Across the footwear sector, the last few months have seen brands’ wholesale revenue increasing but in a smaller number of stores.
A few years after pulling back on many of its wholesale partnerships in order to focus on DTC sales, Nike is now reporting that, in the most recent quarter, it saw double-digit sales growth across many of its biggest wholesale partners. They include Dick’s Sporting Goods in North America, JD, Zalando and Sports Direct in EMEA, and Topsports and Pou Sheng in China.
In the brand’s first-quarter earnings call on September 28, Nike CEO John Donahoe owed the company’s growth in wholesale revenue, which was up 1% in the quarter, to having fewer partners and not more.
“We’ve really sharpened our wholesale focus over the last few years to focus on fewer multi-brand partners where we’re investing in elevated retail experiences and connected digital membership at scale,” Donahoe said.
He pointed to Dick’s Sporting Goods as one partner in particular that has been successful. In August, Dick’s president Lauren Hobart said on the DSG earnings call that a campaign the company ran with Nike earlier this summer received 1.5 billion impressions. The ad, which ran in Dick’s app spotlighted 10 athletes and their Nike gear. It also included content that was exclusively available to Nike loyalty program members.
“There’s a lot of growth opportunity with those strategic wholesale partners,” Donahoe said.
Another sneaker brand, On Running, is in a similar boat. On its most recent, second-quarter earnings call, in August, CFO Martin Hoffman said the brand’s wholesale business is growing rapidly. And, like Nike, it’s seeing the majority of its wholesale growth from a handful of its largest partners.
“Our wholesale channel also grew rapidly in Q2, up by 51% versus last year to [around $303 million],” Hoffman said. “Sell-out at our top five key account partners in the U.S. combined grew 92% in the first half of 2023. This does not yet even include the newly established business with Dick’s Sporting Goods.”
Hoffman said On is planning to only selectively expand its number of new retail partnerships. Instead, it will sell more deeply to its biggest partners like REI.
“Looking ahead, … we plan to selectively expand on our key wholesale partnerships by only adding doors with meaningful, additive customer bases,” Hoffman said. “While we expand selectively, we expect the net additional door number in the coming quarters to be lower than it has been in the past, as we expect to [close some stores] in some of our more established markets.”
Brands are likely to continue investing in wholesale as the e-commerce boom that defined the pandemic years cools off. A survey conducted by digital wholesale platform Joor over the summer found that 74% of fashion brands reported wholesale making up over half of their sales. Meanwhile, 51% said wholesale was their top channel for investment in the next year.