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Why Nike’s Buying a Data Science Company—Again

Nike just took another data-focused fashion tech company off the market.

On Wednesday the Oregonian athletic apparel firm announced its acquisition of Celect, a Boston-based firm specializing in predictive analytics and demand sensing. It’s Nike’s third data-science-related acquisition in the past 18 months, including its purchase of Zodiac and Invertex, whose technology powers the footwear firm’s recently announced fit tool.

And the deal plays into Nike’s two-year-old Consumer Direct Offense strategy that focuses on accelerating innovation by “leveraging the power of digital,” as the company noted back in 2017. “The future of sport will be decided by the company that obsesses the needs of the evolving consumer,” CEO Mark Parker said at the time.

Nike likely had its eye on the intellectual property holdings in engineering and data science amassed by Celect, which was started in 2013 by a pair of MIT professors who will remain at the university and consult with the apparel company as required. Nike said the remainder of the Celect team will be incorporated into its global operations team.

Part of Nike’s approach to winning with consumers has been opening cutting-edge flagship stores like the six-floor Fifth Avenue outpost and small-footprint shops like the Melrose store tailored to the tastes of customers living and working in the Los Angeles neighborhood. Armed with Celect’s “proprietary insights,” Nike will be better equipped to “optimize inventory across an omnichannel environment through hyper-local demand predictions.”

Nike is not alone in its dominance-by-acquisition strategy. “This trend of mega-retailers and brand managers buying a hot technology to get it off the market is an interesting one,” said RSR managing partner Paula Rosenblum. Others in retail have made similar plays, she noted, such as Home Depot’s purchase of Askuity, which gives retailers and product suppliers insight and analytics to improve retail execution, collaboration and planning and Amazon bringing tech like body-scanning firm Body Labs in house, or the robotics startup Dispatch that it acquired to launch its beta-tested roving delivery bot, Scout.

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Celect’s new status within the Nike family creates a void in the market and “it certainly creates an 18-month (give or take) advantage for the brand manager who’s buying the tech company,” Rosenblum added. “Someone will replicate what Celect does, or even do it better, but it will take some time.”

Brands ranging from Lucky Brand to Aeropostale relied on Celect—which raised $15 million late in 2018—to optimize allocation and enable digital transformation inside what are often legacy retail companies rooted in a different way of doing things.

Nike COO Eric Sprunk wasn’t shy in noting the company’s reinforced strength in digital.

“With the acquisition of Celect, Nike greatly accelerates our digital advantage by adding a platform developed by world-class data scientists,” Sprunk said. “As demand for our product grows, we must be insight-driven, data-optimized and hyper-focused on consumer behavior. This is how we serve consumers more personally at scale.”

Nike did not disclose the terms of the acquisition.