The American sportswear giant has finished some of its independent retailers’ supply agreements to boost profits. The company warned it might end all agreements by 2021.
Nike shrinks the independent retailer’s channel. The American sportswear giant has finished some of its independent retailers’ supply agreements in the United Kingdom to boost profits. The company explained that sales of this channel were no longer in line with Nike’s distribution strategy, according to The Sunday Times.
The goal of this operation is to increase its profits and margins by eliminating intermediaries, reducing independent retailers’ promotions and control its distribution strategy.
Nike already started this strategy back in 2017, when it announced that it planned to reduce its presence in small stores and independent retailers. With the consumers' direct offense plan, the goal of the company is to “speed up innovation, producing and getting products to consumers faster and selling to and engaging with consumers more directly through digital channels,” stated the company.
The company has stated that terminations of the contract to focus on its strategy might start next year. Nike closed the first quarter of its fiscal year with a rise of 7% in sales, up to 10.6 billion dollars. The net profit of the American company jumped 25%, up to 1.3 billion dollars.