X Files #1 Nike

We are pleased to share with you the first issue of X Files, bringing you an exclusive review of how technologies and digital innovations impact consumer trends and behaviors.

This issue is centered on Nike, a front-runner for digital innovations in the athletic shoes & apparel category.

It is produced in collaboration with the retail and consumer expert Laurence Faguer.

For more information, visit: customer-insight-consulting.com

Nike, 55 years old and fitter than ever

Nike is a 36 billion $ company founded in 1964 and based in Oregon, US.

The company takes its name from Nike, the Greek goddess of victory.

Nike sponsors many high-profile athletes and sports teams around the world, with the highly recognized trademarks of "Just Do It" and the Swoosh logo.

For its fiscal 2019 third quarter (ended February 28, 2019), revenues for the Nike brand were $9.1billion, up 12 percent on a comparable currency basis.

For Nike, loyalty means serving each member personally but at scale

Nike considers itself a Tech Company - which no one disputes, its latest Nike Fit feature is a further proof of it.

However Nike still has 1182 stores worldwide whose relevance it must justify at a time when new competition is coming, that of fashion brands entering the fast-growing wellness segment.

Precisely, this "RetailTech" approach actually gives Nike the freedom to become a personal trainer for each customer, creating undisputed loyalty.

Obsessed with building its community

Have you noticed? There is no Nike loyalty card, everything happens in the app. Nike, whose mission is to "bring inspiration and innovation to every athlete", believes more in the loyalty-building power of community and personalization than in the accumulation of points that qualify for discounts as a result of purchases.

Recognition vs Loyalty - Nike does not distribute points, discounts, or status. Instead, Nike has developed the world's largest sports community by providing members with free apps, services and exclusive products to help everyone, individually, surpass themselves. Nike rewards sports practice, engagement in apps and takes care of storing these data to better personalize each member's experience.

Each one of the 4 Nike apps is linked to the Nike+ member's account:

1. Nike E-shop app: personalized for each user, with early access to new releases, exclusive products and invites to events and experiences just for NikePlus Members. + rewards for being active.

2. Nike Run Club: A perfect Running Partner. Tracks the member’s runs, gives coaching adapted to the member’s level and brings friends along for the ride.

3. Nike Training Club: Brings to the member a huge array of workouts for every fitness level plus the Nike Performance Council’s tips on training, nutrition, mindset, recovery and sleep.

4. SNKRS: For exploring, buying and sharing the best Nike sneakers. Nike SNKRS has insider access to the latest, including launches, drops and the stories behind all your favorites.

When data science serves loyalty

Nike devices and connected products strengthen the direct relationship with the customer. To increase Nike direct's business was a key part of the Consumer Direct Offense plan launched in 2017 by Nike CEO Mark Parker.

A single management team integrating Nike.com, Direct-to-consumer retail and all Nike+ digital products has been created to this end. As an example, the “global head of digital products at Nike”, Michael Martin, oversees the Nike site and applications but also the Direct omni-channel services and experiences in Nike stores around the world and the "Nike's digital studios" (four small teams of experienced engineers in Shanghai, Tel Aviv, Amsterdam and New York, working on Nike's Data Science, Computer Vision, Deep Learning and AR challenges). With them, Nike recently launched Nike Fit, a feature in the Nike app that allows you to know exactly your shoe size, for each sneaker model.

In April 2018, Nike chose to integrate in-house a predictive analytics company, Zodiac, with a dual objective: extracting most of the data the company collects as it launches connected products and experiences, helping Nike predict its customers' future purchases and create personalized interactions that will drive those purchases.

Why would a customer with a mobile phone enter a store?

Nike knows one thing for sure: the customer who enters its stores has a mobile phone in the pocket.

Other brands, making the same observation, assign to the mobile the role of "companion" of the customer in the store.

Nike goes a step further: after asking the difficult question of why a customer would still want to visit the store, the group decided to turn the subject upside down. His last two concept stores were imagined as a digital/mobile experience, built on what makes the strength of the web. The knowledge acquired from his connected customers (web or app) will inform the decisions made by the brand towards "the" local community and towards "the" customer who enters. But be sure to enter the store with the NikePlus app for this to work.

