Nike pulled away from wholesale three years ago, but it’s currently re-embracing the model as more brands seek out the benefits of selling with a partner. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes and the Glossy Beauty Podcast for interviews from the beauty industry. — Danny Parisi, sr. fashion reporter
Wholesale is making a comeback
Compared to its all-in DTC approach from the last few years, Nike struck a decidedly different tone on its earnings last week. On the call, CEO John Donahoe said it was clear the brand “needs to make some important adjustments” in regard to its wholesale partnerships.
The company’s retail sales with partners grew double digits, Nike reported, with wholesale revenue up as much as 12% in some markets and 3% on the whole. Meanwhile, the brand’s direct sales growth was lower, dropping by as much as 1% in some markets and staying relatively flat across the board.
At the beginning of the pandemic, Nike poured money into its direct sales business and cut ties with many wholesale partners. But this is the second quarter in a row where the brand has spoken about counter moves to that strategy. In December 2023, it signaled that it would reinvest in wholesale partnerships after it became clear that cutting ties with more than 50% of its partners had negatively impacted its inventory management.
Wholesale has made a big comeback in retail in the last few months. For example, the workwear brand Brunt entered wholesale last month with 23 partners.
But there are still issues with the wholesale model. On the Glossy Podcast last month, Amy Williams, CEO of the Citizens of Humanity Group, said wholesale often shows customers only a small section of a brand’s full product lineup. For that reason, wholesale works best in coordination with DTC, as a way to introduce people to a brand before, hopefully, moving them to DTC after their first purchase.
DTC brands looking to enter the wholesale channel often turn to Nordstrom. DTC brands like Percival, Watchfinder, Andie Swim and Vuori have worked with Nordstrom as their only, or one of their only, wholesale partners in the last year. Last week, it was reported that the Nordstrom family was attempting to take the company private. Moving forward, Nordstrom is expected to increase its focus on its discount store, Nordstrom Rack, which grew sales by 15% in the last quarter.
Nordstrom Rack carries many of the same DTC brands as Nordstrom’s mainline store, including Free People and Good American. And while brands have lamented the heavy discounts often put on their products when sold through wholesale, low prices are a great way to attract interest. Nike said that heavy promotions on its Jordan brand in China in the last quarter helped grow its sales by 3% in North America and 5% in China.
