Yahoo Finance Nike to Debut ‘Rise’ Retail Concept in China
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Nike is hoping to climb to greater heights with the debut of its latest retail concept, Nike Rise.
The first of the large-format stores will open July 9 in Guangzhou, China, and it will mark the debut of the sporting goods giant’s fourth retail concept. The others are Nike House of Innovation, its flagship concept in key urban areas such as New York and Shanghai; Nike Live, its new small-format neighborhood concept, and the Nike Factory outlet stores.
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“We’re reimagining our entire fleet,” said Cathy Sparks, vice president and general manager of Global Nike Direct Stores & Service. She said each of the formats is being analyzed to determine which works best in each market and existing stores may be converted to other concepts.
Nike Rise is poised to capitalize on the strength of the company’s digital efforts and is intended to “bring the pulse and energy” of the sports in the city to life within the store, she said.
The 22,000-square-foot store is located near the city’s Tianhe Sport Center and will feature three floors of product and experiences and services connected to the Nike app. This includes Nike Experiences, a new feature that serves as a platform for members to connect and participate in sports in that city. The technology will soon be expanded to other cities in China, such as Shanghai and Beijing.
A variety of sport activities will be shown on a digital calendar in store and will include running events spearheaded by Nike running ambassadors; basketball and soccer matches with Nike Trainers, and soccer events at a court sponsored by Nike at the Tianhe Sport Center. Sparks said in addition to actual sports, the brand will expand its efforts into such areas as wellness, nutrition and sleep. “We’re putting experiences at the heart of the store,” she said.
When entering or coming close to a Nike store, members will receive notifications of events and new features within the store and once inside, can scan any product barcode on the app to learn about the item, check availability and place an order in-store or online.
The Nike Rise Guangzhou store will also offer a Nike Fit in-store experience for the first time in Greater China. Launched in the U.S. last year, this footwear sizing tool scans consumers’ feet and collects 13 data points that allow associates to recommend the best shoe for each individual.
The store also offers all of Nike’s primary categories of lifestyle product for men, women, children and Jordan.
The Guangzhou store is a retrofit of an existing unit that closed nine months ago and was converted to the new Rise concept. Its design also marks Nike’s commitment to sustainability since it uses 45,000 pounds of recycled materials in its finishes and fixtures and displays, including 10 percent Nike Grind, a post-industrial waste created from discarded athletic footwear.
Sparks said Nike is planning to add a number of other Rise stores in North America by retrofitting some of its larger-format units. The first is expected to be in Los Angeles, although no exact time frame has been set, she said. In light of the pandemic, it could be delayed until the end of the company’s fiscal year in May.
In the past several years, the company has been shifting from a dependence on brick-and-mortar sales to an enhanced digital shopping experience.
On its fiscal fourth quarter earnings call on June 25, John Donahoe, Nike’s chief executive officer, said: “We’re seeing a true step-function change in our digital transformation. As you know, this has been an area of investment over the past few years as we’ve built our digital advantage, but COVID-19 has accelerated the pace. We’ve seen the strong digital momentum continue throughout the quarter and into early June, even as stores have begun to reopen.”
On the call, the company said that despite a coronavirus-fueled loss of $790 million in the period, it experienced a 79 percent surge in digital sales. And the company surpassed $1 billion in annual digital revenue in both Greater China and the EMEA region for the first time.
Much of that has been fueled by the Nike app, which Donahoe said has experienced “an extraordinary leap in digital demand and engagement.” Since February, the Nike commerce app has been downloaded more than 8 million times, triple the rate of last year, he said. And it has translated into sales.
Nike set a goal in 2018 to reach digital sales penetration of 30 percent by fiscal year 2023, but that number was actually reached in the fourth quarter, and sales hit $5.5 billion for the full year. The company now expects 50 percent of Nike’s overall business to come from digital penetration in the foreseeable future, with the largest growth and market share opportunities in women’s and apparel, according to Matthew Friend, executive vice president and chief financial officer. Nike has only a 10 percent share of the women’s apparel market in the U.S., even though the category sold at twice the rate of men’s in the fourth quarter, Donahoe said.
But Donahoe stressed that despite the growth in digital, Nike will continue to invest in its store fleet. He said customers “don’t necessarily just want to buy digitally and have it shipped from home. You’re seeing during the pandemic, and we believe it will continue, they want to buy it on their digital device and go pick it up in the store, or with soft goods like apparel they may want to reserve it online and try it on in the store. Consumers increasingly want a consistent, seamless physical and digital experience, and so that’s what we’re committed to providing.”
As a result, he said Nike will open between 150 and 200 new stores that will be “small footprint, digitally enabled monobrand stores in North America and EMEA [Europe, the Middle East and Africa].”
The vast majority of these stores will be the Nike Live concept, Sparks said, which is currently being tested in California and Asia. The first pilot opened in Melrose, Calif., in July 2018, followed by two others in Long Beach and Glendale, Calif., as well as Shibuya in Tokyo over the past nine months.
Sparks said the Live stores measure between 15,000 and 35,000 square feet and carry about a quarter of the assortment of the Rise concept. The mix is determined by using data analytics from the Nike app and the e-commerce site to source the right product. About half of the mix will be skewed to women.
“We will have many of these in the future,” she said, adding that the focus will be on North America, Europe and China. “We’re working on expansion in the first half of the fiscal year.”
She said Nike is “incredibly happy with the results” of the Live stores, which have met or exceeded the financial targets set for them. She also pointed to the “member engagement metrics,” such as repeat customers and engagement with the experiences inside the stores.
In addition to Live and Rise, a House of Innovation is slated to bow later this year in Paris, she said. This format, which is also in New York and Shanghai, is intended to showcase “the biggest and best of everything Nike,” Sparks said, and is intended for the “global world stage.”
As of this week, 91 percent of Nike’s fleet of stores had reopened globally and 100 percent of the stores in China. As stores started to reopen in North America in mid-May, the company experienced “strong double-digit growth” in stores, a trend that continued into early June, the company said on its earnings call. It is projecting sequential quarterly improvement as stores continue to reopen and supply and demand “normalizes.”
