At a new Factory Store in Tuscaloosa, Ala., near the campus of football-crazy University of Alabama, the wall is scrawled with game-day chant “Roll, tide, roll.” A store in Brooklyn’s Flatbush area features photos of the neighborhood and its athletes snapped by a local photographer. At a store that opened last week in East Los Angeles, banners have been hung to represent every high school within 10 miles of the shop.
These local touches are part of a push by Nike to make its U.S. stores reflect their surrounding neighborhoods.
“From the moment you approach the door, you start to get that contextual feeling of where you are,” said Christiana Shi, president of direct-to-consumer for Nike.
Retailers have been working for years to figure the best way to leverage one of their most important assets — their brick-and-mortar stores — in the digital era. Many stores have a cookie-cutter design and sell the same merchandise across the country. But a growing number of retailers are now experimenting with what’s known in the industry as localization, or giving the outpost some of the originality and charm of a homegrown shop. Chains hope it will help them ring up greater sales and attract new shoppers — particularly millennials.
“[Millennials] are communal by nature, they embrace locally-owned businesses, so large chains must find ways to incorporate a sense of local ‘belonging’ to each new location,” said Jorge Lizan, managing director of Lizan Retail Advisors, in an e-mail.
Mega-retailer Target says that after it began adapting the merchandise and displays in some of its Chicago stores to reflect the demographics in those neighborhoods, it saw stronger sales at those outlets than at other Target stores in the same market. Local artisans will build each new store for trendy upstart Kit + Ace. Even McDonald’s is striving to bring some localization to its thousands of U.S. restaurants, by changing its menu pipeline so that local restaurants can tailor their menus to regional tastes.
Experts say that the localization trend reflects a desire to connect more deeply with consumers at a time when competition within the retail industry is growing fiercer. And it is also likely a play for coveted millennial shoppers, a group that research often finds craves authenticity from their shopping experience.
Localization also may be gaining more traction now because sophisticated algorithms and other technology is making it easier to execute, said Dick Seesel, head of consultancy Retailing In Focus.
“All these national retailers with thousands of stores coast-to-coast realized that they were missing business at the same time the technology was improving to let them learn what customers wanted,” Seesel said.
Nike says its effort is about more than store decor. At its store at major Los Angeles shopping center The Grove, they’ve found that soccer is big business. So they’ve tailored their clothing line-up to appeal to soccer enthusiasts and have added a trial zone where a shopper can put on cleats and practice kicking a ball on a strip of fake grass.
“Consumers expect you to be relevant, they expect you to know them and they expect you to serve them,” Shi said.
Nike’s push comes as its retail industry counterparts experiment with similar strategic changes. Kohl’s has said that some 40 percent of its merchandise will be localized by the end of this year. Its full range of merchandise should be locally tuned by the end of next year.
At smaller stores that already have tightly-edited product selection, localization often seems to more to come down to the vibe of the store. Aesop, for example, a pricey skin-care and hair product retailer, says its forthcoming District store will be inspired by the nearby 9:30 Club and other stalwarts of the D.C. music scene.
While localization strategies seem to be gaining fresh momentum, they are not an entirely new concept. Macy’s, for example, launched a program it calls “My Macy’s” back in 2009. As part of this strategy, Macy’s empowered store managers to make more decisions about what kind of sizes, colors, brands and styles should be in their stores. “My Macy’s” remains a core pillar of the retailer’s growth strategy, though the company today says it is working to refine it to lead to quicker decisions.
With more retailers taking up similar strategies, it’s probably a smart play by Macy’s to polish their approach.