Beyond educating its customers on sizing, and hopefully helping more people avoid injuries from wearing the wrong size shoe, this technology could also be a financial boon for Nike, with its dominant position in the sneaker industry.
According to NPD Group sports analyst Matt Powell, Nike is the No. 1 footwear brand in the U.S. in terms of sales, representing roughly one-third of the market, ahead of Adidas, with 11% of the market, and Under Armour. It also remains really hot among teens with money to spend.
“Nike is not in any danger of giving up No. 1 by any means,” Powell said. “The consumer today is looking for unique products,” which Nike continues to churn out, he said.
However, Adidas, while it still holds a smaller share of the U.S. market, has been growing sales in the U.S. at a faster rate. In its latest reported quarter, Adidas said North America sales grew by more than 11%, compared with a 7% gain in Nike’s sales in the region. Adidas is also ramping up for a sneaker collaboration with Beyonce, which is expected to generate momentum in the U.S.
In 2018, 64% of Nike brand revenues came from footwear — shoe sales were $22.27 billion out of $34.49 billion in total sales. That doesn’t include sales from Converse, which operates as a separate business within Nike, and so Converse sneakers won’t be compatible with Nike Fit.
Shoe sales were up 6% last year, excluding currency changes, thanks to strength in running, Nike said. But that was less than the 8% growth in footwear revenues in 2017, as Nike didn’t sell as many Jordan shoes in 2018.
When testing Nike Fit in stealth in three markets — Seattle, Pasadena, California, and Dallas — Martin said the company noticed conversion rates increased for the people who used Nike Fit to find the right shoe size, meaning those people were more likely to leave the store with a bag in their hands. They were also more likely to come back later and buy another pair of shoes. Nike said returns were down at those stores. And associates spent less time running back and forth to the stock room to gather other sizes.
It can also help Nike stock the right inventory. Martin explained that Nike, like many shoe brands, typically ships shoes in bulk to different regions based on a standard “curve” that’s long predicted for the industry how many people typically wear each shoe size. But he said that curve is not as exact as it could be. And so it’s easy for companies to end up with too many size 10 sneakers in one market, when it’s really the 9 that more of those people need to be wearing, for example. Data gathered from Nike Fit should help the company make its own curve of sorts.
“We’ve never had any data coming back to understand just how accurate is that distribution,” Martin said.
Nike Fit is expected to help Nike grow its membership base, which amounts to more than 150 million people worldwide today. A Nike membership is free to sign up for and offers members early access to new products, a birthday reward, the ability to chat with athletes for tips on merchandise or training, and on-the-go workouts from Nike’s app. The company says it’s on track to increase its membership base to 300 million people, as those shoppers spend 40% more than guest customers, on average.
During its six-month trial run of Nike Fit in three stores, Nike said the service was the strongest lever to boost membership sign-ups that it has found.