Is Nike Adventure Club, a Subscription Service for Kids, a Winning Commerce Strategy?

October 23, 2019 by  Chris Erwin

Nike’s first subscription shoe service for kids brings the latest silhouettes to their doorstep.”

–Press release on Nike News, August 12, 2019.

 

What Is Nike Adventure Club?

Back in August Nike launched its footwear subscription service for kids, Nike Adventure Club. The three tiered service will offer 4-12 shoe replacements per year ranging from $20-50 / month. Subscribers can choose from 100+ types of Nike and Converse shoes (Converse was acquired by Nike in 2003). The mailed Adventure Kit has the kid’s name on the shoe box and includes curated kids activities to promote the ‘power of play’ and adventure.

 

Why Is It Interesting?

Nike Adventure Club is an innovative re-think of the parental shoe shopping experience for kids that solves a few major pain points from high frequency shopping: high cost, shopping time and product waste. It’s also an interesting case study in how Nike drives multi-generational brand affinity and loyalty, all in support of greater customer Lifetime Value (LTV).

Let’s dive in…

 

A Co-Consumption Experience by Parents (the Wallet Holder and Purchase Decision Maker) and Kids (the End Consumer and Purchase Influencer)

Shared consumption delight can create incredible brand loyalty across generations. The tactic is reminiscent of Disney/Pixar/Marvel films that cater to both young theater goers and their parental chaperones through varying ‘layers’ of story, visual effects and humor (Marvel’s Thor: Ragnarok nailed this).

The tactic can also be found in many consumer and media brands’ forays into experiential activations – at WORLDZ last month we saw Discovery’s head of Location-Based Entertainment discuss how their IRL network brand activations are uniquely designed for both parents and kids, with certain elements placed at kids eye-level and reachability, or even custom designed for parents that have one arm free while carrying their children.

Multi-generational delight is an incredible value driver for brands, though doing it right requires truly knowing your customer. Nike Adventure Club strives for the co-consumption win a few different ways.

Upon sign-up, parents receive an email of Nike and Converse shoe options, which is specially designed for co-review with kids and ease of joint product selection. As parents and kids become accustomed to this new purchase flow, and with their credit cards automatically charged each month, Nike is effectively creating “brand blinders” for its subscribed members – less retail and online shoe shopping outside the Nike experience means less consumer awareness of, and time spent on, other shoe brands and their other offerings like apparel, wearables, etc. This competitive moat could equate to a more sustainable model to maintain and grow Nike’s shoe market share over time, coupled with lower Customer Acquisition Cost (CAC) due to customer lock-in from memberships, coupled with higher customer LTV driven by more consumer time spent in the Nike ecosystem.

Further, the shoe ‘Adventure kits’ include weekly challenges with animated instructions / inspiration for play and outdoor activities, like “Crab Soccer” and “Seaweed Tag”. The Adventure Club website lists even more constantly-refreshed game options. Kids can perform these activities with both their parents and other young peers, enabling rich time together, as well as development of new peer relationships (and potentially other parents to be exposed to Nike Adventure Club, a derivative marketing benefit).

Nike’s intention is that parents and kids will associate their regularly-delivered Nike shoes with an active lifestyle, deeper family ties and new communal relationships – values that resonate with all generations. Of course, it’s unclear how much user traction there will be with these Adventure kit games, but they are yet another consumer touch point that consistently reinforces Nike’s greater brand purpose with its Adventure Club consumers – and it is this brand purpose that Nike relies on to galvanize its consumer base for repeat success.

“Activity guides lay out fun ways for kids to get moving” – Press release on Nike News, August 12, 2019″

 

A Brand Identity that Prioritizes Kids Health and Planetary Well-Being

 Proliferation of direct-to-consumer channels and in turn lower go-to-market costs has allowed an increasing array of consumer products to enter the marketplace. Therefore, competing on product alone is increasingly challenging, and the winning commerce formula is a mix of (1) highly differentiated product (2) fun and easy purchase experience and (3) strong brand identity / purpose.

 Where Nike excels…

 

Product?

We will not claim to be experts on the quality of Nike manufacturing. Yes, questions are consistently raised over Nike’s product and labor quality, which date back to the 1970s when the company moved production overseas, and which are still prevalent due to increasing social consciousness re environmental and labor sustainability. While Nike did initiate factory audits starting in 2002 and the company has made significant progress in improving conditions for its international workforce, there still remains much room for improvement (unfortunately, this is a theme consistent across the overall fashion and apparel industries, and more worthy of consumers’ attention).

Another product consideration for Nike has been increasing competition from UnderArmour, Lululemon and the past decade’s growth of the athleisure category, which required Nike to step up its product quality and innovation game (e.g. Nike Joyride Run Flyknit shoes). In this spirit, our hope at RockWater is that increasing competition will NOT drive a short term race to the bottom (faster, cheaper…and significant negative externalities), but instead a longer term race to the top (high quality product differentiation and durable profits via sustainable material and labor practices). But we digress…

 

Purchase Experience?

