Winning Big with Small-Format Stores

Nike’s new concept underscores the need for innovative thinking
Posted July 12, 2020

Earlier this month, Nike (Beaverton, Ore.) officially announced that it plans to open between 150 and 200 small-format, digitally enabled stores over the next few years. Major news for retail!

With concerns that the pandemic has left its mark on the social fabric of the community that won’t heal anytime soon, many retailers are looking at permanent models that can accommodate social distancing and sanitization. It was not a surprise to hear Nike expediting the rollout for stores they had successfully prototyped and tested during the past few years. The brand has always walked the walk when it comes to innovation in retail and is not afraid of experimenting with new ideas – everything from encouraging digital touchpoints to new physical store models. Now it appears that its forward thinking may have paid off, leaving Nike well ahead of its competition.

Two years ago, the brand prototyped the first iteration of its Nike Live stores at the Nike by Melrose location in Los Angeles. The concept had a pop-up vibe and was a sandbox for an experimental digital-meets-physical retail pilot. Nike began by using the data from online purchases to inform a curated two-week merchandise rotation in the small-format store, turning it into a representation of favorites of customers in the area. Much of this information was collected from customers using Nike's online services or from those who were members of the Nike+ app.

The current state of social distancing has forced most of us to shop online, order takeout and attempt curbside pickup. Businesses understand that customers will have heightened awareness about their shopping experience and how safe they are at every touchpoint. The digital capabilities of Nike’s new concept has allowed it to be at the forefront of going “touchless” by removing many pain points towards a frictionless shopping journey.

The ability to scan a barcode with your own smartphone via the Nike+ app enables shoppers to learn more about a product, see what options are in stock, request products be sent to a fitting room, reserve an item then pick it up from a dedicated locker, and finally make the purchase. The fascinating fact is that Nike didn’t develop these services for socially distanced shopping. It created them to provide a better experience to customers. It just so happens that the approach applies in both “normal” times and during the “new normal.”

It’s fairly safe to say that no retailer had planned for something like the current pandemic. But in Nike’s case, it didn’t have to plan for it. It had already given itself the tools for success simply by embracing an innovative mindset. Recently, many retailers have seen success with small-format stores, kiosks, temporary pop-up shops and even transportable shops. With a low barrier to entry and a new way to introduce new products and brands, these small-format retail spaces have gained in popularity among both retailers and consumers.

One great benefit of small-format is its ability to let companies test out innovative and fun product ideas without investing in larger, traditional commercial spaces. Without doubt Nike’s innovative leadership team has never been afraid to test-and-learn, therefore always staying ahead of the curve by simply embracing the future. The question is, are other retail businesses and brands ready to be as bold and undertake the same big steps?

With a background as an industrial designer with experience in furniture design, exhibit design and fashion runways, Mardi Najafi, Director, Retail Design, Figure 3 (Toronto), has been immersed in the world of retail design and strategy for more than 20 years. Mardi is passionate about creating memories through unique moments and unexpected details and has the ability to bring a client’s brand vision to life, creating innovative and transformative retail experiences.