City Specialty Assortment Rollout Strategy: six account groups in place of a shared catalog

What it is

City specialty was Nike's channel of city footwear chains and boutiques. A Nike sales summary of January 2016 sized it at $751M in bookings, with more than 668 accounts and 2,300 doors. The top 10 accounts were 62% of the business.

The whole channel bought from one Best catalog and one Better catalog, fed by category merchandising. Khounlavong's deck named what that produced: a diluted message at retail, fragmented assortments across categories, a sea of sameness and heavy inventory positions.

He took the channel as his second marketplace assignment, covering city specialty, boutiques and WSS. Under Create the Future, Nike's reorganization of merchandising, the new marketplace merchandising function became the owner of assortments. Catalogs stayed with category merchandising.

What Khounlavong did

• Wrote the City Specialty Assortment Rollout Strategy. The deck went through 11 versions in five weeks, from January 26 to February 29, 2016.
• Set five goals for the rollout: align to the sales strategy, build collaborative and consumer relevant assortments, build a cluster blueprint, learn from key retail partners, and roll out on time.
• Sorted the account base into six groups: boutiques, running focused, basketball focused, hybrid, all other Best and all other Better. The boutique group named BAIT, Bodega, Concepts, Extra Butter, KITH, Nice Kicks, Politics, Social Status, Sole Fly, Ubiq and Undefeated among others.
• Sized each group against the channel's fiscal 2019 target of $1.0B, using the cross-category growth plan. Basketball focused accounts were $277M, or 28%. Running focused accounts were $224M, or 23%. Boutiques were $54M, or 5%.
• Drew the handover by season. Spring and summer 2017 added a Shoe Palace pilot, a running led assortment for Shoe Palace and Sneaker Villa, and a basketball led assortment for DTLR, Jimmy Jazz and City Gear. Fall 2017 added a hybrid assortment for Shiekh.
• Kept WSS on its own catalog in every season of the plan, and worked with a West territory marketplace director to raise the account's needs. His review calls WSS arguably the retailer that connects Nike to the Hispanic consumer.
• Proposed an interim step for boutiques: a recommended assortment plus exclusive models, with the catalog still open to them, ahead of full assortments in fall 2017.
• Listed the work still to do, with owners and seasons: a boutique tiering strategy, Best, Better and Good assortment levels, standard retail sales reports, and a door cluster blueprint driven by capacity and revenue targets.
• Wrote the City Specialty merchandising strategy for fiscal 2017 to 2019. Its priorities were to pioneer the new city and boutique merchandising strategy, define the door cluster blueprint, segment and differentiate the marketplace, and obsess the consumer journey. The page also named women's and taking back the boutique.
• Led the marketplace merchandising part of CSRS, Nike's city specialty meeting with its retailers, in Las Vegas in February 2016.

Results

• Khounlavong's fiscal 2016 review marks the goal as completed: a new city specialty and boutique strategy, built with cross-category partners, to drive segmentation, differentiation, sustainability and productivity.
• The deck set the target state in writing: focused and flexible assortments, a segmented and differentiated market, and higher assortment productivity and profitability.
• His meeting notes of January and March 2016 raise a push of the rollout to summer or fall 2017 because of systems limits. Spring 2017 was planned as catalogs only, with the Shoe Palace pilot.
• No sell-through or revenue result is recorded. He moved to Hibbett Sports and Shoe Palace in March 2016.

At a glance