Nike's retail strategy for L.A. has been ambitious, experimental and innovative. Instead of pursuing a strategy of a downtown flagship and mall stores, the apparel brand has launched a number of thematic outlets to serve consumers in new ways: Some locations, like the Nike Live concept at Melrose Place, are designed around a particular neighborhood’s needs, using insights from local NikePlus app users to build a hyper-curated and connected experience. Others, like Blue Ribbon Sports, serve a specific sporting cohort, and draw upon the brand's heritage to craft an experience rooted in legacy. Still others, like the brand's store in Santa Monica, provide a broader range of products and services for a more mainstream consumer.
Over the past few years, Nike has been tearing up the rules to reimagine its retail presence—as have others in the industry. But what sets this brand apart is the way it goes about responding to key retail shifts that have developed over the past 10 years.
Maybe (just maybe) some of the senior execs at Nike have been thumbing through a few of our reports…doodling all over the pages as they get inspired by opportunity…You see: PSFK has been publishing our Future of Retail reports since 2010, and over that time we've shared how some major shifts have impacted retail. To keep up to speed over that time, you downloaded the reports, you came to our talks, you read the newsletters, you chatted us with questions—you even hired our consultants.
For this final newsletter of the decade, we wanted to look back at what happened along the way.
This theme was one of the earliest trends that we tracked in our reports. Favored by department stores more than any other type of retailer as they came to grips with the Retail Renaissance, the curated and often rotating shop within a larger location helped these stores attract customers with ever-new and even exclusive offers. Today Bloomingdale's (with their Carousel concept) and Macy's (with STORY) continue to leverage this trend, allowing for unique brand collabs, limited-edition merch and special services to drive foot traffic. The store-in-store strategy is popular among DTC and digital natives, too, with Birchbox beauty installing mini shops in over 500 Walgreens stores for the holiday season (1).
Remember Showrooming—and how a Target CEO made a big fuss about shoppers using their phones in his stores in 2012?? As network speeds got faster and data got cheaper, we saw wave after wave of app development and then new business models. Today, mobile allows for customers to facetime shop-floor associates and messaging-based commerce is taking off with retailers like Burberry building direct and personalized communication channels. And… with so many digital sales now coming through mobile, a new Target CEO has a different attitude to the tech than his predecessor.
Mobile and Social Media hit retail with a double whammy. Social media helped consumers find, learn and share information about products from a third-party source and this was accelerated by phone use. The rise of social media has been a vehicle for not only communication and entertainment but also retail. It took a little bit of time to arrive, but S-commerce is certain to rise in the next decade: 17% of North American retailers in 2017 were implementing social commerce operations—rising to over 30% by the next year (2).
Remember when people would roll their eyes when you said the o-word? While they did, Amazon pushed the frontier of online-offline synergy across its stores—and everyone else has been playing catch up. Just 50% of retailers were integrating an omnichannel strategy as of four years ago, but today, that figure has risen to 90% (3).
The connected store evolved as a way for retailers to elevate brick-and-mortar as well as bridge the digital-physical divide, giving digital-native consumers the convenience and personalization of ecommerce in an IRL experience. Fashion brand Ruti is a pioneer of this tactic, wielding a platform rooted in facial-recognition tech to immediately identify shoppers when they enter its stores, pull up their history and profile, and curate product recs as well as inform sales assistance.
Immersive, educational and discovery-oriented retail dominate the sector towards the end of the decade. Experiences offered shoppers a means to establish memorable and emotional connections with brands beyond the product or service. The new Showfields in NoHo NYC is an attempt to reimagine the department store with themed, curated shop-in-shops that encourage demonstration and discovery—even verging into retail-as-theatre with a shoppable performance experience.
The DTC boom that shook up the industry and led many heritage brands to innovate or exit continues to sound. It is estimated that there are around 400 DTC brands today, and it is suggested that their online traffic has doubled since 2017 (4). Nike is again a pioneer in this category, reinventing itself by pulling more and more inventory from mass retailer shelves and investing in building its own stores and services that bridge the digital-physical divide. It has also used DTC to foster rapport and loyalty, marshaling experiential, localized and personalized tactics.
The latest shift in retail is a development at the intersection of personalization and helpfulness. As retailers look to provide greater value, they will need to move beyond building ‘Grammable stores or stocking the latest online sensation and invest in personal utility.
To set yourself up for the next decade, get the insights from our latest report: The Future Of Retail 2020: Retail As Personal Utility.