipment costs by managing production digitally. This eliminates setup and idle time resulting in shortened delivery time from weeks to days7.

Nike has also introduced 3D printing for two reasons: to improve product and prototype testing and enhance retail experience. In product design, what used to take weeks and months now takes hours for products to be tweaked, made and tested enabling quicker iterative design approaches8. This same technology is also expected to be brought on-site to manufacture custom shoes inside retail stores.

Nike's Flyknit shoe was first in its kind to be 3D designed and manufactured.
Nike’s Flyknit shoe was first in its kind to be 3D designed and manufactured.

What Next

Smart clothing: Embedding sensors into apparel is a logical step in next-generation clothing9. Not only could clothes monitor body conditions during exercise to give insights on performance but the same technology could detect abnormalities that could prevent serious health problems. Nike could start collecting this data to shift itself into the health industry.

Early vision of smart clothing capabilities.
Early vision of smart clothing capabilities.

Enhanced retail digital interconnectivity: By leveraging full retail Internet-of-Things (IOT)10, they can move towards full self-managed stores. For example, stores could digitally self-monitor lighting, detect inventory throughput, and communicate with users via their Nike+ apps and beacon technology. Through this increase in data collection, Nike could amass more information on store behavior that could lead to enhanced store utilization, efficiency and sales.

Model of fully integrated IoT retail.
Model of fully integrated IoT retail.

By using digitization to focus on customized experiences and products through retail and supply chain innovation, Nike can better personalize their relationship with their customers.  With its brand strength, and increase in digital investment, it can also move forward to be a leader and pioneer in not only fitness but also next-generation health-care.

 

*anyone with a body

Word Count: 800

1 Trefis Team, “Here’s How Nike Is Innovating To Scale Up Its Manufacturing”, Forbes, May 18, 2016, http://www.forbes.com/sites/greatspeculations/2016/05/18/heres-how-nike-is-innovating-to-scale-up-its-manufacturing/#13036b277024, accessed Nov 2016.
2 Nike and apple team up to launch Nike+iPodGlobal; collaboration brings the worlds of sports and music together like never before. (2006, May 23). PR NewswireRetrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/447661731?accountid=11311
3 Lucy Ingham, “Nike FuelBand’s Demise: End of Wearable Tech or a Sign of Bigger Things?”, factor-tech.com, April 22, 2014, http://factor-tech.com/wearable-technology/2731-nike-fuelbands-demise-end-of-wearable-tech-or-a-sign-of-bigger-things/, accessed Nov 2016.
4 Darren Heitner, Just Do Digital: Nike’s Fundamental Shift To Direct-To-Consumer”, Forbes, Aug 2, 2016.http://www.forbes.com/sites/darrenheitner/2016/08/02/just-do-digital-nikes-fundamental-shift-to-direct-to-consumer/#44cc800b707a, accessed Nov 2016.
5 Nike soho debuts the future of sport retail. (2016, Nov 09). Business Wire Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1837411849?accountid=11311
6 Flextronics, “Company News”, http://investors.flextronics.com/investor-relations/company-news/press-release-details/2015/NIKEs-Manufacturing-Revolution-Accelerated-by-New-Partnership-with-Flex/default.aspx, accessed Nov 2016.
7 “Recoding the Run”, intelligenceofthings.com, https://www.theintelligenceofthings.com/article/recoding-the-run/, accessed Nov 2016.
8 Nickolaus Hines, “Here’s How Nike Will Probably 3D Print Your Next Shoes”, May 17, 2016, https://www.inverse.com/article/15779-here-s-how-nike-will-probably-3d-print-your-next-shoes, accessed Nov 2016.
9 Sean Everett, “The Importance of Nike to Apple’s Future Smart Clothing Product”, June 6, 2016, https://humanizing.tech/the-importance-of-nike-to-apples-future-smart-clothing-product-b9c0f3370173#.9z45ps1x9, accessed Nov 2016.
10 Accenture, “Accenture Strategy”, https://www.accenture.com/us-en/insight-internet-things-revolutionizing-retail-industry, accessed Nov 2016



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