In the last few years, Adidas’ market share and gross margin have increased significantly. Adidas’ sales were particularly strong in the U.S. (double-digit growth) which means stealing Nike’s clients. In reply, Nike changed their strategy and engaged customers with augmented reality. At The Next Web, we had an opportunity to see how it worked…
Building a digital community
Nike’s strategy in the last few years was to sell indirectly through brick-and-mortar partners. It looks like they were too slow to respond to the changing needs of consumers and Nike started losing contact with its clients.
In response to this, the CEO of Nike announced last year a plan to change the strategy of approaching clients. They decided to focus on closer cooperation with a small group of resellers (e.g. they introduced Amazon as a reseller). But what is even more important is that they started focusing on selling directly to the consumer.
The sneaker hunt with a smartphone
Their own channels are physical stores, nike.com and mobile apps – NIKE + and SNKRS. Nike made a huge step forward. After the great success of Pokémon Go, they invested in augmented reality to engage core fans and sell limited-edition shoes in a fun and active way.
They developed their own independent mobile innovation studio – S23NYC. The experiment began with SNKRS Stash in Los Angeles. Users in a certain area received hints and had to meet at specific locations. This ideally connects to running and the Nike identity. When they found the exact spot, Nike unlocked a special offer for them in the app and the engaged users could buy unique shoes, available only for them.
Ron Faris – GM, S23NYC Digital Studio explaining SNKRS Stash
Involving the fanatical customers in mobile experiences
The strategy of S23NYC is to address the most fanatical clients of Nike – the Sneakerheads (the sneakers fans). The General Manager of S23NYC – Ron Faris – believes that the 15-20% most active people in the community are the most important for Nike. They will share knowledge and inspire the rest.
In last 12 months, the S23NYC team, with the use of augmented reality and geo-location, has created really innovative mobile-first eCommerce concepts.
Nike sneaker hunt screens for The Nike Air Force 1 Low “The Ten” (source)
After the initial success of this model, Nike kept experimenting. For example, they partnered with a famous restaurateur for a limited-edition shoe available only for purchase through the app when visiting one of the Momofuku restaurants.
This concept is constantly developing. Now, Nike is planning another interesting social component – you can pair with a friend into teams and then work collectively to unlock shoes.
Ron Faris – GM, S23NYC Digital Studio explaining new social components in SNKRS Stash
The next idea is to pair with artists and organize a Sneakers Drop during a concert. Recently, a special edition sneaker has been dropped exclusively for Kendrick Lamar fans attending the TDE Championship Tour. Only concert visitors were able to unlock these shoes, which makes the customers very exclusive.
Shaping new retail models with the mobile-first approach
This year, during The Next Web, we had an opportunity to see how this new strategy is working for Nike and how the possible future of retail can look like.
Thanks to the new strategy, the company’s direct-to-consumer sales grew 16% last year.
With this model, Nike was able to turn any place into a digital pop-up shop. This is probably the first mobile-first eCommerce app that makes people more likely to leave the house and explore new places and situations.
This way, Nike is able to gather very interesting data about their most passionate clients that can be used to design dedicated products or engaging experiences supporting brand identity.
Augmented Reality in Nike+ SNCKR (source)
The next step could be to integrate these tools with other channels and for example, allow users to buy a specific shoe only after they complete a certain task in their running-app.
More importantly, with their unique approach, Nike has changed the way we think about engaging customers in eCommerce. They proved that gamification and alternative points of sales involve customers and effectively support product sales.
We’re looking forward to the next brands taking this approach. In the future, brands will be able to expand their retail channels with the mobile-first approach to enter their customers’ environment. The mobile-first approach is also great to introduce new products and build customers’ loyalty and engagement.