GFB Formative New PDF
GFB Formative New PDF
GFB Formative New PDF
Asessment:
Leah Arbeid - N1094391
Alexa Blake - N1089414
Yin Mon Zaw - T0289121
Rachel Bradley- N1091170
Contents:
McDonald, F. (2022). UK Footwear Retailing Market Report - Market Size & Growth. [online] Mintel Store. Available at: https://store.mintel.com/report/uk-
footwear-retailing-market-report?utm_source=google&utm_medium=cpc&cid=13839165047&agid=140375908723&utm_term=footwear%20statistics&d
=c&gclid=Cj0KCQiAnNacBhDvARIsABnDa68saK5YRjf4-y7Rjv4w7uo_ZT-_jo3uW29VPJBKuM4dGYAbyWZbgysaAoXREALw_wcB [Accessed 11 Dec. 2022].
This chart illustrates Nike’s total company revenue in billions, from 2010-2020
Salpini, C. (2020). Nike’s Total Company Revenue, in Billions, from 2010 to 2020. Retaildive.com. Available at: https://www.retaildive.com/news/how-nike-is-using-dtc-and-
data-to-expand-its-empire/596602/ [Accessed 11 Dec. 2022].
Nike’s brand value is £22.8 billion in 2022. Whereas, competitor Adidas has an estimated net worth of £16.47 billion in 2022.
Radonic, D. (2022). 21 Impressive Nike Facts and Stats for 2022. [online] Fashion Discounts. Available at: https://fashiondiscounts.uk/nike-facts/ [Accessed 11 Dec. 2022].
Nambiar, P. (2022). How much is Adidas worth? [online] HITC. Available at: https://www.hitc.com/en-gb/2022/10/25/how-much-is-adidas-worth/ [Accessed 11 Dec. 2022].
Nike has a 38.23% total market share, meaning that it is the most popular sportswear brand in the world.
An astounding 20.8.59 million people from Great Britain wore Nike’s footwear in 2020. (Statista). Nike’s statistics demonstrate that footwear is their most popular product in the UK.
In 2020, Nike’s online store made a revenue of £93.1 million in net sales in the UK.(Statista)
Nike’s online sales statistics show that it is a leading brand for e-commerce in the UK. However, other brands had more sales, such as John Lewis, JD sports and ASOS. Surprisingly,
Amazon sold more footwear than Nike did too.
Radonic, D. (2022). 21 Impressive Nike Facts and Stats for 2022. [online] Fashion Discounts. Available at: https://fashiondiscounts.uk/nike-facts/ [Accessed 11 Dec. 2022].
“Other than Coca-Cola, I can’t think of another company that has managed it’s brand as well as Nike. They have made the swoosh, sports and athletes inseparable”
Steve Gelsi of Brandweek Magazine. Quote from the book Nike Culture: The Sign of the Swoosh (1999).
Nike has a value of £452 million in sponsorships, earning it the name of the most marketable brand for sports in the world.
Radonic, D. (2022). 21 Impressive Nike Facts and Stats for 2022. [online] Fashion Discounts. Available at: https://fashiondiscounts.uk/nike-facts/ [Accessed 11 Dec. 2022].
Stevens, L. (2020). Nike: The Past, Present And Future Of Sportswear (NYSE:NKE) | Seeking Alpha. [online] seekingalpha.
com. Available at: https://seekingalpha.com/article/4354628-nike-past-present-and-future-of-sportswear [Accessed 11
Dec. 2022].
PART B: Buying Cycle and Retail Roles
Range Review
Nike is a multinational company that deals with several clients on a regular ba-
sis. In order to draw in new customers, they use celebrities or current trends.
Post-mortem report
Nike’s post-mortem report has
illustrated all of Nike’s quarterly
reports revenues, direct-reported
revenues, wholesale reported rev-
enues, gross margin, and diluted
earnings. Also included perfor-
mance results, market analysis,
and results for each country and
investigated the problem area.
Budget planing
Nike’s digital advertising strategy has favoured Facebook mobile over the pre-
vious 12 months, with slightly over 50% of their digital spending going to this
platform. The Kaepernick advertisement is Nike’s most valuable creative for the
year, despite only making up a fifth of the company’s advertising budget.
Nike is investing more on social than rivals like Adidas, who have been in-
vesting in film. Adidas has invested almost 50% more in digital advertising
so far this year, while Nike continues to dominate in terms of spend and
Facebook mobile impressions.
