Inside Nike’s Store of the Future
Nike saw the future of physical shopping, and it revolves around your phone.
The company opened a new flagship store in New York on Thursday, the culmination of years of internal research into personalized and experiential shopping. The six-story building, a model for locations Nike has planned for cities around the world, is designed to work seamlessly with the Nike app, allowing shoppers to check in on their phone, request clothes to be delivered to locker rooms and schedule appointments with an in-house stylist.
Shoppers automatically become NikePlus members after downloading the Nike app, a membership that provides them with benefits such as discounts, personalized recommendations and exclusive product offers. NikePlus members already spend three times more on Nike.com than guests, and the world’s largest sneaker and sportswear seller thinks it can achieve that ratio in brick-and-mortar stores too, with a few tweaks to the model. traditional retail.
“Mobile is central to people’s daily lives, and when people walk into the store, they walk in with their digital device,” said Adam Sussman, Nike’s Chief Digital Officer. “We want to create a seamless connection between the physical and digital experience.”
In this regard, the Nike store of the future is not primarily about driving sales within its own four walls, rather it is a porch for the entire Nike ecosystem. A six-stage immersive marketing strategy, if you will. You can buy shoes there, but you can also leave having only downloaded the Nike app, and as far as the company is concerned, that’s fine too.
It’s a trend playing out in retail, led by new Books and Go stores from Amazon and Nike, where apps are key to the shopping experience, says Wendy Liebmann, CEO of the firm retail consultancy WSL Strategic Retail. “There’s a logic to pushing buyers that way,” she says. “It’s about ‘How can I get to know you? How can I engage with you and bring you into my community?’ It’s not just about the immediate transaction.”
Nike saw it a few months ago by opening a concept store in Los Angeles to test new retail ideas. The company tracked members who entered the store against a comparable set of customers who did not. Members who visited the store subsequently spent 30% more, online, than those who did not have the in-person experience.
The 68,000 square foot location in New York takes some ideas from this concept store and builds them. The phone integration, along with additional in-store benefits for members, has two main purposes: to provide customers with a better experience and to generate data on who those customers are and what they like. Does this information in turn impact product design and inventory decisions? “So it’s good for our business and it’s good for consumers,” said Heidi O’Neill, president of Nike Direct.
Nike has long been considered a leader in the retail world, according to Liebmann. This is also true of its marketing. When Nike released a controversial ad campaign starring Colin Kaepernick earlier this year, its marketing reputation alone led to many people praising the move. Nike knows these are their customers, that was a common refrain, so it must be what they want.
The ubiquitous NikePlus membership allows Nike to do this on a much more granular level, tailoring the experience to specific people. This is partly why members tend to spend significantly more than non-members, they’ve built trust and brand affinity, and Nike is better able to speak to them directly.
And these stores are great for recruiting new members. The conversion rate of shoppers to NikePlus members at the Los Angeles concept store was six times higher than at other physical Nike stores. In Shanghai, where Nike has just opened a store similar to the New York flagship, Nike recruits a new member every two minutes.
“It’s a member acquisition opportunity, a member retention opportunity, and a member engagement opportunity,” O’Neill said.
The new stores come at a time of transition for Beaverton, Oregon-based Nike, which remains the industry giant but has lost market share to Adidas in recent years. In response, the company announced its “Triple-Double” strategy: doubling down on innovation, speed and its direct-to-consumer business. In the past fiscal year, the company earned approximately 29% of its sales ($10.4 billion) through direct channels, encompassed by its redesigned website and apps, as well as approximately 7,000 Nike stores in the world.
At the same time, Nike has cut ties with a number of retailers, focusing instead on the roughly 40 companies, like Foot Locker and Nordstrom, that it deems the most productive. Nike is also once again focusing on urban areas, highlighting 12 key cities (including New York and Shanghai) that will drive the majority of the company’s near-term growth.
The Nike app uses geolocation technology, so it knows when a shopper enters the store, instantly changing the homepage to showcase new offers and content. In the store, shoppers will be able to book one-on-one appointments for advice on style or athletic goals, scan mannequins for product information, and have specific sizes delivered to the dressing room. Nike members can check out on their own on their phone or pick up reserved items from the downstairs lockers (unlocked, you guessed it, with your phone).
There are also several areas to customize the product. If you’re willing to wait 20 minutes for the dye to set, you can order shoes in any color you like. You can also sew a swoosh of your choice or add patches to garments found in the store.
Besides New York and Shanghai, Nike plans to open another similar store in Paris in late 2019.
“We truly believe that we are leading and innovating the future of modern retail,” Sussman said. “And this store is our most immersive and experiential yet.”