At Nike Shanghai 001, the digitally-enabled innovation, design and personalized service is unlike any other Nike retail experience.
Source: Five Facts to Know About Nike’s New House of Innovation in Shanghai
I wanted to name this article, “How will Nike’s House of Innovation translate into the closure of more Nike accounts in North American Cities?” I didn’t do that because it sounds too fatalistic. Nike needs wholesale accounts, don’t they?
Not exactly, and this is where I feel a duty to discuss why retail outlets need to place pressure on other brands to work more aggressively in merchandising store in store shops. This “House of Innovation” in Shanghai is a model that will arrive in the US, but only in “major” cities. New York of course will be first, but that’s because like China, the city has so many people that creating a 41000 square foot store isn’t a risk. It’s a benefit.
The Innovation Center will function as a community center of sorts for the Shanghai area. What it will function as for New York is an attraction that will pull in tourists which could disrupt local stores.
With a speaking and presentation area and customization areas, the shop will inspire engagement. While a store like this won’t pull visitors from all of the boroughs in New York, in smaller cities if a concept like this is installed it could be very disruptive.
Will this happen? Probably not on the scale of Shanghai or New York, but as far as projections go, I see the internal concepts of the Innovation House being broken down into boutiques across the country. Here is something to consider about Nike and small store formats:
Just Do It Headquarters at 1541 North Cahuenga in LA
Nike Concept Live Melrose
Nike Unlaced for Women (stores not established yet, but are in process)
These concepts were tested in Los Angeles first. They haven’t begun to travel, but that doesn’t mean Nike isn’t reading the data there. The brand does an incredible job at expansion and when you take the time to look at the breakdown of the Innovation House it reads like a small store format introduction:
At the store’s Nike Arena, in the center of the first floor, shoppers will find key styles and installations — from the Zoom X live to a Battleknit LeBron sculpture — that rotate regularly. At the digitally-enabled “Center Court” they can enjoy speaker sessions, workshops and digitally-led trialing sessions.
Through advanced or in-store bookings, the top floor Nike Expert Studio gives NikePlus members unrivaled access to gear up, get styled and get matched with exclusive and personalized product picks in private sessions with Nike Shanghai’s most highly-trained store athletes.
At Nike by You, NikePlus members can have one-on-one sessions with a designer to customize select shoes — adding dip-dye, embroidery and more — and walk away with freshly designed footwear.
Consider if the brand introduced a Nike Innovation expert studio in small-big cities. They would effectively wipe out accounts like City Gear who have failed to create a differentiated store experience. I mention City Gear because it’s a chain with over 100 stores and every store in a 3 hour radius of Memphis hasn’t been updated. What I see in that chain is a reliance on the perceived idea that people in the hood don’t care about the experience, but I digress.
Retail outlets need to place a serious emphasis on forcing brands to step up their marketing and merchandising. As Nike continues to place an emphasis on CDO and building more of their own doors, retailers have to realize that there is an inherent danger in relying solely on Nike. Unfortunately they can’t rely on other brands as there aren’t any brands willing to take on the cost to advertise and build brand loyalty… and if they did those brands would mimic Nike in DTC. Retail has to stay ahead of the curve, the question is ‘how’? As much as everyone wants to analyze the death of malls and retail, I’ve witnessed a mall without anchor stores, without any major stores, survive for over ten years on the strength of urban retail. Imagine, just imagine if urban retail began to respect that customer. Nike is beginning to think about that, which is a scary thought.