1.

Introduction &literature review

1.1 Introduction
Covid-19 pandemic is continued forcing the retail stores and showrooms to be
closed, which signals an unprecedented distraction in the retail commerce. A wide range
of footwear brands experienced frightening magnitude of long and short-term challenges
in the domains of marketing, consumer demand, cash flow, labour force and supply
chain. However, some of the footwear retailers have been successfully navigating all of
these issues, such as, Nike Inc. Along with this; retail sector is at the paramount
essentiality in Bahrain, since it acts as a gateway to customers from businesses’ financial
performance and upstream sector. This study is aimed at discussing negative impact
posed by Covid-19 pandemic on Nike Company.

1.2 Background information

Nike Inc. has reported huge loss for the first time in a couple of years disparaged
by closure of retail stores and departments due to lockdown spurred by Covid-19 across
Bahrain. Share of this footwear manufacturing company has fallen by 4% in trading.
While the Covid-19 pandemic weaved at2nd half, overall impact was exceptionally great
to withstand. Based on the research of Roggeveen, &Sethuraman, (2020), pandemic has
damaged retail economy through hitting consumers’ health and wellbeing

Figure 1: Revenue drop of Nike

(Source: Citycentrebahrain.com, 2021)
 Moreover, wholesale businesses, by which, Nike vends merchandise to anther
retail companies, also came to halt in this health crisis. For this reason, Nike faced 50%
drop of shipment, for the reason of higher cost and increased inventory. Subsequently,
gross margin has diminished at 820 basis point by the 4 th quarter of 2020
(Citycentrebahrain.com, 2021). At this stage, Nike closed numerous retailers and its
company-owned stores for 8-9 weeks. Net loss of this company came at 51% per share
and gross revenue was plunged by 38%, which reached at $6.31 billion.

1.3 Definitions of Key Terms

Covid-19 pandemic: This disaster has negatively affected all international
businesses.
Crisis management: Businesses have been implementing effective strategies to
overcome this crisis and recover entire operation (Chaeraniet al. 2020).
Purchasing pattern: This pattern is followed by a group of actors while
purchasing products or receiving services (Nehrebecka, 2021).
Supply chain: This refers to a network of activities, organization, resources and
individuals involved in creation and selling of products.

1.4 Research Questions

Research questions are mentioned below.
 How the Covid-19 pandemic has histrionically disrupted the footwear
manufacturing company, Nike?
 How Covid-19 pandemic has disrupted purchasing pattern of Nike’s consumers?
 What are the issues faced by Nike’s management to continue selling through
brick-and-mortar shops?
 What are some recommended strategies so that Nike Inc. can improve their
business?
1.5 Purpose of Research
The present research has evaluated the negative impact of Covid-19 pandemic in
terms of revenue, gross margin, dropping the sell volume and loss of consumers. Nike
Inc. has closed almost 50% of the stores across Bahrain and reduced working hours in the
rest of departmental stores due to worsening coronavirus outbreak. The stay-at-home
initiative is considered as the main reason behind this inferior situation. For the
consequence, Nike has doubled down its effort to escalate online presence for wake of
crisis. Management had the plan to fortify personaldigitalplatformthroughaugmenting
partnership with the leading retailers. The entire country came under quarantine order and
subsequently, consumers were more likely avoided going outside. In this circumstance,
this footwear retailer recognized a huge decrease of global response to their innovative
products. The present study is going to conduct, since Shoring up cash reserves is also a
negative impact on retailers, since they were facing loss of physical footprint.
Such effort is poised to convert the businesses more agile, for which, the digitally
orientedfootwear manufacturer, Nike has become fortified. References to this matter, it
can be found that, worldwide athletic apparel giants have received benefits from robust e-
commercestrategy that surged as consumer’s motivation. Meanwhile, the retail partners
of Nike had closed flagship stores, which led to reduce 54% of annual sale by wholesale
accounts. In Bahrain, majority of consumers cut expending in non-essential items and
apparels. Henceforth, during this pandemic, Nike operated business in an uncertain
economic environment.

1.6 Research Procedures

The realism type of research philosophy has been incorporated for this research,
since it helped to analyse social phenomenon perceived through real senses. On a similar
note of Snyder (2019), it refers to a methodical probe accentuating the authenticity
predictable by logic as the facts. Through using this philosophy, real picture of Nike has
been drawn by action research.
Descriptive research strategy has been carried out to categorise features of issues
through describing Nike Company’s case study. As per the view of Snyder (2019), facts
are gathered corresponding to the pre-determined criteriathatcan be deployed to
appreciate precise problems.
Deductive type of research approach has been adopted by the researcher, since
this approach is primarily concerned with intention of research questions and designing a
specific strategy to answer those. Another advantage of deductive approach is that it
helps to derive conclusion from propositions or premises.

Chapter2: Review of literature

1.7.1 Impact of Covid-19 on footwear retailers

The global company, Nike has been incorporating a local approach in Bahrain,
wherein the executives and leaders are committed to response to customers’ need.
Ongoing Covid-19 pandemic along with the local resurgence led to major disruption for
the Bahrain-based retailers. During this turbulent period, business continuity was
disrupted although having multi-faceted contingency plan of retail businesses. Based on
the research of Bretas, &Alon, (2020), sales and footfall have fallen due to mall and store
closure along with movement restrictions conducted by Bahrain’s government. In this
year, retail market has so much notably compressed that it might take huge consumers’
confidence to overcome. Eventuallyretail sectors of Bahrain haveexperienced disruption
of order management and request fulfilment.

