Experiential doesn’t mean the same for every brand, concept or customer. That’s a lesson the retailer is taking to heart as it iterates on the future of direct-to-consumer stores.
These days, brands are tripping over each other to create personalized experiences that will draw customers into stores and keep them coming back. Retailers and brands have opened pop-up and concept stores galore with varying degrees of success.
But experiential doesn’t mean the same for every brand, concept or customer. That’s a lesson that companies like Nike are taking to heart as they iterate on the future of direct-to-consumer stores — and localization is key to making it all work.
The way Nike thinks about converging physical and digital worlds may be most clearly represented in its latest concept, Nike Live. The first such store, Nike by Melrose, is a 4,557 square-foot, single-level space located at 8552 Melrose Avenue in Los Angeles. The store, which has “pop-up vibes” but won’t go away anytime soon, is nestled along a fashionable, upscale retail strip in a neighborhood also home to single family houses and premium apartments. It’s also just an eight minute walk from Nordstrom’s Local concept, which similarly uses data to personalize its store to fit the local community.
At its core, Nike Live aims to reflect the needs of its “sport and speed obsessed” NikePlus members in the community by using data to personalize experiences, services and its product assortment.
From ideation to open doors, the process took about eight months, Cathy Sparks, VP and GM of Global Nike Direct Stores, told Retail Dive in an interview. To Sparks, who worked on the concept with a core team of 12 people, the store is like a baby. And if it grows up quickly, the aim is to scale the model, as well as specific services and features, to the company’s U.S. store fleet and beyond.
Is localization the future of stores?
Nike Live is the brand’s first concept that is declaratively dedicated to being a hub for members. “We need our stores to better reflect the consumers in that marketplace and member insights is how we will do that,” Sparks said. “The future of service will be very personal. We will know you so well we will be incredibly relevant with the product we give and the services we offer.”
For the new store, that means catering to a “style and fitness customer” who loves to look good, workout, is style conscious, spends time with friends and expects high service levels, Sparks added.
Targeting the most engaged customers is something industry experts see as a step in the right direction. Member activity increased 48% over last year, according to data provided by Nike.
“Best customers are the place where you want to make the investment,” Matt Powell, vice president and senior industry advisor for The NPD Group, told Retail Dive in an interview. “They have a greater affinity for the brand, buy more than the non-customer and the cost of acquisition of non-customer is high.”
Hyperlocalization is one of the key trends today allowing retailers to get to know their core customers in a deeper way, but localized assortments often struggle when it comes to implementation, Matt Sargent, senior vice president of retail for Magid, told Retail Dive in an email.
“Many retailers rushed localized concepts to market,” he said adding that he owns a Patagonia T-shirt “localized” to Minnesota featuring snow-capped mountains, which don’t exist in the state.
“Nike is addressing this up front by letting the enormous traffic they generate on their website steer the merchandising. This gets to a core desire of millennials, which is to take part in a brand’s development.”
Physical, meet digital
When the Nike app came out a few years ago, the vision was always to integrate it into stores, Sparks said. And the Nike at Retail App, which has been piloted in Portland, Santa Monica and The Grove, is already showing promising results.
“Conversion when consumers are engaging with the app and products is double what we would see on typical day,” Sparks said, adding that a recently launched reserve feature aimed to reduce the friction of same-day pickup, is also driving traffic to stores.
Integration of the brand’s Nike App at Retail, which made its debut in March, is central to the Nike Live concept. Through the app, Nike Plus members can reserve products for pick up at smart lockers, shop Nike products in-stores, scan product barcodes to learn more about specific items and earn rewards. Members shopping at the new store can also redeem “unlocks” at a digital vending machine, which dispenses an array of products.
Among other services, shoppers at the new store can text store associates, for example, to organize the return or exchange of products via curbside pick-up — one such service that Sparks sees as immediately scalable to other stores.
The store, which features a mural on its exterior wall by an LA-native artist, is white, modern and lined with digital signage on the inside. Product aside, the store hosts services like the Sneaker bar, 30-minute or less style consultations at its Nike Express Sessions and a Dynamic Fit Zone, where shoppers can lounge around or try out products on treadmills.
The product assortment of the store is split roughly 50-50 between men and women and will rotate every two weeks — a first for any Nike store.
“We are learning as we go. For now, to support us through our first 60 days, we have an off-site storage giving us room to play,” Sparks said, adding that she knows the fulfillment model isn’t scalable in the long term and that her team is working on ways to push its supply chain. “We have to design a store and a process that allows us to flow and build systems to flow.”
Measuring for scale
From day one on, Sparks said she’ll be looking at key performance measurements like member engagement and participation in the Nike App at Retail to gauge the success of the store. Within that process, the team will also immediately begin scaling what works to the brand’s global store fleet, starting in North America and then Europe.
The company already has its eye on another, smaller Nike Live store in Tokyo, slated to open in the Spring. While Sparks couldn’t say how many of these stores the company will eventually roll out, she noted that CEO Mark Parker said in the company’s latest earnings call that he imagines more of these globally.
To Powell, the concept is exactly the type of experiment that Nike should be doing, and starting with one store will be a litmus test to decide whether it warrants the expense of constructing a digital and data-first store.
Nike is quickly learning that experience isn’t one size fits all for its customers. This fall, the brand will debut its new NYC flagship showcasing “experiential retail like we’ve never done before.” That store will align more closely with the brand’s Soho store, which notably features a basketball court, among other immersive experiences.
“We’re taking all our learnings from Soho and pushing it as hard as we can into something new,” Sparks said. “More digital connection, more exclusive product and a deeper level of innovation storytelling.”