By  on November 16, 2005

Nike Inc. is a global sporting giant with legions of fans around the world. But only in the last few years has the company begun to tap women consumers in a significant way.

In a keynote presentation, Mindy Grossman, Nike's global vice president of apparel, discussed the company's "revolutionary change" in how it thinks about and designs products for women.

"Revenue from women's products is up from where we were a few years ago, but still represents our greatest area for growth," said Grossman, who joined Nike in 2000 from her position as president and chief executive officer of Polo Jeans Co. "The women's fitness consumer who we define as 'sweat beauty' is embracing sport into her lifestyle like never before."

In fiscal 2005, Nike's women's business was up 20 percent, and represented 18 percent of the Nike brand portfolio, Grossman said. Nike's overall revenues last year were $13.7 billion.

Grossman peppered her presentation with videos and recent advertising campaigns to showcase the breadth of Nike's message and product offerings, and how it has evolved its overall strategy to communicate more with women, and better meet their needs.

"Nike began with a vision to be of service to athletes," Grossman said by way of introduction. "To help them run faster, perform better and, ultimately, to allow them to achieve their dreams. And that same vision exists today. However, Nike is now a significantly more complex and diversified brand and portfolio of businesses than it was the year Phil Knight and Bill Bowerman created the first waffle racer. Last year, sales reached almost $14 billion globally ... What was once one shoe is now a product creation machine that produces over 15,000 styles a year in apparel alone, and the Nike brand has become Nike Inc."

While the company has long had products for women and has had various initiatives over the years, it was never able to elevate its women's business, Grossman said.

"It became clear to us about four years ago that we were going to have to do something different," she noted. "We changed the game at Nike by embracing a new consumer, evolving our strategy and making a commitment as a brand and an organization to change."Grossman said initially there was some "underlying fear in some camps" that if Nike focused and connected with women, it would lose its edge with its core male teen consumer.

"The predominately male culture that existed didn't yet understand that we could have two sides of the brand," she said.

She outlined three overarching resolutions the company made to begin changing the way it addressed its female customers. First, "We had to be open to change," she said. Resolution number two was "We had to evolve our strategy," and the third was "We had to commit."

She noted that as Nike was beginning to make these changes, a revolution was also happening globally. "The spending power of women was escalating around the world," she said. "In the U.S., women now spend approximately $2 trillion every year. They buy 81 percent of all athletic apparel, including 60 percent of men's and 91 percent of children's.

"Fitness and the role it plays in her life is changing," said Grossman. "It is no longer one-dimensional. It is part of her everyday existence ... There is a strong connection between her gym and after-gym world. What she wears to the gym influences what she wears outside of the gym and vice versa. She is looking for more than function in her performance apparel. It must be beautiful and functional."

With that in mind, Nike began to focus on the women's fitness consumer as its growth accelerator. The company began a process of "microsegmentation" that narrowed and defined the market into smaller consumer segments sharing common traits. It identified four key fitness sports to be at the forefront of its focus: running, cardio, yoga and fitness dance.

"We are now creating products specific to each of these sports, to each of those needs, 365 days a year, without trading out floor space or open to buy," she said.

Another critical component of its strategy was to begin creating products specifically for women based on their unique biological needs. It is now creating women's shoes using a women's-specific foot mold, and has dedicated resources in its advanced research team that is focused solely on creating women's-specific innovations. The first of these developments, a collection of sport bras and support products, will have a global launch in 2006, Grossman said.The company has also begun selling women's collections with coordinated head-to-toe looks. Nike has developed an integrated product creation process so that apparel, accessories and equipment share design inspiration and color, Grossman said. The company now has a fully resourced women's leadership team with a dedicated general manager, brand director and creative director who work across product, marketing, business units, geographies and supply chains.

As part of its efforts to reach women, Nike has increased its direct-to-consumer retail efforts. It has been opening NikeWomen shops throughout the world, and adding women's-specific environments to its Niketown formats. The company also has added catalogues specifically for women, as well as a Web site, nikewomen.com. Sales through these channels have exceeded plans, and more than 94,000 consumers access the nikewomen.com site every week, Grossman said.

"We are also developing aggressive expansion plans to open women's shop-in-shops in department stores, and looking at new mall concepts to create greater impact at retail," she noted. "All of these venues give us the opportunity to continually evolve how we present Nike as a brand for women to women."

In addition, Nike has started sponsoring women's running events, including its second marathon in San Francisco last month, which sold out and also pumped up business at its Niketown store there. Nike has also partnered with choreographer Jamie King for the "Nike Rock Star Workout," which was launched at Crunch gyms and is being rolled out to college campuses and other locations worldwide.

Nike has been promoting its women's products more around the world, with ad campaigns and events in Mexico and China that are specific to those regions, Grossman noted. On the sponsorship front, the company has been working to leverage its female athletes more. Nike-sponsored tennis player Maria Sharapova has appeared in campaigns for yoga in Asia and in other campaigns in Europe. Nike also recently signed a multimillion-dollar deal with 16-year-old golfer Michelle Wie, marking one of the most significant sports sponsorships for a female teen athlete.

"We think she has the possibility to be one of the greatest golfers — not women's golfers — but golfers, of her generation," said Grossman.

In response to a question about whether Nike would tap big-name fashion designers, as Adidas has done with Stella McCartney and Yohji Yamamoto, Grossman said: "We feel we have some of the best and most amazing designers in the world, who totally understand function as well as beauty. That's not to say it's not something we would never do, but we feel we are growing our business and creating a mark on the landscape by maximizing those designers, and that's our strategy for now."In closing, Grossman asserted that Nike's focus on women has come about due to the company's willingness to make critical changes in the way it does business.

"For brands to thrive, and business to thrive and continue to thrive in today's challenging marketplace and environment, they have to embrace change and embed it into their culture, and perceive change as a competitive advantage, not as a distraction."

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