Nike: Going Direct, Then Coming Back to the Stores

Two Roads to the Customer

Every pair of Nike sneakers has to travel from a factory to a customer’s feet, and Nike, based in Beaverton, Oregon, uses two main routes to get it there. The first is selling directly to consumers through Nike-owned stores and Nike’s own website and apps. The second is wholesale: Nike sells large orders to retailers such as Foot Locker and Nordstrom, which then resell the products to shoppers. For years, wholesale was by far the bigger route. In fiscal 2017, which ended May 31, 2017, Nike Brand sales to wholesale customers were $23.1 billion, while sales direct to consumers were $9.1 billion, boosted by a 30 percent jump in digital sales that year.

The Consumer Direct Offense

In June 2017, CEO Mark Parker announced a new strategy called the Consumer Direct Offense. Nike created a Nike Direct organization that combined Nike.com, its own stores, and its digital products such as apps. It named 12 key cities in 10 key countries, including New York, London, Shanghai, Tokyo, and Los Angeles, and said those cities and countries were expected to produce more than 80 percent of Nike’s projected growth through 2020. Nike also planned to cut the number of product styles it offered by 25 percent and to reduce its global workforce by about 2 percent. The plan said Nike would still bring its innovations to its strategic wholesale partners.

At an investor day that October, Nike explained what that meant. According to the Portland Business Journal, Nike would focus its resources, marketing, and exclusive products on 40 key retail partners, out of a network of about 30,000 retailers. Nike did not announce that it would stop selling to the others, but its priorities were changing. The company wanted to turn shoppers into members with accounts on Nike.com and its apps. Nike said it had more than 100 million members, who spent about three times as much on Nike.com as guest shoppers, and it set a goal of growing digital sales from about 15 percent of revenue to more than 30 percent. A Nike executive also said that within five years, more than a third of Nike’s product offerings would be available only to members on Nike.com.

Accelerating Direct

The push went further under John Donahoe, who was CEO during the COVID-19 pandemic. In fiscal 2021, which began in June 2020, Nike announced a follow-up strategy called the Consumer Direct Acceleration. In 2021, Sam Poser, an analyst at Williams Trading, reported that nine retailers had been told in August 2020 that Nike would stop selling to them, and that their last Nike shipments came in early 2021. He also reported that Nike would close six more wholesale accounts: DSW, Urban Outfitters, Shoe Show, Dunham’s Sports, Olympia Sports, and Big Five.

At first, the numbers seemed to support the strategy. In fiscal 2022, Nike Direct revenue reached $18.7 billion, up 14 percent in one year and led by 18 percent growth in digital sales. Wholesale revenue slipped 1 percent to $25.6 billion. In fiscal 2024, Nike Direct reached $21.5 billion, about 44 percent of Nike Brand sales through the two channels (see Exhibit 1).

Cracks in the Plan

But growth had stalled. In fiscal 2024, Nike Direct grew only 1 percent, and Nike Brand digital sales fell 3 percent. The next year was worse: Nike’s total revenue fell from $51.4 billion in fiscal 2024 to $46.3 billion in fiscal 2025, and net income dropped from $5.7 billion to $3.2 billion.

In September 2024, Nike’s board announced that Donahoe would retire and that Elliott Hill would return as president and CEO, effective October 14, 2024. Hill had worked at Nike for 32 years, holding senior jobs in Europe and North America. Before retiring in 2020, he had been president of consumer and marketplace, leading Nike’s and Jordan Brand’s commercial and marketing operations. When his return was announced, Hill said he was eager to reconnect with the employees and trusted partners he had worked with over the years.

Rebalancing the Channels

Under Hill, Nike began a set of “Win Now” actions and named wholesale as one of its priority areas. In the first quarter of fiscal 2026 (June through August 2025), he said Nike was making progress in its priority areas of North America, wholesale, and running. That quarter, wholesale revenue rose 7 percent to $6.8 billion, while Nike Direct fell 4 percent to $4.5 billion and digital sales fell 12 percent. For the full 2026 fiscal year, which ended May 31, 2026, wholesale revenue grew 6 percent to $27.5 billion, Nike Direct fell 6 percent to $17.7 billion, and total revenue was flat at $46.4 billion. Hill said the company had made structural improvements to prepare for what Nike calls its Sport Offense, which he linked to the company’s team culture, product innovation, brand strength, and service to consumers.

On October 1, 2026, Nike reported results for the first quarter of fiscal 2027 (June through August 2026). Revenue fell 4 percent to $11.2 billion. Wholesale revenue dipped 1 percent to $6.8 billion, while Nike Direct fell 8 percent to $4.1 billion, with digital sales down 13 percent and Nike-owned store sales down 5 percent. Hill said the Sport Offense was driving progress in Nike’s performance business but that more work remained in Nike Sportswear, Jordan Brand, and Greater China. Nearly a decade after the Consumer Direct Offense began, about three of every five dollars of Nike Brand sales through the two channels come from wholesale partners. Nike’s leaders face a lasting channel question: how to balance the reach of retail partners with the control that comes from selling direct.