Nike: COVID Implications and Possible Solutions

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Table of Contents

Introduction
Current Conditions
Reasons for Company Struggling
Possible Solutions
Recommended Solution
Conclusion

Introduction

Nike is a multinational corporation that has been one of the leaders in the market for many consecutive years in a row. This company is considered the most notorious supplier of athletic footwear and clothing. Nike was founded in 1964 by Phil Knight and Bill Bowerman. The target market the company initially focused on consisted of athletes and the general public interested in sports. Over the years, the market has changed, and sports clothes had become an everyday style for most individuals since the 1980s when the Nike brand became a symbol of urban fashion. The switch from purely athletic apparel to sports clothes with a twist of hip-hop fashion that Nike was experiencing was the most significant change that allowed the company to become one of the most famous retailers worldwide.

Nike is a public company, which means that the owner is directly related to stock shares that are freely traded. The key people who manage Nike’s market strategies, decisions, and solutions are John Donahoe (CEO), Mark Parker (executive chairman), and Phil Knight (chairman emeritus). Mark Parker used to be the CEO between 2006 till January 13, 2020, but stepped down and was replaced by John Donahoe. The latter implemented an effective strategy in combating the difficulties that came along with the COVID-19 restrictions.

Current Conditions

COVID-19 had a significant influence on all industries, and the fashion field is definitely among those that had to suffer. Since all stores and factories closed at the beginning of the outbreak, manufacturers could not continue with the same production and manufacturing practices. Other issues included the lack of fabric, retail stores canceling orders, and the lack of staff. Certain manufacturers had strategies that helped combat some of the problems. Nike is among them, and one of the things that saved them from long delays and lack of fabric was preordering materials and keeping them at safehouses ahead of time.

Fashion brands primarily known for in-store sales had the most prominent issues during the pandemic. Since most countries tried to manage the outbreak by preventing people from interacting, unessential businesses such as clothing stores closed down. Moreover, companies had to continue spending money on renting the spaces, paying wages, and other costly procedures. This was a devastating turn of events that caused irreparable damages even for some of the biggest corporations in the world.

There are two different positions when it comes to COVID and its impact on the clothing industry. While the closing of the stores and factories had adverse effects on the revenue, digital commerce has been keeping the businesses relevant. Most companies that are related to fashion are trying to switch to online retailing. This is a more efficient way of interacting with customers, it cuts down on expenses, and it is more convenient for both the buyer and the seller. During the COVID-19 restrictions, consumers could stay at home, avoid the risks of being infected, and receive the goods they have ordered online from their favorite retailers.

Reasons for Company Struggling

Nike’s primary revenue consisted of in-store purchases. The biggest economic challenge was keeping the percentage of sales high despite the inability to advertise and display the items in physical stores. The company’s CEO stated that the strategies of this company are focused on longevity, and the plan for keeping the company stable during the pandemic proved that these words were truthful. While the stores were closed and Nike had no revenue from such sales, the digital sales have increased by more than 30%. The brand’s main representatives’ primary goal was to improve the e-commerce aspect, which was not a technological challenge for Nike since this policy was applied long before the COVID-19 outbreak.

This plan was implemented back in 2017 when Mark Parker announced that the brand would decline collaboration with most of its distribution partners. Over the last five years, Nike has become a brand that partners with 40 distributors, a significant change from previously having more than 30,000 partners. COVID-19 affected Nike’s in-store sales, but it is a step in the right direction when it comes to e-commerce.

From a legal standpoint, the governments of most countries did not allow retailers to sell goods at physical stores due to the possibility of spreading the virus. Everyone from small businesses to big corporations would suffer from legal consequences such as fines and other inconveniences if they were to continue their activity. The legality of in-store sales differed from country to country, but the majority of them had a policy regarding crowding people and not wearing protective measures.

There is also the aspect of competitive challenges. Most brands were already focused on online commerce, so Nike was not the only company on the market providing such services. The most significant competitors (Adidas, Puma, Reebok, Asics, and Under Armour) remained unchanged during the pandemic. However, Nike was the only corporation that was so fast and aggressive in promoting its online services. The long-term plan of developing an efficient e-commerce strategy kept Nike the most successful retailer during the quarantine.

Nike’s marketing promotions also suffered during the COVID pandemic. It became impossible to advertise during sports events and other activities that implied the gathering of people. However, Nike was an early adopter of online marketing. Besides having advertisements on social media platforms and other popular websites, Nike is known for having contracts with celebrities and athletes who are promoting their products. The pandemic did not stop them from posting pictures of themselves in Nike apparel, writing posts about it, and recommending the items to their subscribers.

The pandemic definitely had an impact on the world economy. It affected the prices of stocks for many companies, consumer preferences, and how companies chose to conduct their business. From a consumer standpoint, restrictions due to COVID-19 made e-commerce the primary way of shopping. This also applies to Nike since the physical stores were closed, and online stores were the only ways consumers could still make purchases. The online retail number has increased, and online purchases now consist of around 30% of all Nike sales. This is proof that consumer preference shifted toward online shopping.

Even though COVID-19 negatively impacted all clothing brands, including Nike, their strategy is nowhere near causing financial failure. The brand’s leadership made the right call when they decided to focus on online sales, making Nike a profitable corporation even during hard times. The COVID crisis surely affected the way Nike conducts business and deals with retailers. Still, the shifting in policies and strategies diminished the harmful effects the pandemic would have had on the brand.

Possible Solutions

Nike is a brand that keeps its leading position due to customer demand. A possible solution that would help minimize the effects of COVID has partnerships with as many retail stores as possible. Expanding the list of partners allows the consumers to have available Nike products no matter what platform they use to make purchases. It will also be beneficial in terms of competition with other brands. Another solution is continuing to develop the e-commerce aspect of the company.

This means displaying the items more favorably, having more online advertisements, and restocking with new items as fast as possible. Moreover, Nike should focus on having a reputation of being a conscious brand. This will impress the customer who would want to support such a charitable company. Being conscious of the workforce is also an aspect that builds the brand’s reputation. A company that is focused on keeping its workers safe, taken care of from a financial standpoint, and satisfied will always be more efficient and highly supported by consumers, which will minimize the competition difficulties.

Conclusion

Although COVID-19 had a negative implication for most companies, Nike managed to keep the situation stable and strive in certain aspects such as online commerce. The inability to sell products in physical stores caused the biggest problem, but it was diminished by upgrading the e-commerce system. The remaining problems can be solved by continuing to develop online solutions, advertising the brand’s charitable agenda, and implementing a donation system that would involve the general public.

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Nike: COVID Implications and Possible Solutions

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