In a preview of more pain to come for US, and global, workers, moments ago Nike announced that it will soon be parting ways with approximately 2% of its 70,700 global workforce, or roughly 1,500 employees.
Nike introduced the Consumer Direct Offense, a new company alignment, resulting in leadership and organizational changes as part of which the company would see an overall reduction in about 2% of the company’s global workforce to "streamline and speed up strategic execution."
In addition to the mass layoff, Nike is realigning its regional units as it focuses on driving growth in its most important markets and getting new products to market more quickly. Among the details:
- Cutting product styles by 25%, but will offer deeper selection of key franchises
- Aiming to cut creation cycle in half to speed new products to market
- Consumer Direct Offense program under NKE Brand President Trevor Edwards to focus on improving growth in New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, Milan
- Sees targeted cities accounting for 80% of projected growth through 2020
- Realigning geographic segments to 4 regions from 6; will report results under North America, EMEA, Greater China and Asia Pacific and Latin America starting in fiscal 2018
Discussing the corporate overhaul, Trevor Edwards, President of the NIKE Brand said that "today we serve our athletes in a changing world: one that’s faster and more personal. This new structure aligns all of our teams toward our ultimate goal — to deliver innovation, at speed, through more direct connections.” It will also deliver what is likely the start of many layoffs.
Full press release below.
NIKE, Inc. today introduced the Consumer Direct Offense, a new company alignment that allows Nike to better serve the consumer personally, at scale. Leveraging the power of digital, Nike will drive growth — by accelerating innovation and product creation, moving even closer to the consumer through Key Cities, and deepening one-to-one connections.
“The future of sport will be decided by the company that obsesses the needs of the evolving consumer,” said Mark Parker, NIKE, Inc. Chairman, President, and CEO. “Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever.”
Consumer-focused Growth
Trevor Edwards, President of the NIKE Brand, will drive the Consumer Direct Offense through integrated category, geography, marketplace, product, merchandising, digital, and direct-to-consumer teams.
In the new alignment, the company will drive growth by deeply serving consumers in 12 key cities, across 10 key countries: New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan. These key cities and countries are expected to represent over 80 percent of Nike’s projected growth through 2020.
Nike is moving closer to the consumer—creating a local business, on a global scale. To improve efficiency, all key cities and countries are supported by a simplified geography structure, changing from six to four—comprised of North America; Europe, Middle East and Africa (EMEA); Greater China; and Asia Pacific and Latin America (APLA). The leaders of the newly-formed geographies are: Tom Peddie VP/GM of North America, Bert Hoyt VP/GM of EMEA, Angela Dong VP/GM of Greater China, and Ann Hebert VP/GM of APLA.
As such, financial results for the NIKE Brand will be reported based on these four operating segments beginning in fiscal 2018.
The geography leaders will report to Elliott Hill, President of Geographies and Integrated Marketplace.
Nike’s Triple Double
The Consumer Direct Offense is fueled by Nike’s Triple Double strategy: 2X Innovation, 2X Speed and 2X Direct connections with consumers.
To double innovation, Nike will accelerate the impact and cadence of new innovation platforms. As an example, over the past few months, Nike launched a cushioning revolution, featuring three new groundbreaking platforms: ZoomX, Air VaporMax and Nike React. And, to give consumers more choices of the products they love, Nike is editing to amplify — reducing its styles by 25 percent, and offering a deeper selection of key franchises.
To double speed, Nike is on a path to cut product creation cycle times in half. That starts with the Express Lane, which quickly creates, updates and fulfills products in response to consumer demand. Already operating in North America and Western Europe, a new Express Lane will be activated this summer in China, serving Shanghai, Seoul and Tokyo—some of the world’s most promising markets for sport.
To supercharge this faster pipeline, Michael Spillane is assuming the new role of President of Categories and Product—leading an end-to-end design-to-delivery organization, including Categories, Design, Product and Merchandising. This new integrated organization will place greater resources in the categories with the highest potential to fuel growth: Running, Basketball, Nike Sportswear, Men’s and Women’s Training, Global Football and Young Athletes. To build on the growth of the Nike Women’s business, a new dedicated Women’s team will complement each top-tier category.
To double direct connections with consumers and shape the future of retail, Nike is creating the new Nike Direct organization, led by Heidi O’Neill, President of Nike Direct, and Adam Sussman, Chief Digital Officer. This organization will unite Nike.com, Direct-to-Consumer retail, and Nike+ digital products to enhance and expand Nike’s membership experience on an increasingly global scale. Nike will also extend innovations to its strategic wholesale partners.
Leading with mobile, this team will unite physical and digital retail to serve consumers with the best of Nike. Two recent examples of innovative consumer connections are SNKR Stash, which unlocks access to exclusive Nike and Jordan product using mobile geo-locations; and Shock Drop, surprise alerts for coveted sneakers that allow consumers to buy instantly through the app or at their nearest Nike or wholesale store. Over the next several months, Nike is also launching its Nike+ and SNKRS apps globally to energize the sneaker experience in new markets.
Spillane, Hill, O’Neill and Sussman will all report to Edwards.
Nike’s leadership and organizational changes will streamline and speed up strategic execution. The changes are also expected to result in an overall reduction of approximately 2 percent of the company’s global workforce.
“Today we serve our athletes in a changing world: one that’s faster and more personal,” said Edwards. “This new structure aligns all of our teams toward our ultimate goal — to deliver innovation, at speed, through more direct connections.”