Nike is going high-tech with its newest retail store concept that opened today in Los Angeles. But don’t expect it to be anything like Amazon Go, another innovative take on brick-and-mortar shopping being rolled out by Amazon that removes cashiers and registers from the physical retail experience.
“We are a very emotional brand — we are about human connection and human potential,” Nike Chief Digital Officer Adam Sussman said during a phone interview from Los Angeles on Wednesday. “We don’t want to remove connection with other humans.”
Big retailers are using technology in various ways to improve the shopping experience at brick-and-mortar locations, particularly as more and more consumers opt to buy products online.
Nike today opened the doors to Nike by Melrose, the company’s first “Nike Live” concept store powered by digital commerce data and smartphone technology. It’s also meant to serve the 100 million-plus NikePlus members that spend nearly triple compared to regular Nike.com shoppers.
For the first time, Nike is using consumer buying patterns, app engagement data, and local city insights to decide what to sell in a store. For example, it knows that people around the area like to buy Nike Cortez sneakers, so it will stock the store with that product, in addition to running shoes, bright colorways, and hip packs.
Nike also used data to figure out exactly where to open the 4,557 square-foot space in West Hollywood — “there is tremendous member activity around this location,” Sussman said.
“It really does represent this seamless blend of physical and digital,” Sussman added. “A lot of the techniques we use in our digital operating model apply to physical retail.”
While Amazon aims to reduce friction from the brick-and-mortar shopping process by removing registers and cashiers, Nike is focusing on nurturing 1-on-1 relationships with consumers via in-store employees and technology.
At the new Nike Live store, NikePlus members can reserve products on the app and have them appear inside a locker when they walk through the doors. The app also pushes special offers based on customer behavior and can scan barcodes to surface more info about a product or allow users to request to try on a shoe or apparel. There’s a messaging feature that opens a communication line with a store employee.
While there isn’t Amazon Go-like checkout technology, NikePlus members will also soon be able to buy their items in the store through the app.
The store also features “Nike Express Sessions” for members, allowing them to book 30-minute appointments with a Nike product expert, similar to the Genius Bar at Apple Stores. There is also an “unlock box” with free giveaways meant to provide a “surprise and delight” moment for members.
“Truly the power of membership is our ability to serve that consumer way more personally, to understand how they want to connect with our brand, and enable us to have the tools to better serve them and talk to them,” Sussman said.
The store is part of Nike’s major push into digital. After stints at Disney, EA, and Zynga, Sussman became the company’s first chief digital officer in 2016 when Nike created its Nike Digital arm to embrace “digital as a path to consumer connection,” he noted.
“We recognize the way digital is changing how consumers get inspired, connect with brands, and purchase products,” Sussman said. “We knew we had to accelerate our digital offense to ensure we continued to stay connected with consumers.”
That’s why Nike in March acquired consumer data analytics startup Zodiac. It’s also why the company last year rolled out an app called SNKRS, using augmented reality and a Pokemon Go-style scavenger hunt to rethink how customers find and buy limited edition shoes. Sussman said Nike plans to roll out similar and more larger-scale SNKRS experiences in the future.
Revenue from the company’s digital commerce sales was up 25 percent for the quarter; total quarterly revenue grew 6 percent to $36.4 billion. Nike’s stock is up more than 25 percent in the past year.
“We saw acceleration in Digital that, quite frankly, exceeded even our own expectations,” Nike CFO Andy Campion said on the company’s earnings call last month. “It wasn’t by accident.”
Nike executives said the word “digital” 75 times on the call.
“It’s sharpening our ability to sense the market through data and analytics,” said Nike CEO Mark Parker.
While Nike originally started as a shoe and apparel maker, the Portland, Ore.-based corporation is becoming a tech company in many ways. Its investment in new software and applications as a way to reach more customers is similar to the digital push at fellow retail giant Starbucks, which is also aiming to bolster its membership program and in-store experience with new technology.
Part of Nike’s e-commerce strategy is also working more closely with Amazon. It inked a partnership with Amazon last year, agreeing to sell products on the e-commerce platform to better police counterfeit and third-party sales of Nike products.
“I would just say that our partnership is progressing well,” Parker said on the call in regard to Amazon. “We remain focused on elevating consumer experience on the platform.”