Over the last 20 years Nike has introduced novel new buyer experiences, particularly Nike By You (formerly NIKEiD), which allows customers to personalize and design their own merchandise. Nike By You’s most current iteration includes augmented video mapping that projects real-time custom designs directly onto a shoe. This is cool tech, but we’re unsure just how much sales volume this drives. The Adventure Club subscription is a novel solution for kids shoe buying, but will this materially drive bottom line profit?…

 

Brand Identity and Purpose!

Whether via new product launches, purchase pathways or celebrity endorsements, all Nike activity powerfully reinforces its brand promise: “To bring inspiration and innovation to every athlete* in the world”, with the asterisk denoting that anyone with a body is an athlete. Nike’s purpose-led brand marketing across every single user touch point drives some of the most extreme customer affinity and loyalty among all consumer brands, and explains the company’s consistent listing at the top of the world’s most valuable apparel brands. The company’s brand success stems from Nike’s intimate understanding of its customer and what brings them delight.

Case in point: On September 3, 2018 Nike released a controversial “Dream Crazy” ad featuring Colin Kaepernick, the former NFL quarterback who protested police brutality and racism by taking a knee during the national anthem, and through today remains without an NFL contract. The ad resulted in massive lashback, including POTUS tweets, #NikeBoycott hashtags and social media images of customers burning Nike shoes. But as Phil Knight, founder of Nike, noted “It doesn’t matter how many people hate your brand as long as enough people love it.”

 Core Nike customers loved it and Nike succeeded in further reinforcing its brand identity with its core demo. Further, the ad caused people to talk about Nike EVERYWHERE…to the tune of $163mm in earned media, a $6bn brand value increase and a 31% boost in sales. And just last month, it was announced that Nike won a Creative Arts Emmy for the controversial ad, besting campaigns by Netflix and Apple, and Nike’s first win since 2002. Overall, the ad was a massive corporate win.

 Nike Adventure Club is yet another thoughtful brand moment for the global consumer brand.

 The Adventure Club website lists a three-fold mission: (1) easy access to high quality shoes (2) community support and (3) championing childhood activity and exploration.

 Community support comes from a partnership with Nike Grind, an in-house recyclable program that will help collect used Adventure Club shoes and either distribute them to kids in need or re-purpose the materials into playgrounds and new athletic surfaces (like the Nike Grind Ecore RubberX floor at the Hurley Surf Club in San Sebastian, which I unknowingly visited in August!). With eco-consciousness an increasing priority for gen Alpha (those born after 2010) and their millennial parents, and as highlighted by reactions to last month’s UN Climate summit, Nike is ensuring to highlight its value alignment with consumer zeitgeist.

 Childhood activity and exploration is not just promoted by the aforementioned Adventure kits, but the collective Adventure Club offering which provides vast product selection, better fitting shoes, less shopping time, less eco waste and give back to community play. In turn kids are exposed to new active lifestyle ideas that drive home the overarching Adventure Club mission of “More adventure, more community, less waste”.

 In alignment with its brand promise, Nike is inspiring and innovating the world’s athletes of tomorrow by its role in being a caretaker for today’s youth and planetary health. This greater purpose is a strong rallying cry, and it’s not hard to see how parents and kids could be inspired into long term brand loyalty.

 NOTE: Nike may be facing another big brand moment as part of the NBA / China tweet controversy, which led the company in early October to pull Houston Rockets apparel from its China stores. We’ll save that analysis for another piece we’re drafting on cross border media and commerce expansion.

 

Conclusion

Building a subscription or DTC model feels like it’s becoming table stakes in today’s new economy, driven by the “own your audience” value frameworks and mantras espoused by business leaders frustrated with inconsistent performance by tech intermediaries.

But, that doesn’t mean subscriptions are a logical progression for every nextgen media and commerce company, nor that they are easy to execute well.

Nike Adventure Club presents a fantastic case study of a new business model that is a smart extension of a rock solid business foundation. The new service stems from a compelling problem / solution framework, is enhanced by other existing Nike offerings and Nike’s overarching brand purpose permeates every nook and cranny of the new subscription launch. The result is a collective win across the three prongs of the winning commerce formula (product, purchase experience, brand identity / purpose), and rightly mobilizes powerfully behind the latter.

Nike Adventure Club is far from a guaranteed win, but it is a smart business model evolution.

Nextgen media and commerce operators will be well served by incorporating similar thinking into new DTC launch strategies, particularly as many executive teams head into 2020 annual planning during 4Q 2019. This planning period is a great time to refresh future company visions and resource plans during a wildly turbulent and highly competitive media and commerce cycle – doing this right means truly understanding your customer, your business’ unique capabilities and an assessment of opportunity within your peer landscape.

Have you done your homework? Do you have a good plan to test, learn, launch and iterate new revenue models for a successful 2020 and beyond?

Ping us anytime at hello@wearerockwater.com. We love to hear from our readers.

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