How Nike’s Digital Transformation is Personalizing Retail
Fueled by an end-to-end digital transformation, Nike is enjoying impressive growth, and plans continued investment in retail technology.
The athletic retailer reported a 10% rise in revenue in its first quarter, 2019, beating analysts’ estimates.
Throughout fiscal 2019, Nike says it will invest significantly in the “organic development” of new capabilities, including digital demand sensing, consumer data and analytics, connected inventory, digital product design and creation, a digital content engine and a new enterprise resource platform that will help unlock speed and flexibility in its supply chain.
“Our expanded digital capabilities are accelerating our complete portfolio and creating value across all dimensions as we connect with and serve consumers,” said Mark Parker, chairman, president and CEO, Nike.
Nike continued to enhance and expand its digital ecosystem in the quarter and saw a 36% spike in digital, making it the fastest growing channel in each and every geography the retailer plays in. The retailer says its digital transformation will create separation for Nike over the long term.
“Ultimately, it’s about becoming more personal at scale,” commented Parker.
So how is Nike personalizing retail? One way is through data and analytics.
“It is truly an end-to-end initiative at Nike,” said CFO Andy Campion. “It starts with consumer data and analysis around consumer data. And I’d say, that is manifesting itself right now already and most importantly, in terms of digital demand sensing.”
Nike uses digital demand sensing to leverage its intuition by amplifying it with real data as to what consumers’ preferences are.
The Nike by Melrose store in Los Angeles is one example. The Nike Live concept store’s entire assortment is based on data from what consumers in surrounding zip codes have purchased and are interested in. Nike Live leverages the retailer’s NikePlus membership platform and other digitally enabled services to provide a differentiated consumer experience in the store. At the Nike by Melrose store the conversion of in-store shoppers into digital NikePlus members is six times higher than in the rest of Nike’s fleet of stores.
Campion noted the next step beyond digital demand sensing is digital product creation, taking that insight and creating product leveraging digital technology that allows Nike to bring that insight to life in a product faster.
Additionally, Nike uses data in the supply chain to tighten its demand and supply management.
“On the very front end, of course, from a consumer perspective, data and analytics helps us personalize the consumer experience on the NIKE app, as well as the SNKRS app, and even in our physical retail environment, as we use things like the NIKE app at retail,” said Campion.
Nike’s SNKRS app has become the world’s number one footwear shopping app, according to Nike, and it will launch the app in Mexico, Brazil and Southeast Asia in its second quarter. In 2016 Nike acquired Virgin Mega, a 12-person tech start-up focused on building gamified mobile shopping experiences for millennials. According to Campion that team, now known as Studio 23 at digital hub in New York, is driving the explosive growth of the app.
Earlier this year, Nike acquired Zodiac and Invertex, which are already having a “profound impact on how we better serve consumers,” said Campion.