How Nike Overcomes Coronavirus Impact on Chinese Business

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How Nike Overcomes Coronavirus Impact on Chinese Business

The coronavirus crisis has proven to be a disaster for retailers worldwide. But as Nike is proven in China, brands can reduce pain with the help of powerful technology and quick and decisive moves.

Nike reported its latest quarterly results on Tuesday evening, stating that sales through February 29 had fallen 5% in Greater China, including Hong Kong and Taiwan. With the outbreak of coronavirus in late January, the mass store closed and the period started well, with sales growth of 22% in the region ending at least 10%.

However, as newly created CEO John Donahaw told Wall Street analysts, Nike has both an e-commerce app and a training app, its supply chain strengths, and an approach to reopening stores. In both respects, it is recovering rapidly, aided by the power of its technology. As of Tuesday, the company said that 80% of its 7,000 stores in Greater China, including Wuhan, have reopened and digital sales are growing fast.

Nike stocks gained 10% in early trading Wednesday.

All this informs Nike’s approach to addressing the coronavirus pandemic in North America and Europe, where outbreaks are slow and stores are largely closed. This is very important. North America and Europe together generate 67% of corporate profits, but 15% in Greater China.

“China is on the other side of the crisis,” said Donahoe, who took the reins in mid-January. “We have a playbook that can be used elsewhere.” That approach has brought quick benefits in Japan and Korea as well.

Two weeks after Donnahoe became CEO, no crisis had occurred. Nike quickly closed stores in Greater China. By early February, 5,000 stores, 75% of the fleet there, had been completely closed and other stores were open for limited time. About two weeks later, Nike gradually began reopening the store.

However, during closure, Nike’s e-commerce was further enhanced by a workout app and trainer that provided training at the Nike Training Club. Users grew 80% in the quarter to activate customers at home and focus on Nike. Nike’s fitness and e-commerce apps are particularly well integrated, resulting in a 30% increase in digital sales.

Nike, which closed stores in the United States, Canada and other western markets on March 15, hopes to do so in those markets. During the weekend, Nike waived the premium version of the Nike Training Club, which offers on-demand training and tips from trainers for 90 days. [The base version is free.] Under Armor makes similar bets on the MyFitnessPal and MapMyRun apps. The company’s stores have also been closed.

Nike also needed to manage the delicate issue of reopening the store to minimize losses, but don’t be too early so that it is not considered unaffected by the customer’s health. Donnahoe said he helped strengthen Nike’s brand in this important market, citing the head of Nike’s business in Greater China. “When we say Nike we are a Chinese brand for China, it’s very clear to me that it’s really true.”

Nike has returned to a point where sales in that market in the fourth quarter [March to May] should be comparable to the same period last year. In a research note, Jeffries praised “the continued power of this global brand, its growing digital strategy, and the benefits of strong innovation.”

For North America, Nike uses a similar approach to managing store closures. The company originally planned to reopen stores in the West on March 27, but now plans to reopen stores in North America and throughout Europe “by location.” It pays employees at stores and distribution centers for a period of confusion, while most other companies promise two weeks.

Similar to China, Nike was able to quickly move merchandise for physical stores [own stores or wholesale partner stores with many stores closed] to e-commerce sites. Digital pipe. “

On the marketing front, we’re encouraging people to stay indoors to minimize outbound coverage, rather than just driving people to the site to increase sales. Nike strives to be considered a good corporate citizen.

“If you dream of playing millions around the world, now is your chance. Play inside and play for the world,” read Nike’s ad.

“I know that at such times, strong brands become even stronger,” said Donahoe. “No one has as good facilities to navigate the current climate as Nike.” Some other brands may ask differently, but Nike’s pandemic in key markets Handling will help make that claim.

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