Nike bought predictive analytics company Celect to bolster its direct-to-consumer (DTC) strategy of serving consumers personally at a global scale. Celect’s cloud-based platform provides data to help retailers optimize their inventories with hyper-local demand predictions, per a company announcement. Financial terms of the deal weren’t disclosed.
By integrating Celect’s technology into Nike’s mobile apps and website, the maker of athletic apparel aims to forecast how and when consumers will buy certain styles, COO Eric Sprunk said in an interview with CNBC. Celect, which was founded in 2013 by professors at the Massachusetts Institute of Technology, will integrate into Nike immediately.
Nike chose to buy the startup instead of spending several years incubating similar technology in-house, per CNBC. Celect’s co-founders will continue to work as professors while consulting Nike, according to the announcement.
Nike’s acquisition of Celect is the latest sign that the sports apparel giant seeks to boost DTC sales among a variety of distribution channels, including its mobile app and website. The tech-driven drop strategy of selling exclusive, limited-edition items has become more popular among apparel makers to generate excitement and demand. In footwear, the strategy targets loyal customers such as “sneakerheads” who like novelty items.
DTC sales also give Nike quicker insights on consumer demand than orders from retail chains like Foot Locker. Celect’s tech can help Nike boost this strategy by optimizing its inventory across channels with hyper-localized demand predictions to ensure customers can find and purchase what they’re most interested in. The acquisition shows that Nike recognizes the need to offer personalized experiences and is focused on tech and meeting localized demand to deliver on those experiences.
Nike has shifted its growth strategy from buying brands to acquiring tech companies in order to strengthen its design and data analysis. While the company bought surfwear brand Hurley in 2002 and shoemaker Converse in 2003, its more recent acquisitions have a distinctly digital focus. The company in 2016 bought Virgin Mega, a digital design studio that helped to build Nike’s SNKRS mobile app, which this year served as the basis for a pop-up store in Atlanta.
In March 2018, Nike announced the takeover of consumer data analytics firm Zodiac in an effort to expedite its digital transformation. A month later, it acquired computer-vision company Invertex to strengthen its artificial intelligence capabilities. Nike relied on Invertex’s technology for its recently launched Nike Fit mobile app that aims to help customers find the right shoe sizes. The app scans a customer’s foot with a smartphone camera and matches a digitized 3D image with shoe designs.
Meanwhile, Nike’s direct sales rose 12% on a currency-neutral basis to $11.8 billion in fiscal 2019 to make up 32% of total brand revenue, far outpacing the 2% gain to wholesalers, per its annual report. The digital portion of Nike’s direct sales grew 35% during the period to outpace all other marketing channels, the company said. That growth rate suggests that the company’s digital DTC sales will be a key driver of sales for the foreseeable future.
Originally posted by Robert Williams.
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