Nike by Melrose blends data analytics with in-store digital to experiment with bricks-and-mortar’s future

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The 8000 block of West Hollywood’s Melrose Avenue has a reputation as a retail incubator. Pop-up shops by micro startups and massive corporations like Google open there to great fanfare, and big brands experiment on the strip to find out which trendy products will push next year’s sales.

It’s there in Los Angeles that Nike is looking for the exact right blend of digital and in-store experience that will drive its retail strategy into the 2020s.

Nike by Melrose is part of the chain’s new Nike Live concept, which tries to blend the company’s online retail with unique personalized services that can only be done in the store. The project began in the offices of Nike Direct Stores Global Vice President and General Manager Cathy Sparks in late 2017; the doors opened in July.

“We came up with a pretty ambitious plan,” Sparks says. “We had a good idea going in of what we wanted to do and what this store should look like. We filled in all the details and our team did a great job putting it in place.”

REFRESH, RESTOCK, REPEAT

Every retailer knows the value of local merchandising; Nike’s goal is to bring that tool into the digital age. At the core, the company has heavily promoted its NikePlus loyalty club and used sales and preference data from its Los Angeles members to stock the shelves of Nike by Melrose. The result is apparel and shoe merchandising tightly aimed at a subset of area consumers, with the thinking that its appeal will also spread to discovery shoppers who happen upon the store.

NikePlus data analytics show the classic Nike Cortez styles are currently popular around West Hollywood, and that members enjoy running and hiking. Consequently, Nike by Melrose is well stocked with merchandise for these activities.

The merchandise will also be refreshed at least twice a month to encourage regular repeat visits by its most loyal customers. The idea is that Nike by Melrose is a kind of club for local NikePlus members where they’ll find styles based on purchasing trends in the area. The store’s rooftop patio that overlooks West Hollywood is accessible only to members, which adds to the value of joining. The storefront attracts attention with a mural by local artist Bijou Karman; her designs are featured on T-shirts inside.

Nike is opening similar concept stores in Shanghai, New York and Tokyo, each based on the shopping habits of locals in those cities.

The spartan, clean floor design has merchandise along the walls and no clothing racks or rounders cluttering the area. At the center of the 4,500-square-foot space is the “Sneaker Bar,” a standalone structure decorated by shoe boxes — in case you didn’t know what was behind the counter.

“The idea is in response to our customers who are looking for a fast, genial approach to buying shoes,” Sparks says. “It’s designed to have a friendly vibe, where Nike athletes [sales associates]can easily answer questions and find the right product for each consumer.”

Central to the Nike by Melrose experience is the app, which was developed by the company’s Nike App at Retail team to create a program that would enhance the in-store experience. Nike spent more than a year researching its consumers to find out what would motivate them to use the app when visiting a location.

The result is a store that customers can easily navigate without the app, but they’ll likely be missing out on the full experience. A vending machine offers free socks, headbands or other merchandise when members scan a QR code from the app on their phone. There’s also a store smart locker, which customers who make an online purchase can walk in and open with their app to retrieve the merchandise they bought. When browsing the shelves, scanning items also brings more product information; they also can request a size on the app and have products brought to them. Even simply by walking in, customers get a push notification giving them suggestions about merchandise they may be interested in.

“The point is to give the customer the experience they choose,” Sparks says. “If they’re browsing to see what’s new and have questions for our athletes, they can do that. If they’re in a hurry and just want to pick something up fast or make a return and go, we can accommodate those needs as well.”

CUSTOMER-DRIVEN

Although most retailers don’t like them, returns are something of a highlight at Nike by Melrose. The store features what it calls “Swoosh Text,” which allows consumers to communicate directly with store personnel. Intended to quickly answer questions and let customers pick up products without leaving their car, customers often use it on notoriously parking-space-short Melrose Avenue to let associates know they want to make a curbside return without coming inside. “We’re driven by our customers,” she says. “They want curbside returns and that’s what we’re doing.”

That is also where the concept blends its customer approach. One could hardly call Nike by Melrose a self-serve outlet, though customers could certainly buy products online and pick them up in a locker or get a free pair of socks from the vending machine without saying a word to an associate.

Store personnel have received extra training in Nike products and customer preferences, so they can act as shoe and apparel experts and give in-depth advice. For example, in the store’s “dynamic fit zone” customers can not only try on merchandise, they can use a treadmill to check how their selections work under gym conditions and get expert tips and suggestions.

This “smaller footprint, bigger service” concept is hardly new (Nordstrom Local is trying out its experiment up the block from Nike by Melrose and in other cities), but its spread may be limited. People outside the area may not be as interested in the products chosen and bought by locals. And if the economy turns, how many of those consumers concerned about styles will be more interested in discounted merchandise?

The bigger picture for Nike is seeing what works in the Nike Live concept and scaling it up to use in its regular retail stores, which the company believes will help make its bricks-and-mortar business thrive.

“We’ve got a lot of trust in what our analytics tell us, and we believe that Nike Live is going to lead us forward,” Sparks says. “As we all know, retail is rapidly changing. As long as we adapt and put our consumers first, we’ll come out ahead.”

John Morell is a Los Angeles-based writer who has covered retail and business topics for a number of publications around the world.

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