Nike recently opened its first new concept store: Nike by Melrose, in Melrose Avenue (LA). The retail approach is brand new and takes into account the latest trends in fashion such are customization, localized assortment and omnichannel. In this store, product (footwear and apparel) mix is unique and exclusive, different from other Nike stores, and powered by the trend in and around the city of Los Angeles. The assortment is based on the analysis of online purchases and Nike Plus sell tracking in the same area.
Nike is getting closer to fashion, stocking the latest styles but refreshing them on a weekly basis. Their staff is made of Nike Experts, that know about sports, trends and what´s hot in the neighborhood. This reminds me Zara´s collection strategy, with fresh product every week and a big understanding of trends thanks to their associates feedback.
A Live Store
Nike is not able to produce in less than one month, like Zara, but data is enabling the behemoth from Beaverton to update its assortment during in-season. The store is so-called Live Store because its product mix is not static and changes according selling trends (online and offline). And not only assortment will adapt to real-time sales but also macro and micro space planning (e.g. layout distribution, visual merchandising guides). If today 50% of the store layout is dedicated to men, this could change in the near future, for example.
A Live and Curated store responds to the need of giving a different experience to customers that are bored of standarization or McDonaldization (same layout, same burgers, everywhere). Customers want to feel a unique experience depending on location. In fashion, shopping the same sneakers in Barcelona and Tokyo is not as cool as a few years ago. Product and experience curation are key levers for offline survival.
In fact, online is also looking for a unique, curated offer. Amazon launched Amazon Storefronts, a site that offers more than one million curated and high-quality products, from small & medium businesses in the US, and recently opened a 4-star store in Soho (NYC). Again, it´s about the right product in the right place (assortment and store clustering).
Fashion Retail Digitalization
Nike store in LA also offers special services like Instant Reserve, which “lets you find and reserve new releases every two weeks to pick up in your locker, curb service so you can make your exchange or return on the fly and a full Nike Sneaker Bar for expert knowledge and service”.
Assortment and Store Clustering in Fashion retail
Assortment optimization and store clustering is nothing new, but Nike shows a modern approach or at least some capabilities that are lead by pure fashion retailers. A best practices in fashion retail is to cluster stores beyond store size or sales. Data analytics permits to understand customer behavior at store level taking into account customer profile (e.g. sociodemographics, sizing, etnicity), CRM insights from loyal customers, weather or location. Regarding location, the potential is great thanks to geolocalization insights that can show what are the competitors around the store or other important places that can increase sales like having a train station or university close to the store.
Once stores are grouped according these filters, assortment can be optimized at cluster level using product attributes (e.g. seasonality, fashionability, feature, fabric). This process is more complex, and starting from strategy, every category of products are first segmented according customer needs and shopping missions. Without going more into the detail, every cluster (group of stores) will have an optimized assortment.
At Nike by Melrose, the assortment is based on data from what consumers in surrounding zip codes have purchased. But store-level approach, not cluster level, is something very difficult to scale. Anyway, it´s also a marketing strategy and we will see if Nike redesigns its complete retail channel based on curation. To be honest, I don´t think so, but it´s a good starting point to adress customer-centricity. I´m sure Nike will open new curation stores soon, as new local flagships will substitute traditional, boring macrostores. A trip is worth when the experience is original.
Next cities to open, I guess, are London, Tokio, New York, Sydney, Paris, Copenhague, Barcelona…
Fascinating, if not entirely surprising, developments. Especially from Nike. They’ve demonstrated their commitment of trying to make a deeper connection with their customers. This type of localized curation based on the community’s retail habits is another way that brick-and-mortar retail stores are taking something of a parallel path when it comes to competing with e-retailers.
No one does visual merchandising so well like the fashion or luxury sector. They do it too well. This is because they spend so much on understanding consumer behavior. Most physical stores do not realize the importance of in-store layouts on sales. Efficient store clustering can drive up retail sales.
Thanks for your comments! I agree that fashion retailers are best-in-class when it comes to visual merch, window display or understanding a product ecosystem. I recommend you https://fashionretail.blog/2018/12/03/customer-experience-in-fashion-retail/ where you can find other examples of excellent product presentation or in-store experience, not only fashion.