1.7.2 Influence of pandemic on customers’ purchasing pattern

Covid-19 pandemic as well as its consequence has overturned lives of individuals

across the world. In light of this nation-wide issue, trends of their apparel-purchasing
pattern have decreased. Broadly speaking, most predominant difficulties shoppers have
been experiencing that shortage of product manufacturing. He, & Harris, (2020) have
opined that impact of lockdown was intensified by supply chain disruption, which
adjusted the new level of demands and panic of purchasing. In context of footwear
manufacturing companies, inventory management feared to stock the product, since
customers’ likelihood of buying became low. Moreover, finance-related concern of
customers, negative impact of job security and fear of infection are also the reasons
behind thus huge loss in retail sector.

1.7.3 Issues faced by footwear manufactures across Bahrain due to

pandemic

Rapid outbreak of Covid-19 presented alarming health crisis, which has human
and most significantly, commercial impact. Government of Bahrain headed National
Taskforce to combat this issue. Chowdhuryet al. (2020) have commented that, travel
limitation is the main reason behind loss of footwear manufacturing companies. Entry
ban for the travellers excluding transaction with prior permission granted letter,
diplomats, residents and Bahraini nationals was a significant motive for this. This is why
consumers were restricted to leave their home without any reason or for entertainment.
Departmental and retail stores were also forced to close or open for half working days.
All of these difficulties underperformed apparel sector of Bahrain.

1.7.4 Hawkins Stern Impulse Buying theory

Internal stimuli External stimuli

Financial
Lockdown
shortage

Pandemic Job insecurity

Government
restriction

Figure 2: Impulse Buying theory

(Source: Dannenberget al. 2020)
The present theory stresses on the notion of impulsive behaviour of customers for
buying or not for buying. Conferring with the statement of Dannenberget al. (2020),
impulse of sudden buying can determine the rationale of consumers’ purchasing decision.
In other words, impulsive purchase is driven by various external stimuli that do not have
any relationship with traditional decision-making. Hence, stimuli for purchasing decision
can be categorized as two forces, such as, internal and external. In this context, internal
stimuli are the socio-cultural factors, such aslockdown, pandemic and government
restriction, whereas external stimuli are the situational factors, such as, financial shortage
and job insecurity.
1.8 Organization and Layout
Layout of this research project is shown below.

Introduction
Background
Research Questions Review of literature Purpose of Research
information

Methodology for Study

Data gathering methods Sample Instrument used

Findings & Discussion

Data findings Discussion

Conclusion & recommendations

Summary Recommendations Limitations

Figure 3: Organization and layout

(Source: Self-developed)
 Chapter 3 : Methodology

2.1 Data gathering methods

For gathering data, not only the primary quantitative method, but also
thesecondary qualitative research method has been adhered to this research, which is a
deep-rooted tradition for carrying out reliable exploration. It attempted to assess the
previously existing literacy sources under direct control of researcher. According to
Roggeveen, &Sethuraman, (2020), this data can be extracted from offline or online
resources, government records or from the past researchers. Due to having large scope of
data about Nike Company on authorized websites and company’s homepage, the research
has become able to improve outcome. Since the present research paper has been made
relying on professionally collected factual or statistical information, it is able to answer
all research questions successfully.

2.2 Sample
Primary type of data collection process has also been adopted, through selecting
10 managers of Nike store in Bahrain. Previously, 10 managers and 30 employees were
given this proposal, although 2 of them have not responded to take part due to lack of
knowledge in this area and pandemic restrictions. Hence, population size is 42 and
sample size is 40. 3 Sales Manager, 4 Supply Chain Manager and 3 Operation Manager
and 30 employees were participated in this online survey method. Responses of both
genders were collected with use of 4 closed ended questions for the people and most of
respondents were aged between 35-55. The online survey has been done with help of
Google forms and dataset was collected using Microsoft Excel.
For conducting secondary qualitative research, 25 different journal articles were
retrieved from the authorized web sources. After this, inclusion and exclusion strategy
has been appliedfor adding or rejecting the literacy sources. For inclusion strategy, only
the journals (published after 2017) have retained, which includes information of footwear
manufacturing sector, Nike Company, Covid-19 pandemic, revenue loss of businesses,
consumers’ buying pattern and supply chain disruption. Exclusion strategy has been
applied to discard the irrelevant journals, which were published before 2017. After these
two strategies, 20 reading materials have been selected for this research project. Hence,
population size is 25 and sample size is 20.
2.3 Instrument used
The secondary type of data collection method is appropriate for research, since
the literacy sources offered information about underperformance of Nike Inc., drop of sell
volume, and decrease of revenue. Additionally, qualitative type of data
analysisinstrumenthas been carried out in this study. Snyder, (2019) has mentioned that
capturing qualitative data allows a researcher to capture attitude of previous research
studies. By following this, the researcher is not bound by restrictions of quantitative
method. For utilizing this instrument of data analysis, the researcher has gathered useful
insights about Nike’s financial performance in Bahrain and the purchasing pattern of
customers from this company. For interpreting data, thematic analysis has been deployed
for this project. Reference to this, several themes have been constructed based on
research findings and exhibited those in form of scrutiny. After taking permission from
the organization, the researcher sent an informed consent to them via email, stating that
their responses will not be disclosed to the third party at any cost and it would be deleted
after 3 months of the submission of research.