Budget planning
Seasonality is another factor that has an impact on Nike and may cause
changes in its operating outcomes. In the past, Nike’s revenues in the first
and last financial quarters have been marginally higher than those in the
second and third. Nevertheless, due to shifts in the seasonal and geographic
demand for specific types of footwear and equipment as well as the timing
of major athletic events like the Olympics and the World Cup, the variety of
items sold may occasionally vary significantly.
Mission statement
The corporate aim of Nike is “to inspire and innovate for every athlete across
the world.”
Product- There is no denying that Nike items are superior in quality and visu-
ally distinctive when compared to those of other shoe companies, Nike takes
great delight in upholding this reputation for its footwear.
Price- The cost of Nike goods is high. Consumers are not disturbed by this,
though, because Nike positions its goods in a way that highlights its advantag-
es, which is critical for consumers.
Place- The company uses independent resellers and stores in addition to boost
sales. Nevertheless, the company varies its marketing platforms by including
both physical websites and online shops
Strategy
Product, pricing, promotion, and place are the four ‘Ps’ that Nike uses in
their marketing strategy. While all marketing strategies must include these
components, Nike is aware of how to get an edge. To entice more potential
leads, the brand effectively combines these elements.
Competitor
These companies can be regarded as
Nike’s primary competitors in the
running industry: Brooks, Asics,
Hoka One One, Saucony, Mizuno,
Adidas, and New Balance.
Nike has intentionally positioned its brand as the leader in the market for sports
equipment that offers cutting-edge and high-end technology.
Market position
Customers were persuaded that Nike is a successful and ambitious brand
by the swoosh emblem, the “Just Do It” slogan, and its advertising efforts to
link to the outstanding accomplishments of famous athletes. Nike stands out
from its competitors because it “speaks” to athletes’ hearts through special
and significant emotions.
The corporation has also cemented its position in the fashion industry, where
a portion of its items help clarify the
lifestyles of particular markets.
Nike has successfully implanted the conviction that its items are the finest
choices whenever clients need to purchase sporting goods in their heads.
Nike’s Supply Chain
The key principles behind Nike’s supply chain are outsourcing and diversifica-
tion. Nike contracts 100% of its manufacturing for footwear and apparel out to
independent suppliers.
Supplier performance
This distributed strategy does have certain drawbacks, though. The quality
control process is severely hampered by the need to get components from
numerous different locations. Nike keeps constant communication with its
suppliers to ensure that its high quality requirements are followed at every
stage of manufacturing. Nike also offers support through tools and training to
get suppliers started with its “Lean Management” framework and Total Quality
Management. This strategy has also faced opposition from sources outside the
supply chain.
Nike understands the demands of their target market through consistent interaction with consumers through social media. Nike develop their new product designs and marketing
strategies from analysis of consumer reviews and shopping behaviour.
440 Industries (2021). Nike Marketing Case Study: How Do They Do It? – 440 Industries. [online] 440industries.com. Available at: https://440industries.com/nike-marketing-case-
study-how-do-they-do-it/ [Accessed 11 Dec. 2022].
This chart illustrates the influence that social media platforms have on consumers interaction with fashion product:
The NPD Group (2021b). NPD: Social Media’s Influence on Fashion Industry Sales. [online] NPD Group. Available at: https://www.npd.com/news/press-releases/2021/social-me-
dias-influence-on-fashion-industry-sales/ [Accessed 11 Dec. 2022].
The NPD Group (2021). Future of Apparel. Npd.com. Available at: https://www.npd.com/news/press-releases/2021/social-medias-influence-on-fashion-industry-sales/ [Ac-
cessed 5 Dec. 2022]
Next, the buyer, merchandiser and designer will discuss styles they think are necessary for the upcoming collection. The merchandiser will advise the buyer on the number of
styles and colour-ways. The designer and buyer will compile a ‘shopping list’ of what they want to design. They will create the initial range plan using information collected from
trend forecasting.
Then buyer will select the quantity of previous styles to be included in the new collection based on their popularity.
Buyers and designers will create design packs with specification sheets for suppliers to create initial samples.
Pre-Selection Meeting:
The buying team show every initial sample to Senior Management who analyse the products. Some samples will remain in the range, some will be discarded and others changed
according to suggestions.
Sourcing and Negotitations
Negotiation With Suppliers:
Supplier Performance:
- 100% of Nike’s manufacturing for footwear is outsourced meaning they save significantly in production costs.
- 112 factories in 12 countries supplied the elements of Nike’s footwear in 2019. By not relying on just one supplier, Nike ensure their supply chain is less at risk.
- However, having many suppliers can create issues with quality control. Therefore, the garment technologist ensures a high quality of production through regular com-
munication with all suppliers. Nike also provide training to suppliers through their ‘Lean Management’ and total Quality Management approach.
