Nike Inc.'s Business Continuity Strategy during the Covid-19 Pandemic
| Case Code: BSTR626 Case Length: 19 Pages Period: 2020 Pub Date: 2021 Teaching Note: Available |
Price: Rs.400 Organization: Nike Inc. Industry: Retailing Countries: United States Themes: Crisis Management & Conflict, Digital Strategy, |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Impact of Covid-19 on Retailers
The Covid-19 outbreak led to the disruption of several businesses globally. Retailers worldwide also suffered huge losses as only the sale of essentials was allowed and high selling items such as non-essentials like toys and electronic equipment could not be sold. Thus, many department store chains and other “non-essential” retailers were forced to close down due to the pandemic..
Nike’s Strategy During Covid-19
Nike had a bunch of mobile apps such as the NTC app, Run Club app, and its retail app known as Nike, for online shopping. In 2015, it launched the SNKRS app wherein an alert was sent when a shoe model was launched. The SNKRSS app sold limited edition shoes which were sold out within a few minutesof their launch..
The Results
For the Q4 of 2020, Nike’s digital sales grew 75%, contributing US$1 billion in annual digital revenue in Greater China and Europe, the Middle East, and Africa. For the fiscal 2020, Nike’s digital sales increased by 47% to US$5.5 billion from US$3.8 billion in fiscal 2019(See Exhibit VIfor Nike’s digital commerce sales growth). Donahoe expected Nike’s online sales to account for 50% of the company’s overall revenues, going forward..
The Challenges
Though Nike was by and large appreciated for keeping its stores closed during the Covid-19 pandemic, it faced a backlash from critics and some of its employees after it started opening its warehouses. In April 2020, a worker at Nike’s Memphis warehousedied due to Covid-19 following which an employee at the warehouse complained to the public health inspector. However, when the inspector, known as the environmentalist, from the Shelby County Health Department, respondingto complaints regarding unsanitary conditions at the Nike distribution center visited the center on April 16, 2020, she was denied entry into the building by the security guard..
Looking Ahead
In June 2020, Donahoe announced that Nike planned to lay off some of its employees. He assuredthe staff that the reductions were not being done for cost reasons but for restructuring the ‘overburdened matrix’ the company had become. Donahoe added that the cuts would make Nike simpler and also increase its speed and responsiveness. The layoffs would happen in phases starting from July 2020. Releasing a statement in June 2020,..
Exhibits
Exhibit I: Brand Finance’s List of World’s Most Valuable Brands (2020)
Exhibit II: Nike’s Consolidated Statements of Income
Exhibit III: Nike’s Revenues by Divisions
Exhibit IV: Retail Sales in the US (March 2020)
Exhibit V: Nike’s ‘Play Inside, Play for the World’ Ad Campaign
Exhibit VI:
Nike’s Digital Commerce Sales Growth
Exhibit VII: Nike’s Consolidated Statements of Income (Q4 of 2020)
Exhibit VIII:
Nike’s Stock Chart
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