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Nike’s New Store Concept Aims to Change How We Shop

The new stores blur the lines between digital and physical retail.

Nike by Melrose in West Los Angeles.
The inside of Nike’s new live concept store, Nike by Melrose.
Photo: Nike

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At Nike’s first “live concept store,” Nike by Melrose, buying sneakers is meant to be as easy as ordering food from a drive-thru. If your running shoes have worn thin and you’re pressed for time, you can text the West Los Angeles store and request that a new pair (or another product) be handed to you at the curb. You never have to leave your car.

Giving customers the option to simply roll down their car windows to buy sportswear is part of Nike’s effort to woo digitally driven consumers, many of whom have little time for in-person shopping.

“We wanted to optimize for speed and convenience,” Michael Martin, Nike’s vice president of digital products, told Racked before the Melrose store opened last week. “We wanted somebody to be able to come in, find something that was already well-curated to their interests, and be able to buy quickly and go, ‘That’s great. I want all of that.’ And If they don’t even want to walk in, if they find it online, then they can just pull up, text us, and we’ll bring it out there.”

Nike by Melrose in West Los Angeles.
The outside of Nike’s live concept store, Nike by Melrose, in West Los Angeles.
Photo: Nike

The athletic company plans to launch similar shops around the world. A New York City flagship will open in the fall, and a Shanghai store will debut as well. Each concept store will have different features suitable to its local market, according to Nike. In car-laden LA, where parking spaces are hard to find, curbside service may feel like a godsend to customers. But elsewhere, other services will be offered to patrons.

“You’re going to see different trends and different favorites around the world,” said Nike Direct president Heidi O’Neill. “And sometimes we’re going to have fun, and say, ‘Hey, trending in Tokyo: LA, do you want to check it out?’”

While digital and brick-and-mortar retailers tend to be pitted against one another — e-commerce has often been blamed for the “retail apocalypse” — researchers say it would serve brands well to find ways to join both together. Research about consumer spending published in the Harvard Business Review in June found that online shoppers do make larger purchases than they do at brick-and-mortar stores, but they spend 64 percent more when they’ve first visited a physical store.

“Sometimes we talk about this bifurcated world of physical and digital retail, and it really doesn’t exist in the consumer’s journey,” O’Neill said. “How can we meet consumers on their terms or even stay ahead of them by making that journey, physical, digital, as seamless as they look at it in their life? I think that is what this store represents.”

Switching gears could pay off for the company. Nike had a challenging fiscal year last year that saw Adidas outperform it on its home turf of North America. Also, a scandal over sexism that saw the departure of executives hurt its image.

But through it all, online sales have helped Nike thrive; its digital business drove more than 90 percent of its fourth-quarter growth. Capitalizing on this by using digital technology to improve the brick-and-mortar experience means getting shoppers in and out of stores as quickly as possible. Culling data can help Nike do so.

Say a shopper visits Nike by Melrose and is unsure about which sneaker to buy. She can look at a screen, positioned right by the women’s running shoes, informing her that the Nike Pegasus is the most popular shoe for women who live in the zip codes nearest to the store.

“When we say ‘by Melrose,’ we really mean this assortment is created by their interests and their engagement and their purchases, and we’ll keep flowing it through based on that,” Martin explained.

The live-concept stores will take an innovative approach to inventory, combining elements of fast-fashion stores with their more traditional counterparts. Every two weeks, the stores will add new inventory geared toward the local market.

In LA, for example, people love to run and hike. So the new stock will cater to such interests, and shoppers can use the retail app to let Nike know the kinds of activities they’re engaging in while wearing the company’s apparel.

According to Nike, it’s the first time it will be rotating inventory so quickly. But for shoppers who prefer tried-and-true sportswear to trends, Nike will have its classic products available on an ongoing basis.

Time will tell how successful the new live-concept stores are. As retailers, including Nike, continue to hurt, finding a way to connect with the latest generation of shoppers is vital. Presenting tech-savvy customers who avoid physical stores with a new approach to consumption might ultimately be worthwhile.

“This is us bridging physical and digital in a way we’ve never been able to do until this moment,” Martin said, “and frankly in a way nobody else has been able to do at this point either.”