BEIJING: Nike, the sportswear specialist, believes "brand strength" at least matches the importance of market share in China.
The company reported revenue growth of 20% in the world's most populous nation during the last quarter, including two percentage points attributable to favourable currency conditions.
Among the main sales drivers was a surge in demand covering Nike's trademark and Converse ranges.
"The China numbers continue to be very strong," Charlie Denson, president of the Nike brand, said on a conference call.
"Our inventories continue to be in pretty good shape there and we've seen a great appetite from the consumer across some of the key categories like basketball, football and running."
In an effort to further this momentum, the US multinational is extending its reach into third and fourth tier cities, where affluence and spending are rising.
"I would expect us to continue to see growth coming out of that expansion," said Denson.
"We're still pretty bullish on the China long term, and short term we'll continue to expand distribution out into the broader geographies."
As part of this process, Nike is building up its retail network and is taking more concessions in outlets like department stores.
However, Denson argued that consistency constitutes an essential ingredient of the firm's approach, whichever channel is used.
"We still look at it as a mono brand presentation throughout the distribution network, even into the new cities," he said.
"We're starting to put a few more factory stores down in China as well to continue to maintain marketplace integrity and brand integrity on the inventory levels."
While gauging performance is challenging in China when compared with the US and Western Europe given the difficulties of sourcing comprehensive data, Nike is confident.
"The numbers there are always, from a share standpoint, a little harder to acquire in China than you would expect than maybe some of other more developed or mature markets around the world," said Denson.
"We do a lot of brand strength monitoring as well, which is … actually probably more important than the actual share numbers. Both those numbers are very healthy right now."
Looking ahead, Denson suggested the climate in China should remain particularly auspicious for the foreseeable future.
"We retain the number one position in the country and I would expect to see us maybe grow a little bit over the last couple of quarters," he said.
"We feel very good about both the brand and the business in China and its ability to continue to expand and grow."
Despite increasing competition, Nike will resist reducing prices to secure new customers in lower tier areas.
"We're not expecting to be going down market in those cities," said Mark Parker, Nike's president/ceo.
"We're a premium brand and we're going to continue sell at prices that you would find around the rest of the world.
"Converse is another lever that is more attractive for us to pull in the China market, gives us a little more range in terms of price and position in the marketplace."
The company reported revenue growth of 20% in the world's most populous nation during the last quarter, including two percentage points attributable to favourable currency conditions.
Among the main sales drivers was a surge in demand covering Nike's trademark and Converse ranges.
"The China numbers continue to be very strong," Charlie Denson, president of the Nike brand, said on a conference call.
"Our inventories continue to be in pretty good shape there and we've seen a great appetite from the consumer across some of the key categories like basketball, football and running."
In an effort to further this momentum, the US multinational is extending its reach into third and fourth tier cities, where affluence and spending are rising.
"I would expect us to continue to see growth coming out of that expansion," said Denson.
"We're still pretty bullish on the China long term, and short term we'll continue to expand distribution out into the broader geographies."
As part of this process, Nike is building up its retail network and is taking more concessions in outlets like department stores.
However, Denson argued that consistency constitutes an essential ingredient of the firm's approach, whichever channel is used.
"We still look at it as a mono brand presentation throughout the distribution network, even into the new cities," he said.
"We're starting to put a few more factory stores down in China as well to continue to maintain marketplace integrity and brand integrity on the inventory levels."
While gauging performance is challenging in China when compared with the US and Western Europe given the difficulties of sourcing comprehensive data, Nike is confident.
"The numbers there are always, from a share standpoint, a little harder to acquire in China than you would expect than maybe some of other more developed or mature markets around the world," said Denson.
"We do a lot of brand strength monitoring as well, which is … actually probably more important than the actual share numbers. Both those numbers are very healthy right now."
Looking ahead, Denson suggested the climate in China should remain particularly auspicious for the foreseeable future.
"We retain the number one position in the country and I would expect to see us maybe grow a little bit over the last couple of quarters," he said.
"We feel very good about both the brand and the business in China and its ability to continue to expand and grow."
Despite increasing competition, Nike will resist reducing prices to secure new customers in lower tier areas.
"We're not expecting to be going down market in those cities," said Mark Parker, Nike's president/ceo.
"We're a premium brand and we're going to continue sell at prices that you would find around the rest of the world.
"Converse is another lever that is more attractive for us to pull in the China market, gives us a little more range in terms of price and position in the marketplace."
Data sourced from Seeking Alpha; additional content by Warc staff
