Fashion and footwear brands of all stripes have made new technologies rather en vogue, thanks to intense pressure to go beyond merely satisfying customer preferences to anticipating them.
Nike’s apparently chomping at the bit to race down this track. It’s putting its money where its mouth is with a string of tech acquisitions, including last week’s purchase of data science firm Celect. The move to bring the six-year-old Boston-based company into the Nike fold caps off a corporate shopping spree that the athletic-wear giant hopes will set it up for the future.
Celect’s demand-sensing technology for retail fits into the brand’s strategy to become more “insight-driven, data-optimized and hyper-focused on consumer behavior,” Eric Sprunk, Nike’s chief operating officer, said in prepared remarks. The goal: to help the company “serve consumers more personally at scale,” he said.
Fundamentally, this proprietary platform aims to shed light on consumer demand, so retailers can make smarter inventory decisions across the supply chain.
It may not get the same buzz as collaborations with personalities like Dutch artist Piet Parra, designer Virgil Abloh or basketball superstar LeBron James, or custom kicks services like its “Nike By You” offering. But Celect’s tech could help the company understand which efforts work better than others, which don’t and how to tell the difference ahead of time.
“[Celect leverages] data more effectively through its patented AI-driven algorithms,” Sandra Carreon-John, Nike’s global corporate communications director, told WWD. “It aligns inventory to hyper-local demand predictions and optimizes inventory in an omnichannel environment — in-store, BOPIS [buy online, pick up in store], online, etc.”
And, she said, this system — from modules to platform — fits perfectly with Nike’s vision for Digital Demand Sensing, a company-defined priority on data insights into its customers.
“By being able to make more accurate inventory decisions closer to market, consumers will see more of the right product, at the right time and in the right place,” she explained. “We can use predictive analytics and machine learning to help us understand consumer needs.” Celect’s platform puts all of that in one centralized place.
All together, the various acquisitions look like chess pieces moving into place, filling in a broader strategy pointed at different ends of the business, from consumer-facing features to back-end, data-crunching systems.
In 2016, the brand picked up Virgin Mega, an app development start-up from Richard Branson that was credited for revamping Nike’s customer-facing mobile app. In March 2019, the company bought New York- and Philadelphia-based data science outfit Zodiac to add “world-class, data-science talent and best-in-class tools to power one-to-one relationships with consumers,” Nike vice president and chief digital officer Adam Sussman said at the time.
It’s not clear where Nike aims to apply Zodiac’s expertise. But the latter’s ability to forecast customer lifetime values seems suited for a loyalty program of some sort.
Shortly after the Zodiac announcement, another acquisition bubbled up, this time for Tel Aviv-based computer-vision company Invertex and its breadth of 3-D-scanning capabilities.
The company is amassing what it needs to figure out what will resonate for shoppers and how to give it to them. It’s akin to Trendspotting 3.0, but powered by large machinery of data-chugging platforms, built — or bought — to help Nike. Naturally, those insights are destined for product development as well. With faster and more efficient processes, it will be able to crank out the apparel, shoes and other accessories that its customers want across various regions.
It’s a massive undertaking. According to chief financial officer Andy Campion, “this kind of transformational growth doesn’t happen by accident, [it] requires investment,” he said to investors during a June earnings call. Carreon-John called the recent acquisition activity “evidence of our conviction.”
Indeed. In 2019 alone, the company has invested more than $1 billion in new capabilities and new consumer-oriented concepts. Nike is in a constant state of discovery now, constantly looking for new ways to extend its use of data. “We are always reviewing opportunities to accelerate our efforts,” she continued. “[And we] will continue to run a complete offense, through in-house development and inorganic acceleration.”
Translation: Nike’s shopping spree is likely not over yet.