Business Corona pandemic: How Nike and Adidas survive the crisis

Corona pandemic: How Nike and Adidas survive the crisis

No Olympic Games, no European Football Championship, the world of professional sports is largely idle, many shops were closed due to the pandemic. This is bad news for sporting goods manufacturers like Adidas and Nike. But both are prepared.

By Thomas Spinnler, boerse.ARD.de

In the corona crisis, sporting goods manufacturers benefit from the fact that they have long been focusing on direct business via online retail. “Direct to Consumer” (D2C): At D2C the products are sold directly from the manufacturers to the customers without intermediaries.

Of course, neither Adidas nor Nike can compensate for the failures caused by the shops that were closed throughout the pandemic. “If you sit in quarantine in your apartment for two weeks, you don’t buy new running shoes – because you don’t run in the apartment,” Adidas boss Kasper Rorsted stated dryly.

But of course Adidas and Nike want to consistently use the opportunities of the expected digitization surge. Both groups are working flat out to bind the community more firmly to themselves with their online offerings. Why is the community so important for Adidas or Nike?

Self-realization by brand shoes

In his latest work, cultural sociologist Andreas Reckwitz uses the example of a Nike shoe to describe what naturally also applies to other products from other manufacturers: “The Nike buyer not only perceives the functionality of the shoe, but also its cultural attractiveness – as a symbol of desired identity traits, as an entry into the Nike community “, says Reckwitz.

Consumer goods should therefore no longer satisfy simple everyday needs. The topics of lifestyle, individuality, values ​​and self-fulfillment are sold. This is a great opportunity for companies, because the need for self-fulfillment is practically insatiable, constantly generating new purchase requests and thus growth.

“Inspiration and added value”

Adidas and Nike recognized that. On their online presence, they offer a wide range of services related to fitness and fashion. Direct sales can best offer personal emotional ties to the brand. This relationship is intensively designed and expanded by the marketing departments with fresh content – not only on their own pages.

The RTL subsidiary Divimove recently looked at the most popular brands on YouTube in the period between January and April. Nike ranks third with a 9.2 percent increase in subscribers to 1.4 million subscribers. The sporting goods manufacturer adapted its content strategy on YouTube to the new consumer behavior of the community very early on and published new formats, the Divimove authors write. “A new home workout series and kids’ Nike Playlist format have fueled the channel’s growth since late March.”

Adidas follows its channel with a series that shows how athletes keep fit during quarantine and increased the number of video views by 662 percent. Inspiration and added value are successful, says Divimove.

Shift to online trading pays off

But what is decisive is what happens on their own homepage: Nike had already announced that it would continue to expand its e-commerce business in the crisis. In the past year, the online trade had still made up around a tenth of sales. But it gets more: In the third quarter, growth in the online segment among the industry leaders worldwide was a remarkable 36 percent. Michael Binetti, an analyst at the Swiss bank Credit Suisse, believes that the chances are good that Nike will become significantly more profitable after the Corona crisis – an intended effect of online trading.

According to CEO Rorsted, e-commerce at Adidas accounts for a total of 15 percent of Adidas sales. Brand observers and experts have long expected that this shift away from brick-and-mortar retail will pay off in the long term.

Consumer-centered with Noble Purpose

Those who bind their self-realization fantasy to a brand also make demands that companies have to meet in order for sales to be right. This includes the issue of social responsibility. Because of climate change, both Nike and Adidas are now advertising products that are said to have a smaller ecological footprint. Adidas is advertising to make plastic shoes that floated in the oceans. Nike wants to make jerseys from former plastic bottles and also uses plastic waste for production.

Nike and Adidas also take a stand in the current racism debate in the USA. Adidas plans to hire 30 percent of jobs in the United States to African Americans and Latinos. Nike posted videos and tweeted to support the fight against racism.

The concept carries risks if the customer’s expectations are not met. Adidas felt this when management announced during the corona crisis that despite billions of euros in profits, they would no longer want to pay the rent for closed stores. The criticism was so vehement that Adidas had to apologize and finally paid the rents.

At such moments, companies would probably want a sneaker to be just a sneaker.

Those: boerse.ard.de

Tagesschau24 reported on this topic on June 26, 2020 at 11:45 a.m.


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