Despite facing significant headwinds on Wall Street, Nike and Kohl’s maintain their positions as top choices among consumers across various demographics, according to a new consumer sentiment survey. The AlixPartners report, based on responses from 9,000 fashion shoppers spanning generations from Gen Z to Boomers, reveals a fascinating disconnect between consumer perception and financial performance, highlighting critical challenges and opportunities for these retail giants.
Key Takeaways: A Consumer Paradox
- Consumer Loyalty Remains Strong: Despite stock declines and projected sales decreases, both Nike and Kohl’s are top-ranked in their respective categories by a significant portion of consumers.
- Generational Preferences: While Nike dominates active footwear across all generations, Kohl’s appeal varies, being favored by Gen Z and Boomers as the top department store, while Millennials prefer Nordstrom and Gen X select Macy’s.
- Inventory Management is Crucial: The survey underscores the critical importance of **inventory management**, revealing that the lack of desired products in stores is the top reason consumers switch retailers.
- The AI Solution: Retailers must leverage **AI and advanced analytics** to predict consumer demand and optimize the allocation of inventory across both online and physical stores to satisfy ever-changing consumer preference
- A Critical Juncture: The contrast between positive consumer sentiment and negative financial performance indicates Nike and Kohl’s are at a turning point, necessitating swift action to address underlying problems.
Nike: Reigning Supreme in Active Footwear, Despite Stock Dip
Nike emerged as the undisputed champion in the active footwear category, securing the number one spot across all four generational cohorts surveyed: Gen Z, Millennials, Gen X, and Boomers. This remarkable achievement overshadows recent disappointing financial results, with Nike predicting an 8% to 10% sales decrease this quarter and a 26% stock decline year-to-date. The company’s transition under new CEO Elliott Hill adds another layer of complexity to the equation. While consumers clearly value Nike’s products and brand, the company must urgently address the factors driving this financial downturn.
Decoding Consumer Preferences for Nike
AlixPartners’ Sonia Lapinsky, the report’s author, emphasized that innovation and product quality are paramount to Nike’s consumer appeal. “**We would see in the data what’s important to the Nike consumer. It’s all about innovation, technical quality, product and [the competitors] who are growing super fast … they’re known for innovation, they’re known for product development, they do it a heck of a lot quicker than we know that Nike does it,” Lapinsky stated. This suggests that Nike’s path to recovery involves accelerating its product development cycle to maintain its competitive edge.
Kohl’s: A Department Store Darling Facing Existential Challenges
Kohl’s also surprised experts by securing the top spot as the preferred department store for Gen Z and Boomers. Despite this strong consumer loyalty, the retailer forecasts a 4% to 6% sales decline this fiscal year. This highlights, once again, the disconnect between positive consumer perception and struggling financial performance. The report argues that Kohl’s success is primarily attributed to **competitive pricing**, particularly as evidenced by the customer’s preference for the Kohl’s Cash program, the report found.
Balancing Price and Experience in the Department Store Landscape
Lapinsky highlighted that Kohl’s must focus on enhancing the in-store shopping experience to solidify its position in a challenging market: “Consumers “still think they’re the best at product price combination. They’re still getting a deal. They probably love the Kohl’s bucks,” said Lapinsky. “Now let’s make the experience when they’re in the store something that they’re going to come back for and actually drive your top line.” This suggests that while pricing is a core element of Kohl’s appeal, improving customer experience should become a key investment for future growth.
The Inventory Tightrope: A Universal Retail Challenge
The AlixPartners report unearthed a critical challenge facing both Nike, Kohl’s, and the broader retail industry: **inventory management**. A staggering 66% of consumers surveyed indicated that a lack of in-stock items would prompt them to shop elsewhere. The report highlights the vast discrepancy between online and in-store inventory, with an average of only 9% of a retailer’s online assortment being available in physical stores. This disconnect creates a major friction point for the customer experience.
Bridging the Online-Offline Gap with AI
The report illustrates this issue with stark examples, contrasting Macy’s extensive online inventory of women’s tops (24,000 items) with a much smaller selection (2,500) in its flagship store. Gap faced similar discrepancies, indicating a company-wide retail problem across the industry. To resolve this, Lapinsky advocates for the strategic implementation of AI and improved analytics to predict which products need to be available where. “This is a perfect kind of recipe for where AI should come in,” she explained. “They’ve got to get really smart about where the customer is going and what they’re looking for, and they do that with better analytics, potentially AI models, that are predicting what the customer wants. And then they’ve got to have that same view transition to stores, even by store location, store cluster, store region, where they have a good view of what that consumer is likely looking for.”
In conclusion, the AlixPartners survey presents a compelling case study of the divergence between financial performance and consumer sentiment. Nike and Kohl’s success in garnering consumer loyalty stands in stark contrast to their recent struggles. The findings emphasize the urgency for both companies and the broader retail sector to prioritize **inventory management using advanced technologies** in order to avoid walking the tightrope of satisfying customer expectations which in turn will bolster profitability, and increase long-term success.
