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NIKE (NKE) to Boost Digital Advantage With Celect Buyout

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NIKE Inc.’s (NKE - Free Report) Consumer Direct Offense strategy has been fueling the company’s growth. With rising demand for its products, driven by this strategy, it has now taken aboard an expert in retail predictive analytics and demand sensing — Celect. The acquisition of this Boston-based firm is likely to improve NIKE’s ability to predict consumer needs.

Further, the acquisition will provide NIKE with a digital edge, with Celect’s cloud-based analytics platform, developed with the expertise of world-class data scientists. The acquisition is driven by NIKE’s urge to become more insight-driven, data-optimized and hyper-focused on consumer actions to produce more personalized products for serving the fast-growing global demand.

Celect, founded in 2013, brings with it an advanced intellectual property portfolio focused on data science and software engineering. Its cloud-based analytics platform gives key insights to retailers that enable quick optimization of inventory across its omni-channel business, using hyper-local demand forecasts.

In the acquisition process, NIKE will immediately absorb Celect’s team into its Global Operations Team. Clearly, this acquisition will contribute effectively in boosting NIKE’s digital business, which is one among the key focus areas under the company’s Consumer Direct Offense. Looking ahead, Nike’s digital and direct-to-consumer expansion is projected to drive growth. The company expects digital commerce, own and partnered, to account for at least 30% of sales by 2023.

In fiscal 2019, NIKE invested more than $1 billion in new capabilities and consumer concepts. This included significant investments in the sneakers app, the NIKE app, new store concepts that leverage digital, NIKE Plus membership platform, and enterprise-wide data and analytics capabilities that are likely to serve consumers in new and better ways. Notably, the NIKE Direct business drove nearly 50% of incremental revenue growth in fiscal 2019.

The company expects to expand the digital footprint, with the launch of NIKE app in 13 additional countries in EMEA, Greater China and across APLA in fiscal 2020. Additionally, it will continue to invest in new store concepts that leverage digital, as clear from investments in two new innovative stores in New York and Shanghai. Further, it is investing in the smaller digitally enhanced store formats like NIKE Live and the NIKE Plus membership platform.

These initiatives clearly demonstrate the company’s focus on accelerating digital advantage as part of capitalizing on its 2X Direct strategy. These along with other initiatives undertaken under the Consumer Direct Offense have been aiding the Zacks Rank #4 (Sell) company’s quarterly results as well as stock performance. Notably, the NIKE stock has advanced 9.6% year to date, outperforming the industry’s growth of 6.4%.


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