What: Nike has begun quietly re-entering into wholesale deals with retailers like DSW and Macy’s after pivoting to direct-to-consumer sales in 2017.

Why it is important: Nike and other companies have found that relying solely on DTC can lead to unaffordable customer acquisition costs and does not always yield an increase in revenue or profit margin. Besides, growing competition from brands like On and Hoka, which have thrived due to their savvy wholesale distribution strategies, has motivated Nike to reconsider its wholesale approach.

Nike’s new partnerships with Dick’s Sporting Goods and Zalando are more collaborative, allowing the brand access to customer insights. They also recently re-entered into relationships with retailers like Macy's and renewed their partnership with Foot Locker.

In new wholesale deals, Nike has incorporated elements of data sharing, similar to its DTC model. Customers shopping through certain retailers can link their Nike membership programme, offering dual benefits of incentivising loyalty to Nike while granting the retailer access to sales data.

Wholesale has other advantages. The model provides an outlet for easing excess inventory, a problem Nike faced during the pandemic. It also enables Nike to reach consumers wherever they are, including multi-brand retail spaces.

However, it's important to note that while Nike is re-embracing wholesale, it's not completely shifting away from its DTC strategy. Instead, the company aims to find a balance and establish a symbiotic relationship between its wholesale and DTC channels, thus ensuring it remains a dominant player in the market. This diversification strategy, leveraging the advantages of both channels, allows the brand to maintain a broad reach while also enjoying the benefits of a more direct connection with its customers.

Wholesale still accounts for the majority of the brand’s sales, generating USD 25.6 billion in 2022, compared to USD 18.7 billion in direct sales.

Nike’s complex relationship with wholesale