Inside Outdoor Fall 2017

Nike Off to Races Editor’s Letter Martin Vilaboy Editor-in-Chief martin@bekabusinessmedia.com Percy Zamora Art Director outdoor@bekapublishing.com Ernest Shiwanov Editor at Large ernest@bekapublishing.com Berge Kaprelian Group Publisher berge@bekabusinessmedia.com Rene Galan Associate Publisher rene@ bekabusinessmedia.com Anthony Graffeo Associate Publisher anthony@bekabusinessmedia.com Miki Takeuchi Marketing & Digital Media Beka Business Media Berge Kaprelian President and CEO Neil Ende General Counsel Jim Bankes Business Accounting Corporate Headquarters 15560 N Frank LloydWright Blvd Suite B4 – 5433 Scottsdale, AZ 85260 Voice: 480.503.0770 Fax: 480.503.0990 Email : berge@bekabusinessmedia.com © 2017 Beka Business Media, All rights reserved. Reproduction in whole or in any form or medium without express written permission of Beka Publishing, is prohibited. Inside Outdoor and the Inside Outdoor logo are trademarks of Beka Publishing Sure, it’s only a sliver of Nike’s total annual production of some 1.3 bil- lion shoes, and the Beaverton, Ore., sporting goods giant has been talking about speeding up the design-to-product cycle for many years now. Even so, it would be foolish to disregard, or even underestimate, statements by Nike COO Eric Sprunk at the company’s recent investor day (Oct. 25) regarding the reduction of manufacturing-to-market time from “about 60 days to 10 days or less.” Sprunk, along with CEO Mark Parker, spoke about Nike’s new emphasis on nearshore production to serve North America, home to the company’s biggest group of consumers. Like most of its competitors, Nike currently makes the brunt of its goods in Asia, but it has started bringing more man- ufacturing to regions such as Latin America. Sprunk also offered details about Nike’s two-year-old partnership with global manufacturer Flex. Nike, he said, has just moved into a nearshore, purpose-built footwear factory with Flex that will deliver more than 3 mil- lion pairs to North America in fiscal year 2018 alone. “By 2023, together with Flex, we plan to produce tens of millions of pairs nearshore,” he said. Possibly even more notable, “more than 25 per- cent of those volumes delivered through Nike Direct on a short lead time responsive model,” Sprunk said. “We’re inventing new manufacturing capa- bilities at scale together. We collaborate, innovate and, when appropriate, we bring these capabilities across to our entire source base.” In order to manage labor costs and hasten production, Nike will be implementing a healthy dose of automation, both in Latin America and Asia. By the end of the fiscal year, Nike said it will have installed more than 1,200 new automated machines at the factories of its Asian suppliers to handle cutting, cementing, shoe assembly and making soles. Ultimately, Nike intends to move away from “future orders” toward quick manufacturing in direct response to what consumers are actually buying, right now. It’s essentially a larger scale of what Adidas is planning with its Speed- factory in Germany to serve European customers and the one opening shortly in Atlanta to serve the U.S. Such moves, say Morgan Stanley ana- lysts, should significantly improve margins and help grab market share, as the nearshore model reduces shipping expenses, import duties and the risks of making a large volume of shoes in advance. Right now, most observers are looking at Nike’s plans in terms of where they position the company in the race for footwear market share. But a contestant of Nike’s size has the potential to change consumer expectations and behavior, suggesting the moves toward nearshoring and responsive manufacturing will have nearer-term ripple effects throughout all of sport- ing goods retail. On your marks. – MV Inside Outdoor | FALL 2017 6