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How Nike Mixes Local and Global in Experiential Flagship Stores

New Yorkers don’t go to Fifth Avenue.

The avenue that skirts the east side of Central Park houses museums, cultural institutions and block after block of luxury and retail flagships that seem to exist solely for the well-heeled global tourist (so much so that many a window display turned rubicund and porcine to celebrate Chinese New Year in February).

At face value, the stereotype holds up. But when Nike was building its House of Innovation at 52nd St. and Fifth Avenue that opened in mid-November last year, it wanted to be sure it had something to offer the thousands of “New Yorkers who live and work in midtown,” Cathy Sparks, VP/GM of global Nike Direct, said at WWD Retail 2030.

The result is a good example of how to cater to both a local audience and a traveling customer base coming to experience “five floors of retail theater” beyond the entrance level, she added. While the tourist might want to see the massive shoe selection that, in a first for Nike stores, displays all sneaker styles in one location—a la Saks’ shoe shop so big it needed its own zip code—customers who live somewhere in the city just want to get in, out and on their way. That’s why the store features a Nike Speedshop where locals can find a tightly curated assortment of favorites based on data from area members complemented by the latest major new styles arriving in stores, similar to the first small-format, highly localized Nike Live store in L.A.’s Melrose neighborhood. On top of that, the House of Innovation includes also a separate, dedicated entrance just for time-pressed city dwellers, keeping urbanites from having to mingle with the masses.

Customers seem to be responding; the digital lockers enabling in-store product pick-up have been 100 percent full since launch, Sparks noted. When consumers shop with an expert in the third-floor Studio, their average order value is triple the amount that other customers spend, she added.

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The New York House of Innovation was the second such store to open, following the October 2018 launch of its Shanghai counterpart. Each store is assigned a number, meaning the Shanghai facility is 001, Sparks explained, but the New York team couldn’t stand for that, insisting, “‘we have to be the first one,’” she recalled. And so in quintessential New York style, that’s how the Fifth Avenue store ended up labeled 000 or as Sparks explained, “the one before the one.”

Opening Shanghai early allowed Nike to “pressure test” concepts and configurations and helped the brand make some meaningful improvements. That’s where Nike got the idea to gather all of its footwear offerings into one centralized location. The brand underestimated the Chinese consumer’s passion for collecting footwear, assuming sneakerheads were more of a New York thing. “Wrong,” Sparks said.

Since the doors opened, consumers have been queued up outside the Shanghai House of Innovation, which has attracted four times the traffic Nike had planned for, she continued. In Shanghai, Nike is marketing its in-store expert services on the popular WeChat app, much as it uses Instagram and Facebook in the U.S. for similar digital outreach.

“While cities are unique and special in their own way, there are more and more things that are alike,” Sparks said.

As it develops new experiences for an always-connected consumer, Nike is learning that sometimes the old rules don’t apply. In its Melrose shop, for example, the store manager is now managing social media for that location directly from her Instagram account, previously a no-no for Nike. Under the @jenn.melrose handle, the Melrose “head coach,” Nike’s insider speak for store manager, is “our local homegrown Instagram influencer,” Sparks explained.

The experiment is an effort to “authenticate us as a brand” and better connect with a younger shopper. “We know Gen Z wants to communicate directly with people they see as local influencers,” she added.

The Melrose store, itself an experiment in data-driven retailing, is proving to be a worthy investment. Nike Plus members who simply visit the store engage 30 percent more online than lookalike customers, Sparks shared. The central Sneaker Bar, the place where customer can hang out and talk to a sneaker expert, will be updated in size and shape based on feedback.

It’s all a part of Nike’s effort to position the “physical brand experience as powerful weapon in our digital transformation,” Sparks said.