Shopper Experience
21 December 2022
Nike's membership program is the 'engine' of its DTC strategy
Membership growth helped drive 34% digital growth in Nike's most recent quarter.

Membership growth helped drive 34% digital growth in Nike's most recent quarter.
For Nike, a digitally-powered membership program is helping to deliver digital growth, and build a loyal base of customers that engage with the brand in ways that go beyond shopping for new apparel and sneakers.
For the quarter ended Nov. 30, Nike posted 34% digital growth on an annual basis, delivering a standout result for the quarter that indicates there is still ecommerce growth to be had during a tough time for retail. While this was helped by a Black Friday and Cyber Monday that set records for demand and traffic, there was more to it than a seasonal spike.
Perhaps fittingly for a brand with the famed slogan “Just Do It,” Nike is acting boldly as it steps into the digitally-enabled future. In recent years, its ecommerce strategy has been undergirded by a focus on going direct-to-consumer. As a result, it has scaled back relationships with other retailers in favor of bolstering its own channels, whether that be its digital properties or in-person stores. This marked a big shift for a brand that is used to appearing on shelves everywhere, but allows it to work across digital and physical channels, while centering the Nike brand.
“Our work to directly connect with consumers is founded on a simple consumer insight: Consumers want to get what they want, when they want it and how they want it,” CEO John Donahoe told analysts. “And consumers have told us they want a consistent, seamless and premium experience both digitally and physically around mono-brand and multi-brand.”
It’s clear that Nike is not only selling individual items to people through this approach, but also building an environment where people will keep returning. One way it does this is through its membership program, which Donahoe flagged as a particularly important driver of the brand’s digital growth for the quarter.
Nike now has 160 million active members, and the most recent quarter was its largest to date. Donahoe said Nike saw double-digit growth in engagement from these members for the quarter, as well. The purchases from these members mean more than just a one-time sale. While customer lifetime value wasn’t mentioned on the call, it’s clear the program helps drive up this important loyalty metric.
“More importantly, our repeat buying members who are more engaged, spend more and spend more frequently are growing at an even faster pace of high double digits as they continue to be an important growth engine for our business,” Donahoe said.
At a time of heavy discounting in retail, membership gives Nike a unique way to differentiate the way consumers interact with it. One result is that consumers are continuing to pay full price, even as they seek deals in general.
“The quality of the business through Nike Digital is among the highest quality that we have across any channel,” Donahoe said.
With ready access to purchases and preferences, membership also offers Nike a way to learn more about its customers, and it is using the data to inform product creation, line planning and experiences.
Nike doesn’t only offer shopping and discounts through the membership program. Perks include free shipping, exclusive styles, invites to events and access to workouts. In turn members can engage through a series of apps offered by Nike, including Nike Training Club, Nike Run Club and the SNKRS App. Nike is aiming to deliver more content across these apps, as well, and expects to announce more partnerships in the coming weeks.
Members can also realize benefits in-store. In fact, 50% of store demand comes from members, Donahoe said. The company is also building connection points for people who shop Nike products at other outlets, as well. Nike has connected membership with Dick’s Sporting Goods, JD Sports, Zalando and TopSports. In turn, Nike said the members are driving improved traffic, conversion and mutual profitability. And the other retailers can have the same access to data that helps them personalize their own experience, such as who a customer is and what they’ve bought.
Direct-to-consumer isn’t only about owning channels. It is about elevating the experience. Listen to executives closely, and it sounds like Nike’s membership program is the ladder that is helping it to reach the next level.
“While it's still early days on this journey, we're excited by the foundation we're creating,” Donahoe said. “The ability to give consumers a personalized experience across channels, fueled by data and insight opens up a whole host of opportunities for us. It positions us to empower consumers with their own choice while keeping the scalability and strengths in digital marketing, product creation, distribution and more.”
The retailer's marketplace is expanding quickly.
When it comes to ecommerce growth, was the pandemic a blip or a new trendsetter?
