Nike Continues To Accelerate DTC Approach, Shifts Away From Foot Locker

Nike is doubling down on its direct-to-consumer (DTC) approach by putting an end to its partnership with Foot Locker — a significant blow to the sportswear and footwear retailer as Nike is its largest supplier.

Nike is expected to make up 60% of Foot Locker’s total purchases for the upcoming fiscal year — down from 75% in 2020 to 70% in 2021.

“We closed out a record year by delivering solid fourth-quarter results that reflect the ongoing momentum we have built in our business in the midst of an evolving market,” said Footlocker’s Chairman and Chief Executive Officer Richard Johnson in a company statement.

Johnson noted that Foot Locker has also been focussing on selling its private label products through DTC channels since the start of the COVID-19 pandemic.

“We made significant progress diversifying our brands, categories and channels in 2021, as well as expanding our customer base across demographics and high-growth geographies with the acquisitions of WSS and atmos. We also invested in our omni-channel platform to accelerate our DTC strategy and enhance the customer experience with new speed and convenience capabilities. And we continue to expand our private label merchandise offerings, including the most recent launch of our new womenswear brand.”

During a call with analysts, Johnson noted that the company would maintain a “strong relationship” with Nike and that the brand will remain an essential partner in categories such as basketball.

Foot Locker offered a wide range of Nike product offerings in 2020 and 2021, which generated impressive results for the retailer, but the over reliance on sourcing products from one major brand ultimately hindered its ability to offer a more diversified offering.

In 2020, Johnson noted that the high concentration of Nike’s products on Foot Locker was based on instinct, a “thought of survival.” Moving forward, however, Foot Locker will work towards offering a wider range of brands.