The global footwear and sports apparel giant Nike in an exercise to downsize it’s team strength has axed 20% of the employees in India. This comes as part of company’s global restructuring process announced earlier this year.
The global restructuring process came with a rider when Nike announced that it will cut 2% jobs out of its 70,000+ workforce worldwide. Mike Parker, Nike CEO stated that the overhaul is done in an attempt to speed up the product development and shift focus to the key markets.
The slump in global revenues has left Parker with the biggest challenge of his tenure. There’s the “Consumer Direct Offense,” to get fewer, but more compelling, products to customers more quickly. There’s also Nike’s “Triple Double” strategy aimed at doubling the speed of product creation, doubling the speed with which it gets products to market and doubling the company’s number of direct consumer interactions.
“Consumer Direct Offense” – as Nike called the strategy for the next three years includes 12 key cities where the sportswear maker projects that 80% of its sales growth will come. The cities mentioned were New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan.
“In June, we announced that as part of Nike’s move to align the company against the Consumer Direct Offence, a strategy that allows us to serve our consumers faster and more personally, there would be workforce reductions, and that has been the case in India. Our headquarters in India remain in Bangalore with two other offices in Delhi and Mumbai,” a Nike spokesperson has been quoted by the ET as saying.
Last year, there were reports that the iconic swoosh brand had shut down 35% of its stores in India and also halved the number of partners, which resulted in just 200 operational stores for the brand in Indian market.
Nike also reportedly pulled out of the cricket bat sponsorship deals with the top players of the Indian cricket team. The rethinking over company’s marketing strategy has been in place for over a year now. Poor returns on its investments have been a concern for Nike in India.
Nike saw its sales fall to Rs 764 crore in FY16 from Rs 803 crore in FY15, according to data from Registrar of Companies. Its losses widened too, from Rs 101 crore in 2014-15 to Rs 170 crore in 2015-16.
Now, the company is adopting slash salary budgets as the first step to bring down the deficit.