Nike has opened in Los Angeles the first of a several new stores that will use customer data to determine what styles will be carried. USA TODAY
WEST HOLLYWOOD, Calif. — What Wikipedia has done for encyclopedias, YouTube for trending videos and Waze for traffic congestion alerts, Nike hopes to do with footwear and apparel.
In a word, it’s crowdsourcing — culling data from thousands of customers’ finger taps on their smartphone displays and using it to collectively dictate what merchandise should be stocked in a new concept store.
In opening its new Nike by Melrose boutique Thursday in trendy West Hollywood, Nike hopes it has found a way to bridge the divide between online and conventional shopping, solving a puzzle that has largely defied the best minds in the retail industry.
Nike’s experiment comes amid a sporting-goods retail meltdown over past couple of years that saw the demise of several once high-flying chains, including Sports Authority, Golfsmith and Sports Chalet, as enthusiasts shifted to online shopping. But Nike, one of the world’s largest brands, still sees the need for stores.
“We don’t see physical retail disappearing,” said Heidi O’Neill, president of NikeDirect, but “the physical shopping experience connected to digital is really important.”
The new West Hollywood store, part of what is known as Nike Live, aims to directly link digitally collected data from users of the NikePlus app and other internet sites run by the sneaker maker with what happens in its retail space.
The Nike store on Melrose Avenue is decidedly smaller than the brand’s three-story Los Angeles flagship only a couple of miles away.
Nike by Melrose will work like this:
At least 25% of the store’s shoe merchandise mix will rotate every two weeks based on the interest that users of Nike’s smartphone app and other company-run sites show in particular items. So, for example, if runners stop marveling at the Air Zoom Pegasus 35 on the NikePlus app and fall in love with the Epic React Flyknit instead, the stock will be quickly rotated to make sure more Epics are ready for buyers.
Data collection will be centered on NikePlus app users living within five zip codes near the new store, said Sean Madden, senior director of product for Nike Retail.
At Nike’s other stores, the turnover rate for the shoe inventory can take up to 45 days.
Customers who order from home via the app can then come to the store and can swipe their smartphone screen to unlock a compartment, like a vending machine. There they will find the merchandise they ordered.
Also, they can use their phones in various ways while in the store.
By scanning a QR code at a display, they can find if the sizes and colors of merchandise they may want are in stock. At Nike’s nearby flagship store, staff fields up to 200 calls a day asking whether particular items are in stock, said Michelle Warvel, a senior director for Nike stores.
If the customer wants to try on a pair of shoes or merchandise, they don’t have to ask for help from a clerk. They can scan the code on a label and ask that the apparel be delivered to a fitting room or to them directly so they can try it on.
In the future, if they are interested in an outfit on a mannequin, they will be able to scan the code on the model and see a list of all the items and their prices. The system will also give them the opportunity order the outfit online if it is not in stock.
Customers can use their phones to skip the line with instant checkout.
Nike Live began with a store in the hip Soho section of New York City, a store with a digital focus that it saw as the future of sport wear retailing. Some 40% of Nike’s digital business came from its app. Now more Nike Live stores are planned, including Tokyo in the spring according to O’Neill.
“We have to serve the local consumer in a different way. We came up with this idea ‘speed shop’ which is to serve the local members fast,” said Cathy Sparks, vice president of global Nike stores. “We are going to use data to determine what product did they want and what services they care about the most.”