How Preemptive Digitalization Helped Nike to Cope with Pandemic

It doesn’t matter if the company is well-known to everyone. Any company can stagnate for a while, even the one with as loud name as Nike. Conversely, any company can switch its mindset and go through an ongoing digital transformation to reinvent its brand. Nike did that back in 2012… and it wasn’t very successful until 2017, when disjointed initiatives were finally united into a single strategy that helped to guide the company to the new heights amid the COVID-19 pandemic.

Earlier, Nike centered much of its strategy around the 2012 launch of FuelBand, a digital-fitness tracker. Release of Apple Watch pretty much killed this idea for good, but then they realized that data collected by software in the process was more valuable to Nike than developing the hardware itself. The Nike+ fitness app system for smart phones and watches now has more than 170 million members. Nike+ membership subscription was central to creating a more seamless “physical to digital” retail experience and lead to increased transactions and higher sales among Nike+ members.

Additionally, Nike has acquired multiple AI and data analytic startups to improve the understanding of consumer’s shopping behavior. Also, Nike has found a unique way to use AI: scanning customer’s feet in store and make the best style and size of shoe for that customer.

Going forward, Nike saw the technology a key component in increasing the “speed to market” . Introducing improved digital tools to product creation teams red lead to faster design cycles. Moreover, a couple of years ago, Nike partnered with various 3D printing companies and launched the first 3D-printed textile upper in performance footwear. The benefit was obvious: Nike was able to prototype 16 times faster than in any previous manufacturing method. All these new digital tools allowed Nike to leverage on collected consumer data to create the product based on client’s preferences.

All in all, instead of relying on other vendors, Nike improved its connection with customers through membership opportunities, stronger digital marketing and powerful data analytics. An end-to-end focus on consumer data better allowed Nike to connect with customers and recommend the right products. The improved digital focus gave Nike a faster product development cycle to quickly respond on market changes. All measures these proved to be vital at the height of pandemic.

Just like many other companies in the consumer and fashion industry, Nike was heavily affected by COVID-19 lockdown. Nike closed almost all stores in the USA, when the virus started to spread. The situation was similar for all other countries as well. Even for stores that remained opened, the foot traffic has declined significantly, which led to a drop in revenue and a net loss in the company’s 2nd quarter.

In response to the pandemic, Nike doubled down on efforts to grow online operations, strengthening its own e-commerce platforms and expanding app initiatives to drive digital sales. The result: Nike’s stocks now are worth 35% more than before the pandemic. All of it would be impossible if the company hadn’t started to go digital years ago.

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