"We do not consider digital and the store as two separate channels, or as a channel that would support the other. Instead, we worked on the reasons why a person with a phone in their pocket enters a store”.
Michael Martin, global head of digital products at Nike, in Digiday.

2018 new retail concept: Nike by Melrose

In 2018, Nike was busy opening innovative retail concepts. On July 13, the first Nike Live store opened in Los Angeles, the Nike By Melrose: "The community store built for you, by you".

The new store concept is inspired by and built as a hub for its local NikePlus members. The location was chosen because of a high number of customers in West Hollywood. Also, research into the insights and behavior of NikePlus members in Los Angeles shows that they are running and style obsessed. They are on the competitive side but are also visionaries.

As a result, the #nikebymelrose store offers a range of exclusive product and digital services to NikePlus Members:

‣ They can find, on top of a selection of nike.com best-sellers and essential product, some city-specific styles, all of which is determined by Nike digital commerce data (buying patterns, app usage and engagement) to serve local NikePlus members exactly what they want, when they want it.

‣ They can book items online to pick them up in stores in "smart lockers".

‣ They can access the shop from the Nike App, tap the book button and pick up their product to try-on and purchase in-store.

‣ They can redeem product or rewards by using their member pass every two weeks at the NikePlus Unlock Box (essentially a digital vending machine).

‣ And they can benefit from Curb Services for returns, exchanges or purchases: using an SMS messaging system between the shopper and the store, a member can simply text the store, pull in, grab or return goods, while staying in his car.

Plus an ultra-fast turnover of assortment…we are in Los Angeles!

It took only 8 months for a small agile team of 12 people to set up the project. And the KPIs are adapted to the concept: sales figures, but also members' engagement to store services and activity in the application.

2018 new retail concept: The House of Innovation

In November 2018, Nike opened The House of Innovation, a 68,000 square feet New York flagship divided into 6 "stories" (we no longer talk about floors) on 5th Avenue.

Here too, it is better to come with the Nike apps to enjoy all the services. By integrating Nike apps to its New York flagship, the brand wants

‣ To offer its members a better store experience

‣ To collect customer data ("who are the customers of this store and what do they like?")in order to refine customer knowledge. For example, the Nike Speed Shop, which spans an entire floor, uses local data to display New Yorkers' favourite products on the shelf and to replenish supplies in near-real time, depending on the needs of the community that day or week (traffic in the store, weather, sporting events in NYC, etc.).

In The House of Innovation in Manhattan, members with their apps benefit from totally new, personal and responsible experiences.

1. Before the store visit: the member can make an appointment for an individual consultation with a stylist or an in-house sports coach.

2. Upon arrival in the store: the Nike application uses geofencing to instantly customize the app's homepage and present new offers and content that match the member's sports profile to the member entering the store.

3. In the store:

‣ Scan the look: by scanning a QR code on a mannequin, the customer obtains product information and has the "request try-on" feature to have the items carried by the mannequin delivered to a fitting room. A Nike Store Athlete (Sales Associate) will install the items in the cabin and send a notification to the customer when it is ready.

‣ Pick up area: the member can also request a missing size on the shelf, via his app. He will find his garment to try on at "Pick up area" kiosks throughout the store.

‣ Pick up reserve: NikePlus members can book items in advance on their app and pick them up at their convenience, in ground floor lockers, which can be unlocked, of course, with their phone.

‣ Nike Instant Checkout: Scan. Pay. You're done. The member eliminates waiting times at the checkout by paying within the app (and receiving the invoice for his payment in the app too). Instant Checkouts are located throughout the store so that customers can pack their purchases and leave.

‣ Personalization, DIY: The store has multiple areas to personalize its products. In 5 minutes, you can change the color of the lace or affix a patch to a garment, in 20 minutes, you can get shoes in the color of your choice. More advanced customization is possible in the "Nike By You Made-To-Order Atelier at the Expert Studio" that combines pieces of different clothes to make a unique piece of its own.

New stores results

These new stores recruit more new members and increase member revenue - The conversion rate to become a NikePlus member in the new store in Los Angeles is six times higher than other Nike stores. And members who have visited the store subsequently buy 30% more online than those who have not visited the store.

NIKE + members buy more: in the new New York store, one out of two transactions is carried out by a member. And in all Nike stores, customers who use the Nike app buy on average 40% more than customers who do not use the app.