Digital speed and personal service combine to create locally-relevant shopping experiences at the forefront of cross-channel retail.
Source: Nike Live Launches in Long Beach and Tokyo
Let’s take a visit to 2017. Nike’s stock share price was in the dumps, adidas was killing it in marketing and product, and Champion gear was being rocked like Raekwon delivering a verse for Wu-Tang in 93. This was the routine until October arrived in 2017 and Nike unleashed a barrage of tech and product under the banner of the Consumer Direct Offense which included a discussion on the Triple Double, Key Cities and the removal of Poor Consumer Experiences.
2017 NIKE, Inc. Investor Meeting | The Scale of Sport Highlights – A Detailed Breakdown
Let’s focus on Poor Consumer Experiences especially in regard to urban accounts and small chains. A few days ago a person on LinkedIn dove into my comments section and stated, “Shoppers at City Gear don’t care about Customer Service, they just want the hot product.” In this region these are the store closings… as a matter of fact if you don’t want to read a list here is a long video from 2015 that you click and watch. (I discovered while writing this that YouTube pulled the video from each location it was posted after Google+ was retired.)
I’m listing the locations in Memphis, and the surrounding area, that have closed in the last few years:
Sammy’s (Which was an original Jordan Brand account) 3 store locations.
Marty’s (purchased by City Gear 3 locations closed).
Finish Line 1 location (purchased by JD Sports)
FootLocker 7 locations (including both Lady FootLocker stores a Kid’s FTL and a Champs. This was strategic for FTL. They opened a House of Hoops and a Kids as well as a new Champs location.)
Hibbett Sports 3 locations
Looking Good (4 locations lost their Nike account. They recently redesigned their store and fought to get a low tiered account.)
Okuns (7 locations, closed 2 locations and had to sell to Jimmy Jazz)
The Athlete’s Foot (2 locations closed)
City Gear (sold to Hibbett Sports)
When this person exclaimed that people shopping at City Gear don’t care about customer service, it implies that people in the hood don’t care about a store’s atmosphere. It also implies that the product sells itself. This is typically the routine at urban accounts which are primarily the smaller accounts being shaped by Nike’s CDO. Notice, however, that on this list are Finish Line and Hibbett Sports two larger chains. It’s not just small. mom and pop chains who are being hit. The natural progression of direct to consumer strategy is that wholesale accounts are negatively impacted.
When you factor in that those wholesale accounts no longer teach their sales leads about product and those sales leads believe they simply have to monitor the floor for loss prevention and then pull shoes when a customer needs a size, it doesn’t matter what setting the store is in, the hood or a small town, the customer will begin to seek places that earn their dollars. Nike understands what their customer expects. Their first Nike Live store in Melrose utilized data from their digital commerce platforms to build a store that operated as lean, efficient store only stocking what was in demand in that area. Digital informed brick and mortar. With these two new smaller footprint stores, the company is finally encroaching on the boutique format which places them in direct competition with every chain that carries the brand. One look at the pictures below and you realize that Nike is doing retail better than retail.
Companies like Sports Direct are filing lawsuits against Nike and adidas because the company is no longer giving the retailer “good” product. The attitude that product sells itself is a contributor to the issues for small retailers and of course both Nike and adidas are seeing the benefits of DTC. The closure of stores will continue to take place as Nike Live rolls out into more locations. I would say this is a bad thing, but the fact is, it’s a good thing. Smaller brands want relationships with retailers. This is an opportunity for wholesale accounts to look inward and understand that there are tactics which can offset Nike’s dominance. The question is will smaller retailers take the hit and implement a new form of retail based on customer service and depth of knowledge?
