Four years ago, Nike Inc., the $9.9 billion athletic wear and running shoe giant, realized it had a woman problem. John Hoke, global creative director of Nike brand design, who had joined the company in 1992 to launch the Niketown concept, saw that sales to women were dropping in Niketowns. The atmosphere, he realized, was “distinctly male.” All that jock bravado was “brutal to our female consumer,” he says.
A woman problem at Niketown would not by itself be a crisis for the Beaverton, Ore.-based company; its 14 Niketowns account for only about 10% of sales in the U.S. But Hoke feared that a woman-hostile ethos might be hurting the brand itself. In Niketown, he saw “the brand stood for hyper-competitiveness and was unappealing, off-putting, to the female consumer.”
If Nike were identified as a for-guys-only brand, it risked ceding perhaps the best marketing opportunity at hand: exploiting the growing demand among active women for athletic apparel. While sales growth in athletic footwear has tapered off (Nike's footwear sales were down 0.7% in fiscal 2002, ended last May), apparel sales are growing.
And women's athletic apparel is a category ripe for tapping. Based on research by Mediamark Research and American Demographics (another publication of Primedia Inc., SCW's parent), there are 74 million active women in the United States, who spend an estimated $17 billion annually on athletic apparel. Active women (see table and map p. 37) turn out to be a very desirable target: mostly college-educated consumers in management and professional occupations, with household incomes exceeding $60,000. Many hold advanced degrees.
It's critical for Nike not to lose these customers. According to a January 2001 study by MarketResearch.com, women's footwear and sports apparel sales will hit $39 billion by 2005. And, because women buy athletic wear for boyfriends, husbands and kids, as well as for themselves, they account for 81% of all athletic apparel purchases, according to the Sporting Goods Manufacturers Association.
Against this backdrop, Hoke set about creating a new concept store, called NIKEGoddess. Nike's in-house design team brought in Callisonas a consultant, and began pursuing the anti-Niketown.
How well did they do? The store entrance alone signals how great a departure NIKEGoddess represents. It measures just 15 feet in length, but sets a distinctly different tone from the frenetic multimedia assault that greets patrons of Niketown. “We made this the decompression zone,” Hoke says. “Here are some products, but just come in, put your bags down, take a load off.”
Coated in light blue tiles of varying shades, the entranceway becomes a runway, and ends in a partition that soothingly curves upward and back toward itself. That vertical finale also acts as a backdrop for selective product display. The operative word is “selective,” because one of the issues that women had with Niketown was its merchandise overload — “more choice than one can handle,” Hoke says. In planning the smaller (4,000 sq. ft to 6,000 sq. ft.) NIKEGoddess venue, Hoke recalls, “We said we're going to pre-select, we're going to edit, we're going to show them less: We would create a place where we would curate the materials.”
Actually, NIKEGoddess winds up presenting the merchandise in two modes. On one side is a boutique-like area, where a few items are “curated.” On the other is a more traditional “warehouse” section where instead of using merchandise as décor, Hoke's team used photography and other graphics to set the scene. This is where serious buying takes place.
Nike honed its design strategy by cycling focus groups through a prototype in Beaverton. The testers were given money and then the researchers tracked their movement through the store and purchases. The focus groups convinced the Nike-Callison team to change some materials, increase the size of dressing rooms (and mirrors), and alter the lighting from spots to a softer wash.
The stores are spare and the furnishings are mid-century modern, including reproductions of designs by Charles and Ray Eames and Isamu Noguchi. The Modernist aesthetic resonates throughout the space, from the casement-like storefront windows to the ceiling light fixtures.
The first NIKEGoddess, which opened (after some additional tweaking by Boora Architects) in August 2001 in the Newport Beach, Calif. Fashion Island mall, won a SADI design award, sponsored by Shopping Center World. It was followed by The Grove store and three in-store boutiques in Macy's flagship Herald Square as well as in San Francisco and Los Angeles locations.
Although the company initially considered skewing the NIKEGoddess to women in the 25 to 31 age group, based on research from Bain & Co., it decided instead to focus on the psychographics of all active women. “We definitely did not want to make the store teen-driven or too young,” says Heather Amuny-Dey, senior designer with Nike Brand Design. “But I wouldn't say that there's anything inherent in the store that's more attractive to an older audience.”
So, the homey but hip design of the store is supposed to appeal to both teenage tri-athletes and soccer moms. Both can appreciate the soothing environment, and there's a range of apparel, footwear and gear (averaging $38 per item) for every age group and recreational interest. “Nike doesn't discriminate who a goddess is, just as long as she moves,” Hoke says.
NIKEGoddess is just part of Nike's “woman's initiative.” Nike also has new products aimed at exercise and lifestyle, not just sports. Air Kyoto, for example, is what Nike calls a “to and from yoga shoe.” This hybrid illustrates Nike's expanding view of the female audience: not all women who exercise call themselves athletes. Plus there is more fashion in the mix. The design invokes the wrapping of a kimono, and its fabric is based on a dress designed by Issey Miyake.
Sneakers, even the chic Air Kyoto, are not the primary focus at NIKEGoddess, however. Most of the space is devoted to apparel. The selection is hybrid — suitable for track, field and casual Fridays, says Hoke, who supervised the merchandising as well as the store design. He believes the trend in adopting sportswear as lifestyle fashion favors Nike. “NIKEGoddess offers great performing sports apparel, but it can also be incredibly flattering,” says Hoke. “You can run in it. You can wear it out. And I think that's what our customer is looking at.”
While the company declines to provide any hard numbers about sales at the NIKEGoddess stores, executives say they are pleased with the results. Where women might purchase one or two items for somebody else at Niketown, at NIKEGoddess they'll buy three or four items for themselves. Results at the secondstore at The Grove in Los Angeles are “ahead of our expectations regarding sales performance, and we're seeing our average consumer shop at least once a month,” says Stephanie Cocumelli, Nike's director of retail operations.
Still, Cocumelli says Nike is taking a wait-and-see approach. After the existing stores, as well as three more Macy's in-store boutiques planned for Chicago, Honolulu and Dallas are given a year to operate, Nike will develop its growth strategy, she says.
Until then, the company won't discuss the number of NIKEGoddess stores and in-store boutiques it might eventually build. It does say, however, that it won't spend as much as it did for the prototypes, which cost $1 million to develop and $250 per sq. ft. to build. The goal is to cut the construction cost in half.
Perhaps more important for the company — whose stated goal is to double sales of women's products from $1.5 billion to $3 billion annual by 2005 — is the message that the NIKEGoddess design sends to the retailers that sell 90% of its wares. “It shows retailers how we think our brand should be presented,” says Hoke. “In turn, those retailers love this stuff because they can achieve it and they see the benefit of tapping into this consumer.”
The NIKEGoddess experiment will also have lessons for other retailers, says marketing consultant Paco Underhill, founder of Envirosell and author of Why We Buy: The Science of Shopping. The female-unfriendliness that Hoke discovered at Niketown is not just Nike's problem, he says. “As a culture we have stepped away from biology,” he says. Sportswear has been marketed across the board according to a masculine perspective, he says. Until now.