Why Nike Is Betting on Digital to Bring Back Store Traffic

Nike has a new proposal for consumers that is at the intersection of digital and physical retail: Nike Live, a tech-driven concept store that aims to get traffic back inside doors.

The athletic brand is housing the first location on L.A.’s boutique-lined Melrose Avenue as its pilot — targeting the community’s digitally engaged, fitness- and style-obsessed locals. It opened July 12, with plans to roll out a second iteration in Tokyo for spring.

The idea originated in the fall as “Speed Shops,” a version of Nike Live geared toward local customers around the brand’s flagships in New York and Shanghai. But it developed as a standalone concept that came into fruition in less than a year, said Cathy Sparks, global VP and GM of Nike Direct stores.

Los Angeles, which will also become more important for the brand with the arrival of NBA star LeBron James, is among Nike’s top 12 key markets in its “Consumer Direct Offense” strategy. And digital engagement with the brand’s apps is high in the city. “Last year to this year, L.A. membership [in the apps] was up 48 percent,” said Heidi O’Neill, president of Nike Direct. “What we’re looking to do is know our consumers as individuals. We always served elite athletes one-on-one, so we’re bringing that to them. We listen to the neighborhood as a whole.”

Dubbed Nike by Melrose, the 4,557-square-foot single-level space has a pop-up-like ambiance that begins with its façade — a mural by Los Angeles native Bijou Karma — that depicts a quintessential sun-soaked day in the neighborhood. Inside, products and amenities are curated by cross-channel data from the closest five ZIP codes in the area.

Nike Los Angeles
Inside Nike Live in Los Angeles.
CREDIT: Courtesy of Nike

Nike assessed the needs of consumers using its digital and physical platforms through a qualitative study that included shop-alongs. The retail floor has a clean, minimalist look, with screens displaying product facts while flanking mainstay inventory across all categories. Items are selected based on what’s popular with Angelenos, like the Nike Cortez sneaker, along with trending styles.

Around 25 percent of footwear will be changed every two weeks, eschewing seasonal priorities — a first for Nike. “We’re a global company and have insights all over the world. You might see a pod of what’s trending in Tokyo, and we might give consumers a slice of capsules and product from around the world,” O’Neill said.

Part of the experience enables customers armed with their smartphones to scan bar codes to determine size and color availability stocked in-store. Alternatively, the shopper can immediately place an order online or find a local store carrying the product. It’s part of a strategy to eliminate the friction points of buying, said Michael Martin, VP of digital products. “If we have that color and size, they push the ‘try on’ button, and every athlete associate [staff] is alerted,” Martin said, adding that it’s a time-cutting measure that can help the associate reach the customer with inventory within five minutes.

Hyperlocal insights are parsed from Nike.com, the Nike Plus and SNKRS apps, and the brand’s nearby stores. What Nike found is that consumers in the area want fast service without the retail theater. “We want people to return, get advice and have re-engagement with our team,” said O’Neill.

Among the conveniences, shoppers can get merchandise via curbside pickup, free hemming and bra fittings, Swoosh texting for real-time personal service and product reservations. They can also book sessions for guidance on gear and fitness goals. “We can curate a fitting room with what you need, information on where to run and your best workouts, and be in and out with a highly personalized experience in just 30 minutes,” O’Neill said.

There’s also the Nike Unlock Box (similar to a vending machine), which provides rewards such as free socks for consumers via the Nike app.

Geotracking within the Nike Plus app can be enabled to alert members of exclusives and free items available when they are in the area. “We wanted a way to say, ‘We value you.’ Every few weeks, there will be something new there. We’ll be able to serve them physically as we do online,” said O’Neill.

Access exclusive content