Amazon and Nike are charting a course for the store of the future (AMZN, NKE)

Nike by Melrose

New technology is increasingly being infused into stores, and the results are finally starting to show.
Tech-forward companies like Amazon and Nike are completely changing the idea of what it means to have a physical store.
Nike's Live concept store, which chooses items to stock by analyzing customer data, and Amazon's Go concept, which uses just-walk-out technology instead of cashiers, are two examples of how the way the industry is thinking about stores is changing.

Retail is changing faster than ever.

Though there has been a lot of talk about how online shopping is changing the retail landscape, forcing traditional shopping centers like malls to close, it's only now that the future of the industry is truly coming into focus.

And yes, it's digital, just as we were promised.

Amazon and, more recently, Nike, have debuted store concepts that put their digital smarts front-and-center as they offer new experiences to customers.

Nike lives out loud

Nike is using data pulled from online purchases to inform the products stocked in its new store, which opened in July.

It's the first Nike Live concept store, which seeks to maximize speed and convenience by combining digital offerings with a 4,000-square-foot physical retail location.

Called Nike by Melrose, the store is a representation of favorites of customers in the area — in this case, the West Hollywood part of Los Angeles. Much of this information was gleaned from customers using Nike's online services, whether they were shopping on Nike.com or were members of Nike Plus.

Nike by Melrose

For example, Los Angeles-based customers buy a lot of the Nike Cortez, a retro-styled, low-cut sneaker. Nike knows that from observing their shopping habits, and so it can then stock more of the shoe in more colors and feature it prominently.

The store is stocked with products in categories like lifestyle and running, which are two of Nike's most popular, and it is predominantly focused on serving customers who care about both style and fitness. The store stocks both men's and women's products but allows for variation based on each gender's preferred styles.

That marriage of digital prowess and physical store experience is the hallmark of Nike Live stores.

"This much more represents how consumers are thinking about shopping. They don't put the wall up between physical and digital," Heidi O'Neill, president of Nike's direct-to-consumer business, said to Business Insider during a visit to the new store shortly after its opening.

Customers can also use the Nike retail app to scan products' barcodes and find out more information about them, including the sizes and colors the store has in stock.

Nike is also adding convenience-oriented features like curbside pickup and digital reservations in lockers that customers can open with their phones.

With Nike Live, the company will have what you want, where you want it — and it will help you get it with as little friction as possible.

Future Nike stores, like the flagship stores currently slated to open this fall in both New York City and Shanghai, will incorporate some elements of Nike Live, CEO Mark Parker said in the company's earnings call this week.

Amazon Go creates a 'magical' new experience

Amazon opened its first cashierless Go store in late January.

The store features Amazon's "just walk out" technology, which uses sensors and cameras to track what customers take off shelves and out of the store. Located in Seattle, near Amazon's campus, it's seen by many as the future of brick-and-mortar retail, with complicated technology that's designed to make in-store shopping as seamless and easy as shopping on Amazon.com.

With no lines or checkout process, the store uses cameras and sensors to track what you put in your basket. It then charges you through your Amazon account.

The store opened to the public on January 22 after a lengthy beta period. The opening of the store brought a lot of interest from locals, and lines soon formed on opening day.

Amazon Go

In a letter to investors, Amazon CEO Jeff Bezos spoke with pride about hearing customers call the experience of shopping in the new store "magical."

Amazon has since expanded its Go footprint to four locations, three in Seattle and one in Chicago, with more on the way in cities like New York and San Francisco.

The company could have an even more ambitious plan to expand Amazon Go. It wants to have at least 10 stores open by the end of this year, then 50 in 2019, then possibly a rapid expansion to about 3,000 by 2021, Bloomberg reported, citing people with knowledge of the matter.

Brick-and-mortar stores are changing forever

Taken together, Nike Live and Amazon Go chart a new course for retail that is unconstrained by what came before, and they offer new opportunities to get products to customers more efficiently than ever.

The advent of tech-focused physical stores proves that brick-and-mortar retail isn't going anywhere soon.

"Physical retail is clearly not dead," retail consultant Steve Dennis writes in a contributor post on Forbes. "Far from it, in fact. But, to be sure, boring, undifferentiated, irrelevant, and unremarkable stores are most definitely dead."

In fact, what's happening now is what Deloitte calls a "retail renaissance," fueled by new technology and data-centric insights into customers' habits and characteristics.

"A sea change is clearly taking place in the retail market — but it is not the retail apocalypse. In our view, it is instead a renaissance — driven by huge shifts in economics, competition, and consumer access to options, all fueled by exponential advancement in technology," Deloitte wrote in a March 2018 research report. "And in this renaissance, the winners appear to be those retailers that can capitalize on consumers' experiences of their economic well-being — or lack thereof — to offer a value proposition that aligns with consumer needs."

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