How Elliott Hill Is Rebuilding Nike: Risky Reset? 🤔
In the face of a brand crisis that saw consumer disengagement and internal turmoil, Nike’s former CEO, John Donahoe, was forced out [00:00]. The person who stepped up to take the helm and initiate a bold turnaround strategy is Elliott Hill, an executive with a 30-year history with the brand—he even wrote his undergrad thesis on Nike [00:20]. His mission: to orchestrate a “risky reset” and return Nike to its former glory.
The Problem: DTC Overload and Loss of Focus
Under the previous leadership, Nike heavily pursued a Direct-to-Consumer (DTC) model [01:02]. While this performed well during the COVID-19 pandemic when online sales boomed, it inadvertently created two critical problems:
- Ignoring Key Channels: The DTC focus cut off the middleman but ignored the fact that different customers shop in different places. Consumers at Nike stores, Foot Locker, and factory outlets all have distinct needs and purchasing habits, which were being neglected [01:15].
- Product Drift: Nike’s focus began to drift away from being a sports equipment company. Production volume shifted heavily towards casual shoes like the Air Force One, which is not a sports shoe, leading to an overstock and a diluted brand identity [02:05].
Elliott Hill’s Blueprint: A Return to the Core
Hill’s strategy is built on re-centering the brand around its original values and optimizing its commercial distribution. He immediately regrouped the company into two key directions: the “sports company” and a growth/casual division [01:48].
1. Rebuilding Channel Relationships
Hill recognized that all distribution channels are essential because they serve different customer profiles and allow for different product offerings [01:31]. The new plan focuses on rebuilding strong relationships with wholesale partners like Foot Locker, a direct reversal of the previous DTC-only approach [07:20].
2. Returning to the Athlete (The Why)
A core sports company thrives when it is closest to its athletes [02:25]. Nike is now re-focusing on performance and innovation to create shoes that genuinely improve an athlete’s performance [02:46].
- The fastest-growing segment in the business is now Nike Running, up by 20% in initial results [02:32], and the company is actively designing shoes to power up running performance [04:15].
- New internal sub-teams have been created for specific sports like running, basketball, and tennis to maintain a close relationship with professional athletes [02:53].
- The strategy focuses on the three main brands: Nike, Jordan, and Converse [03:20].
3. The Full-Price Model
Under the previous management, Nike was heavily reliant on discounting (30-50% off sales) to move inventory [06:24]. Hill is shifting the brand to a full-price model, prioritizing brand equity and performance over immediate sales volume. This change signals a belief in the product’s value and is supported by studies showing Nike still maintains pricing power in the market [06:31].
Initial Results: A Slow but Positive Turn
After one year of this strategic reset, the results are measured but promising:
- Revenue has remained stable with a positive 1% growth [04:04].
- Wholesale orders are picking up, growing their order book by 5% [04:20].
- Inventory is being reduced as the company clears out older, non-sport-focused stocks [04:10].
While the growth rate is not spectacular—especially when compared to competitors like On Holding, which has seen 30% growth—Nike’s enduring high brand equity remains a powerful asset, particularly in the US with its strong basketball culture [08:09].
Elliott Hill has stated that this effort to build portfolio equity with athletes and drive long-term profit will take a while and is not an immediate fix [07:58]. By returning to their origin story, focusing on the athletes, and building products that meet specific needs (like the initial waffle-sole design for track-and-field) [05:12], Nike is betting that its history is the key to its future.
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