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Can hyper-local stores save bricks-and-mortar retail?

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Nike’s new store concept is tailored to the needs of a very specific local community and has been described by the retailer as an “experimental digital-meets-physical pilot”

Global sportswear giant Nike debuted a new data-driven store in July this year, unveiling the first home for its Nike Live concept at Los Angeles shopping district Melrose Avenue.

The 4,557 sq ft shop marks the start of a more localised approach to bricks and mortar for the retailer, and has been inspired by and built for local users of the NikePlus app. Data from the app showed Nike that the Melrose shopper embraces new trends and is particularly interested in running. Accordingly, the new store is stocked with bright, fashion-forward colourways and plenty of running product.

Insights from the app, including buying patterns and engagement, have also been used to decide city-specific styles for the store in an attempt to serve local shoppers “exactly what they want, when they want it”. The retailer says the clothing, footwear and accessories available at Melrose will be tailored to Los Angeles’ needs, “regardless of Nike’s wider seasonal priorities”.

Customers are demanding a more relevant, personalised service because they are used to being able to get anything, at any time

Paul West, strategy director at retail design agency Dalziel & Pow

Nike chief executive and president Mark Parker has previously argued that the future of retail will belong to the company that “obsesses over the needs of the evolving consumer”, and he plans to create a local business on a global scale.

A second neighbourhood-specific store is already planned in Tokyo, before the concept is rolled out in cities around the world. As retailers battle with the question of store strategy – where to open, how many to open and what purpose they should serve – could Nike’s tailored, localised approach help solve some of the challenges facing physical retail?

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The sneaker bar in the Melrose Avenue Nike store

Good data has underpinned Nike’s customer-centric approach and other retailers could soon follow suit, argues Siu Lan Choi, creative director of retail design agency Household: “Nike are pioneers on many fronts, which is why we’re seeing them make this move first, but I do think we will see lots more of this approach [in the retail industry].

“What’s particularly interesting is that the brand has been able to open up a global community through the NikePlus app, and is now taking that specific information and data back to create something super-local.”

Customer care

Increased competition in the industry, particularly from agile new brands, is also forcing brands and retailers to take a more personalised approach to stores.

“Brands and retailers all want a closer connection to customers and that’s what is driving these new initiatives [such as Live], argues Paul West, strategy director at retail design agency Dalziel & Pow. “Customers are demanding a more relevant, personalised service because they are used to being able to get anything, at any time.

“It is also safe to say that in some markets big global brands are approached with cynicism, so a more localised approach can be a good strategy. From a customer perspective, shoppers today are bombarded with so much choice that a more edited offer, combined with good service, is appealing.”

Customers are tired of a homogenous approach where everything feels and looks the same

Irene Maguire, director at design agency Caulder Moore

He adds that the real focus for retailers when it comes to stores must be on meeting customers’ needs, regardless of what shape they take: “We are definitely seeing more localised formats and I expect that to continue, but retailers are also trying to create a ‘family’ of different spaces within their portfolios to get closer to customers – it could be localised but it could also be a service-led format or focusing on convenience.”

American exemplars

US retailers are leading the way when it comes to championing new store formats. Department store Nordstrom has launched new concept Nordstrom Local, a stock-free “service hub”, where customers can pick up online orders, and make returns and exchanges, but also make use of an alteration service, visit a nail bar and buy a coffee. The first Nordstrom Local store opened in Los Angeles last year and the retailer has since announced plans for two more in the city, and another in New York.

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Denim brand American Eagle has taken an experiential approach with its community-focused store AE Studio, which opened last year in New York’s Union Square. Designed as a hangout spot for local New York University students, the AE Studio has a spacious lounge complete with charging points, dormitory-friendly homeware and free in-store laundry facilities.

Visible difference

Closer to home, the UK high street is also moving away from cookie-cutter stores in a bid to offer customers memorable experiences, agrees Irene Maguire, director at design agency Caulder Moore: “We’re seeing writ large in retail at the moment that customers are tired of a homogenous approach where everything feels and looks the same. They want spaces that are a little bit more special and memorable, or else why bother going into a physical store?

“What we’re seeing is brands who haven’t worked hard to think about what customers want from stores are really struggling. Nike’s initiative is very much about understanding customers’ lifestyles and amplifying the brand through relevant touchpoints.”

However, Dalziel & Pow’s West warns that retailers must balance a more local offer with maintaining their brand identity.

“There is a compromise to be made between creativity and achieving consistency across a store estate. Brands are trying new things, but the flipside of that is that you risk losing who you are.”

The Drapers Verdict

By leveraging the extensive customer data at its well-connected fingertips, Nike has been able to create a store expertly tailored to a specific group of shoppers. Taking a more local approach makes sense in a market where increasingly impatient and time-poor shoppers expect their every demand to be met. Retailer’s bricks-and-mortar strategy can no longer be a “one size fits all” approach. Increasingly, retailers must keep an open mind and consider new formats when it comes to stores, whether they be experiential, localised or service led. 

 

 

Readers' comments (1)

  • It would be interesting to know how Nike plan to resource the creation of an individual range assortment for each of these local stores every season. Doing this at such a localised level of detail for multiple stores will be very resource heavy for a range selection and merchandise planning team. Algorithms can help, but it still needs someone to look at the selection to make sure it would all sit together aesthetically in the same store. Maybe the solution is to put the store manager in charge and give them the data, as the person closest to the consumer, but it requires an additional set of skills. And, as Paul West points out, you can lose control of the brand image and identity as you give more control to more people. But the reality is that it seems to be what the consumer wants, so as an industry we need to work out how to give it to them.

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