Nike, the sporting-goods manufacturer, is pursuing a four-stage approach as it responds to COVID-19.
On a recent conference call (📕 see transcription here) with investors John Donahoe, Nike’s CEO, discussed the 4 strategic pillars to its Coronavirus response.
The first phase of Nike’s response to COVID-19 involves containment of the outbreak.
In this period, stores are closed and Nike pivots wherever possible to provide digital services to consumers that will be spending a lot of time indoors. An approach that has already proved successful in China, Japan and South Korea.
When stores in these markets were closed ecommerce growth remained strong. Nike also supported the shift to digital by connecting with consumers at home through their Nike Training Club app.
As we have observed, in-home fitness is seeing significant growth during the crisis. As this happened, Nike made the premium version of its Nike Training Club App, which offers virtual workouts like a 43-minute upper body strength routine, free to all U.S. consumers.
Further supporting online growth, Nike Training Club workouts in China saw an extraordinary rise in signup and engagement. With weekly active users for all of Nike's activity apps up 80% by the end of Q3 versus the beginning of the quarter.
The second phase of Nike’s strategy is Recovery.
With the primary indicator of the “recovery” being the reopening of physical stores – a phase that Nike’s operations in China, Japan and South Korea have already effectively passed through.
Approximately 30 days ago, Nike began to gradually reopen stores in China. And as of today, nearly 80% of Nike's stores in China have reopened with more coming back on line every day. Last week, Nike also reopened its first store in the Wuhan area with encouraging results.
Nike's digital business in China has accelerated even further over the past month, and they are now seeing double-digit increases in retail traffic week-over-week with some stores having already returned to prior-year levels.
While Nike can't predict perfectly how long the containment phase is going to take in the U.S. and Europe, Nike is seeing consumers back on the streets and back in stores in markets that have passed through the containment phase.
In the “normalisation” phase, business conditions begin returning to pre-crisis levels but with some new behaviours from their customers.
Nike expects to see these new behaviours normalise in countries all over the globe, and is shifting its entire consumer ecosystem to deliver digital access to sports that reflects consumers’ changing needs.
Broadly speaking, Nike is accelerating its plans to create shared experiences and opportunity for virtual participation. It is clear that the company has ambitions to connect people to something bigger and show how sport can inspire.
The final stage is “returning to growth”.
While there is still uncertainty around this phase, by using the playbook from Nike's Greater China business for how to navigate the crisis Nike has confidence that they can emerge in a stronger position.
It is also clear that Nike plans to invest in developing more powerful online and offline experiences and in enhancing its position in key cities like New York, London and Shanghai.
Nike has a view that 'digital versus physical' experience is a thing of the past and is rapidly reshaping its digital services to meet accelerating consumer preferences.
Brands should be considering that at a fundamental level consumers want to get what they want, when they want, and how they want it.
This means that the nature of considering a digital purchase or a physical purchase is rapidly become less meaningful in developed countries and will open up new business models for forward-thinking companies.