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April/May 2011

Executives on Track

Featuring Davide Cardarelli, MD of NIKE SA

Davide Cardarelli
In this series Sports Trader keeps track of the sporting feats of executives in the industry, and what they do to keep fit. Words and photo: NIC DU TOIT

Davide Cardarelli, who has been in charge of NIKE SA for the past four years, was born into an Italian football family… and this inherited passion and ability resulted in him being selected to play for quite a few youth pro teams, inter alia Roma.

Now based in Johannesburg, he says SA has almost the perfect environment to play sport. He is still playing social league football and is also a cycling enthusiast, a keen swimmer and a regular in the gym. He also started playing golf in SA, but his real passion is cooking — especially Italian and South East Asian dishes. He is a member of The Italian Academy of Cuisine.

Clearly a man of many talents, he speaks fluent Italian (his home language), French, Portuguese and English — language skills that were refined when he worked in the oil industry in Italy, Brazil and London.

Cardarelli started his career with Price Waterhouse, with whom he did his articles to become a chartered accountant, before joining the oil industry for the biggest part of his career. He joined NIKE in Italy as financial director in 2003, for four years before coming to SA as MD.

The recession over?

He says the recession has been unprecedented, but he believes that in SA we are technically out of it. Brands with aspirational value, such as NIKE, have not been affected as badly as brands of a lesser stature. The 2010 FIFA World Cup also helped us through the recession.

In addition, a few developments in SA further assisted us with getting over the recession.

In the first instance, during the past 18 months people started to feel that they had more money in their pockets due to salary increases that exceeded inflation.

Secondly, food inflation reduced substantially, and last, but not least, the cost of money was halved due to reduced interest rates.

Although inflation is currently under control, it’s still at a low, and he is less positive about inflation in the near future. He believes that SA will experience increasing inflation due to energy becoming more expensive. Oil prices seem to be heading up, while electricity will increase locally by substantially more than inflation. In addition, commodity prices will increase, locally tax will increase, and the rand will reduce in value, hopefully gently, rather than suddenly.

Cardarelli says these factors make him cautiously optimistic about the immediate future in SA, as well as NIKE’s position in the market.

NIKE SA growing well

NIKE SA’s performance is influenced by global developments and stability, but currently he believes it is growing in fertile surroundings.

Cardarelli is clearly proud of what NIKE SA achieved under his leadership. It experienced very strong sales growth — even during the recession there was not a single year that they did not experience positive growth — and the brand has outperformed SA’s growth in terms of gross domestic product by several multiples.

At the same time, the brand has performed very well in South African market surveys and by winning awards. In the recent Virgin Active Sports Industry Awards NIKE SA was nominated nine times and won three awards (see p4).

The recent 2010 FIFA World Cup has been the most successful yet for NIKE worldwide, he says, and clearly NIKE SA played a very important part in making it a success.

But Nike SA has also created a lasting legacy that lives on in SA. It’s newly developed Nike Football Training Centre in Soweto enables the youth to develop greater skills, while Nike continues to create awareness on, and educate the youth about, HIV/Aids. Three years ago they won the Global Business Coalition’s Core Competence Award for their HIV/AIDS programme in SA.

Inside the organisation NIKE SA also managed to improve its own Human Capital. Virtually every current director and team leader has been appointed during Cardarelli’s reign.

The warehouse used to be criticized when he started here — today Nike SA has a newly built warehouse offering improved technological solutions and partners that deliver to the brands requirements.

Relationships with retailers

What is NIKE SA’s strategy as far as independent retailers are concerned? Cardarelli says that NIKE is very particular about supplying only retailers that will enhance the brand’s strategic priorities. They do have certain minimum order sizes, but the store itself is taken into account as well. For example, they might decide to supply a small running store, even if the quantities ordered do not reach their minimums, as long as the store is considered to fit the NIKE image.

They do their own distribution and will supply wholesalers by exception, and then only after approval of the wholesaler’s customers as well.

Like all the main brands NIKE believe in concept stores, not as a margin driver, but it provides a real experience of the brand to the consumer. They also use factory stores, not only to provide an outlet for end of season products, but also to serve as a NIKE experience shop for lower LSM’s.

So far, Cardarelli’s stay in SA almost sounds like a fairy tale. Have there been no disappointments? What about crime?

He says crime is unfortunate, but after living in Brazil, it is not a new experience for him and it has not dented his enjoyment of working and living in SA.

He is very complimentary of the South African people and made many friends, many who will be his friends for life.

But, if there is perhaps one area where he has been a bit disappointed, it is in South Africa’s leaders who do not make the most of the unique opportunities offered by events like the FIFA World Cup, when the leaders of large global corporations visited SA to observe the excellent infrastructure and other good qualities, which provide opportunities for investment in this country. Such windows of opportunity do not stay open for a long time and Cardarelli believes that South African leaders need to embrace these long term opportunities for progress.

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