Ye, W. (2020). How Does Nike’s Supply Chain Work? - CleanChain. [online] www.cleanchain.com. Available at: https://www.cleanchain.com/blog/how-does-nikes-sup-
ply-chain-work/ [Accessed 11 Dec. 2022].
- China and Vietnam are the main manufacturers of Nike shoes, manufacturing 36% worldwide.
Cole, A. (2015). Manufacturing Process | nikeshoes. [online] Osu.edu. Available at: https://u.osu.edu/nikeshoes/manufacturing-process/ [Accessed 11 Dec. 2022].
-When choosing suppliers, the buyer will take into consideration the cost of producing the shoes and the lead time. Nike bases 36% of its shoe manufacturing in China
and Vietnam because China is the world’s number one producer of footwear and Vietnam is number two.
Adegeest, D.-A. (2022). Global Footwear Manufacturing Is Shifting from China to Vietnam. [online] FashionUnited. Available at: https://fashionunited.uk/news/business/
global-footwear-manufacturing-is-shifting-from-china-to-vietnam/2022091465149 [Accessed 11 Dec. 2022].
-The quality of footwear manufactured in Vietnam is the same as footwear produced in China. However, the cost of labour in Vietnam is lower. Therefore, the most promi-
nent footwear companies in the world, such as Nike and Adidas, are moving their suppliers from China to Vietnam.
Kennemer, J. (2020). China Vs. Vietnam Manufacturing // Sourcing in Vietnam and China Pros and Cons Ultimate Guide. [online] Cosmo Sourcing. Available at: https://
www.cosmosourcing.com/blog/china-vs-vietnam-manufacturing-sourcing-pros-and-cons [Accessed 11 Dec. 2022].
Ohio State University (2022). Statistics for Nike Factories and Workers. U.osu.edu. Available at: https://u.osu.edu/nikeshoes/manufacturing-process/ [Accessed 11 Dec. 2022].
Ethical Considerations:
- Nike has a department dedicated to bettering their factory worker’s lives, they have reduced the number of their factories that inflict excessive overtime upon their workers to
2.5%. In 1999, Nike played a big role in the creation of the Fair Labour Association (FLA). In Nike’s sourcing strategy, they aim for their suppliers to take leadership in corporate
responsibility and sustainability. Furthermore, since 2005, Nike have become completely transparent with their supplier list.
-In 2019 Nike was sourcing 93% of its materials and products from sustainable factories.
Ye, W. (2020). How Does Nike’s Supply Chain Work? - CleanChain. [online] www.cleanchain.com. Available at: https://www.cleanchain.com/blog/how-does-nikes-supply-chain-
work/ [Accessed 11 Dec. 2022].
Negotiation:
The buyer will negotiate all of these factors with the supplier to achieve the high quality of Nike shoes. They will also negotiate the quantities per style and the cost prices for ev-
ery product. The merchandiser and buyer must ensure that the price meets Nike’s target profit, but also makes the supplier a profit. The buyer will also negotiate delivery dates.
Re-Sampling:
The designer will create Design Packs, the buyer will input their commercial, customer and sales knowledge. Any amendments suggested in the pre-selection meeting will be
applied to the design packs and when ready, they are sent to the suppliers.
On their ‘Nike Product Testing Program’, Nike chooses consumers to test their upcoming shoe collections. In this testing programme, the shoes will be tested for performance, fit
and quality.
Nike (2022). How to Become a Nike Product Tester. [online] FITFLYFELLOW. Available at: https://www.fitflyfellow.com/blog/2019/6/2/how-to-become-a-nike-product-tester
[Accessed 11 Dec. 2022].
Nike (2022b). How to Become a Nike Product Tester. Fitflyfellow.com. Available at: https://www.fitflyfellow.com/blog/2019/6/2/how-to-become-a-ni-
ke-product-tester [Accessed 2022].
The first step in range finalisation is the Range Finalisation
pre-selection meeting, before this takes place
the buyers and merchandisers ned to work
with the suppliers to get a physical sample of
a trainer. This meeting is to look at the whole 1) First the trainer will be made quickly,
Autumn/Winter Range. They make sure it maybe not in the exact fabrics or colours
follows the original intentions and provides but it’s testing the concept of the shoe to be
products for multiple customer profiles. approved in terms of fit and make appro-
priate adjustments. The fit sample is hugely
From here they take each shoe and decide on important with footwear, especially trainers
any changes they want to make for a perfect it improve comfort and performance.
product, this is important do now rather than
later to avoid wasting money later. Requests 2) Nike then produces the pre-production
are made for samples that need alterations sample which is the final product excluding
and some shoes are cut. labels. The shoe will then be retested to en-
sure the fit is now prefect.
