Nike shifted its main focus on the brand’s digital training platforms specifically Nike Training Club and Nike Run Club
By Nicole Ganglani | Photo by Thomas Serer/Unsplash
The coronavirus crisis has challenged many retailers like Nike to make necessary adjustments in their business plans. Nike is overcoming the effects of the pandemic using a four-step business plan that involves its e-commerce and their supply-chain expertise.
According to Nike CEO John Donahoe, the sporting-goods manufacturer will follow the corresponding steps: containment, recovery, normalization and return to growth. These were the exact same steps Nike pursued when the crisis first happened in China. Last January, Nike reported that more than 5,000 of its stores closed down in China alone coupled with a five percent decrease in sales including in Hong Kong and Taiwan.
The COVID-19 crisis is the first major challenge of Danahoe who just started his tenure last January. Danahoe told Wall Street Analysis that the first step the brand did was to do whatever it can to provide digital service to consumers, especially those who will be spending a lot of time indoors.
“Stores were closed, but the e-commerce growth in all three markets remained strong during that time,” says Danahoe in an investor conference call. “The strong engagement of Chinese consumers with our activity apps translated into strong engagement with our Nike commerce app,” he adds.
Nike then shifted its main focus to the brand’s training apps, specifically Nike Training Club (NTC) and Nike Run Club. NTC, a home workout app, saw an 80 percent increase in its weekly users. Both platforms were linked to Nike’s e-commerce sites where digitals sales increased to 30 percent across China, Taiwan, Hong Kong and Macau.
Now that the pandemic has risen in North America and Europe (which together generates 67 percent of Nike’s revenue), Danahoe says Nike will go through the same four phases it did in China:
First step: Containment
As mentioned above, the company is maximizing its virtual training apps by waiving fees for the premium version of NTC. Aside from the features in the free version, users can now also access on-demand workouts and tips from trainers for 90 days.
Step two: Recovery
As of Apr.1, 80 percent of its 7,000 stores have resumed operations in China including Wuhan where the outbreak first started. Nike did this by gradually re-opening its stores based on customer health per city. “Consumers are back on the streets and we’re seeing retail traffic come back. Consumers are in the stores. They’re engaged, they are often wearing face masks, but they’re back on the street,” says Donahoe.
Step three: Normalization
In this phase, stores will begin operating like they did before the outbreak. Since this phase was implemented in China, Nike’s shares shot up 10 percent in the trade industry. “Our digital business in China has accelerated even further over the past months and we are now seeing double-digit increases in retail traffic week over week, with some stores having already returned to prior-year levels,” Donahoe adds.
Step four: Return to growth
The final stage will be regaining back momentum. Before the virus spread and infected the majority of the world, Nike’s stocks grew up to 32 percent. Donahoe says that Nike aims to build more powerful online and offline experiences and regain its positions in cities like New York, London and Shanghai. “We know in times like these that strong brands get even stronger. No one is better equipped than Nike to navigate the current climate,” says Donahoe.
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