As we move further from the height of COVID-related closures, it’s a question that will start to be answered through the lens of history.
So far, the narrative of ecommerce growth in the U.S. from 2019-2022 has gone like this: Ecommerce’s share of overall retail saw a huge spike at the height of the pandemic in 2020-21, when goods in general were in demand and online shopping was necessary to preserve health and safety. Experts looked out and saw a permanent exponential change in the penetration of ecommerce as a share of retail that would last beyond the pandemic. Then, in 2022, everyone went back to stores and the trendline came back to 2019 levels. Growth was no longer exponential. There was still growth, but it was not happening as fast as during the pandemic period.
With this in mind, it’s worth pointing out that 2023 is the first year that there likely won’t be a pandemic-influenced swing to influence ecommerce growth. It is also a year where demand has suffered challenges amid inflation and interest rate hikes.
So as we seek to determine the importance of ecommerce to overall retail, it’s worth it to continue taking a close look at what growth trends retailers are seeing now, whether ecommerce is remaining resilient amid consumer pullback and how retailers are preparing for the future.
The latest example arrived this week from Macy’s. It’s a fitting one for the times. Overall, Macy’s is seeing a slowdown as consumers pull back on discretionary purchases, with sales declining 7% in the first quarter versus the same quarter of 2022. Digital sales were down 8%.
Macy’s is particularly susceptible to the macroeconomic headwinds that many brands and retailers are facing, as spending among the middle-income consumers it counts as a primary customer base is particularly softening, said GlobalData Managing Director Neil Saunders.
But while ecommerce is slowing overall, the importance it gained to Macy’s business during the pandemic is remaining in place.
In 2019, ecommerce made up 25% of Macy’s revenue, CEO Jeff Gennette told analysts on the company’s earnings call. That jumped to a high of 44% in 2020. By 2022, digital reached 33% of sales after the pandemic boom. In the first quarter of 2023, it remained at 33%. So, while the trend line dipped after shoppers returned to stores, ecommerce share still settled in at a higher post-lockdown point than it was before the pandemic.
This came in a quarter in which traffic was “relatively good” across both online and in-store, Macy’s CEO Jeff Gennette said. It was “flattish” online, and slightly up in stores.
“We do expect that this is the reset year with the penetration between them,” Gennette said. “But we do expect more aggressive growth in digital in the future versus stores as we think about '24 and beyond. And that's going to be foisted by a lot of ideas and strategies.
Over the last year, the retailer has made investments in boosting ecommerce, even as shoppers returned to stores. In a bid to boost the assortment of goods available online, Macy’s launched a marketplace in September 2022 that welcomes goods from third-party sellers.
The marketplace had an “outstanding” first quarter, said Macy’s President Tony Spring, who is poised to succeed Gennette as CEO next year. Gross merchandise value increased over 50% when compared to the fourth quarter of 2022, while the average order value and units per order for marketplace customers was 50% above those not shopping at the marketplace.
Macy’s is continuing to build the marketplace even as it racks up sales. The retailer added 450 brands, ending the quarter with 950 brands.
This is helping to draw in new customers, as well as younger existing customers who are buying more items, resulting in increased basket size.
“We're very excited as to how marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible for us to carry in the past,” Gennette said.
In the end, Gennette said a strong digital and social presence is key to attracting younger consumers. That's a different type of shopper than other age groups.
“We know the younger customer starts first online,” Gennette said. That behavior will still be in place as the generation gets older, and gains more buying power in the process.
Going forward, Macy’s is seeking to expand the model to other retail banners in its portfolio. Bloomingdale’s will open a marketplace in the early fall.
The Macy’s ecommerce trajectory isn’t that different from the wider U.S. ecommerce narrative detailed above. With one quarter of 2023 data, there is evidence that ecommerce share settled out at a higher point after the pandemic than where it started before COVID arrived. There is flattening now, but the retailer is taking it not as a sign of a slowdown, or a signal to change course. Rather, it sees changing consumer behavior as a reason to build for the future.