Nike developed a Coronavirus playbook from its dealings in China, but there is no guarantee that it will translate to the U.S.

WHAT HAPPENED: After Nike shut down its China-based supply chain in December, it started reopening its stores in China on March 24th. The company created a four-phase approach— containment, the recovery period, normalization and return to growth—and said in-store sales are coming back quickly, while ecommerce remained strong since the stores closed. Nike was one of the first major global brands to close its stores in the United States.

WHY IT MATTERS

  • Nike might have survived the COVID-19 pandemic in China (it has reopened 80% of its stores so far), but American consumers aren’t incentivized to spend. The Chinese local governments made a concerted effort to fuel consumption during the outbreak. The nation’s cities donated millions of dollars in digital vouchers to encourage spending while stores were closed, resulting in digital sales that could offset the physical retail closures. For example, Jiangsu’s capital, Nanjing, gave away 318 million yuan ($44.8 million) worth of vouchers and locals redeemed close to 10 million yuan ($1.4 million) so far. This led multiple Chinese provinces to provide citizens with vouchers.
  • In the U.S., Nike is working to recreate the ecommerce success it experienced in China by ramping up its digital presence, offering free workouts on its app with Nike Master Trainers and posting more frequently on social media. But while ecommerce balanced Nike’s business in China, the uncertainty and widespread unemployment in the U.S. likely won’t inspire American consumers to buy non-essential items for a number of months.