SAMPILING
There are three stages at which the suppliers 3)If all is good here, they move onto the fi-
produce samples and points of approval be- nal stage, the sealed sample.
fore the product will be mass produced, these
are fit sample, pre-production sample and
sealed sample.
When pricing the shoes, its common to charge 2.5 to 3.5 more than the manufacturing costs,
Nike also needs to pay attention to the competitors prices in order to maximise their profits.
Once garment fitting, fabric and garment testing, fabric and trim approvals, quality control and
pricing have all been done and finalised pricing then a final selection meeting where the whole
team will get together looking at the full range in perfect condition, as it will be when in stores.
This is where the shoes will be signed off to be manufactured and a purchase order form will be
completed.
As shown in the Ohio’s states University Nike man- Manufacturing
ufacturing process review, the manufacturing of
Nikes shoes happens almost all outside of the Unit-
ed States, China and Vietnam both accounting for
36% production, Indonesia 22% and Thailand at speed, shoe assembly and sole creation.
6%. To further reduce their lead time, ERP
To make the shoe, firstly all the materials are cut Inventory Management Blog shows,
ready for construction, these processes are then Nike use Lean manufacturing and Just in
sown together before being attached to the sole of Time, creating a 40% reduction.
the shoe, they then complete the shape of the shoe
through a process called heeling. Finally, any fin-
ishings touched are added, including the laces and
labels.
Nike must also decide on a buying strategy, merchandisers can use the WSSI method to choose the correct
strategy. WSSI is a weekly Sales, Stock and Intake tool used by the merchandisers to predict, monitor and
book the right amount of stock at the right time. This ensures that late deliveries and quality issues don’t
occur. Furthermore, it allows Nike to take a lean approach to production as they can make sure no stock
is wasted. Nike also pride themselves on being a sustainable company with their ‘move to zero’ campaign,
thus in order to maintain this reputation they will ensure to avoid excessive wastage.
Once stock in warehouse it needs to be allocated quickly to the right stores and web-
sites in the correct quantities. Nike operates globally, so it is essential that stock is avail-
able on websites in order to be accessible to consumers on a global scale. Therefore,
Nike merchandisers must consider how much stock to keep in warehouses that can be
shipped to consumers that have purchased online. This is usually the responsibility of
the junior merchandisers. As well as this, best sellers will also be re-allocated to stores
by the junior merchandiser, or this process may be automated. For this to be possible
Nike buyers must make sure they maintain
an open to buy budget, this is the available budget left to spend in-season on new or-
ders to re-buys of best sellers. This is essential in order to maximize profits on gar-
ments that have performed well with Nike customers.
This stage is vital as stock held in the warehouse unallocated is lost sales for Nike. It
is vital that merchandisers ensure all garments are given the opportunity to be sold to
consumers, otherwise, they risk making a loss from the new product range.
Retail Sales
This is the final stage of the buying cycle whereby the range becomes a reality instore and online. The mer-
chandiser and buyer now have the task of reviewing the performance of each style on a weekly or daily
basis. They must identify the best and worst sellers to maximize profits and reduce risk. Nike’s merchan-
disers will use this information to discuss how to spend the open to buy budget. An open to buy budget is
kept to enable flexibility and reaction to best sellers, also enable buyers to buy into new emerging market
trends or missed opportunities that the competition has capitalized on. For example, if a particular gar-
ment is selling rapidly, Nike may decide to reorder this stock or even order the garment in a wider range of
colours, giving consumers a greater selection. Additionally, they may also need to consider markdowns or
discounts of footwear that is not producing sales in order to encourage spending and get rid of stock. One
of the major benefits of introducing a markdown is increasing the sell-through rate quickly. It is usually
expected of companies to achieve an 80% sell-through rate at the end of their range, so it is important to
keep the sell-through rate high. This is a constant process for Nikes merchandisers that requires analysis,
product knowledge, market awareness and should always be consumer centric. It is vital for the merchan-
diser to ensure the best and worst sellers are being analyzed daily against the stock levels and future buys,
in order to always maximize full price sales.
Now that the range has launched, Nikes merchandiser can use figures given by actual sales to reforecast
the sales and stock. This allows for a more accurate prediction of the outcome of the range; thus, they can
avoid any losses by making changes where necessary. For example, buying repeats or more colourways or
reducing the order of certain garments.
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