Product digitalization at Nike: The future is now

Digital strategy at Nike

The cornerstone of Nike’s digital strategy, announced in 2017, was a direct-to-consumer approach, establishing one-to-one connections, as well as using digital technologies to spur product innovation and time-to-market. In each of the three areas, Nike’s ambition was to double its capacity by 2023; in short, this was referred to as their ‘triple-double’ strategy. ⁶

In response to consumer trends related to digital shopping experiences, Nike had shifted their channel mix towards their website and proprietary mobile applications. Nike’s online sales were predicted to be one third of its total revenues by 2020, about half of which came through mobile commerce. ⁷ In addition, to create a local business on a global scale, Nike had identified 12 key cities, including New York, London, Shanghai and Paris. Nike’s retail approach in these cities involved integrating digital tools into the physical space to facilitate the shopping experience. Leveraging physical-digital complementarities was further extended to Nike’s strategic distribution partners, ⁸ Mark Parker, CEO of Nike from 2006 to 2020, commented ‘Digital innovation allows us to push the edges of new immersive experiences whether that’s in our own channels and social media platforms, or through retail’. ⁹

In comparison with its customer-facing processes, Nike’s product digitalization efforts – creating new experiences around products – were more recent and still limited in scale and scope.

Brief history of product digitalization initiatives at Nike

Since the turn of the millennium, Nike’s product digitalization initiatives included Nike iD, Nike+, Nike FuelBand and NikeConnect.

In 1999, Nike iD was launched, a service that allowed customers to personalize and design Nike shoes and clothing merchandise to their own preferences. For selected items, the customer could choose the colour scheme and add personal details, such as symbols or initials. The custom sportswear was manufactured and delivered within a couple of weeks. In addition, customers could share designs and decide to purchase designs made by peers. Several design contests had been held, in which fans could design a shoe that their favourite athlete would wear while competing. Twenty years later, in 2019, Nike announced the successor of Nike iD, called ‘Nike By You’. This service was available at selected locations and involved the customer putting on a pair of white Nike shoes, which was a canvas on which lights were projected to show what a personalized shoe design could look like while wearing it. The delivery process was significantly shortened, as customers could walk away with their customized shoe within an hour from these locations. ¹⁰

Launched in 2006, the Nike+ platform was a membership website that provided users with a variety of apps and resources that encouraged sports activities and commitment to a healthy lifestyle. To use the Nike+ platform, Nike shoes or gear were not required. While initially the focus was on running, the service expanded to sports such as soccer, golf and skateboarding. Through a mobile app, users could track their progress, share their activities, motivate each other and engage in challenges. Furthermore, there was social media integration, such that friends could virtually cheer for the users, as well as integration with iTunes and Spotify, with music attuned to the user’s activity. ¹¹ In 2015, there were close to 30 million users across 190 countries on the Nike+ platform. ¹²

Launched in January 2012, Nike’s FuelBand was actively promoted within the Nike+ community. FuelBand was Nike’s first ‘wearable’, measuring movement through a built-in accelerometer, while engaging in any activity. These movements were translated into NikeFuel, which could be tracked over time and used to set personal goals. ¹³ In addition to NikeFuel, LED lights on the FuelBand displayed metrics such as calories and steps. The FuelBand was USB rechargeable and a fully charged battery lasted for 4 days. In addition to connecting to other devices with USB, Bluetooth could be used to connect to a PC or mobile phone. ¹⁴ In 2013, Nike launched the follow-up FuelBand SE, with new features and improved sensors. However, the product line did not have the success hoped for and the wearable market became highly competitive. After 4 years, Nike discontinued the product line. ¹⁵

Launched in June 2015, NikeConnect provided real-time, personalized experiences activated through the combination of Nike fan apparel (initially National Basketball Association (NBA) basketball jerseys), a smartphone and the NikeConnect app ¹⁶ . NikeConnect gave customers access to other products, customized content and exclusive experiences through tagging a Near-Field Communication (NFC) chip on the jersey’s clothing tag. The content was different for each jersey and included NBA data such as player stats, pre-game countdowns, behind-the-scenes footage, in-game scores, post-game highlights and exclusive interviews. In addition, users gained early access to new gear, special event tickets, virtual goods in the NBA2K video game and Spotify playlists from athletes. The app was compatible with both Android and iOS devices. ¹⁷

Nike HyperAdapt 1.0

Hatfield, still at Nike in 2019 as the Vice President of Design and Special Projects, originally dubbed the project Electro, Adaptive, Reactive Lacing (E.A.R.L.; see https://news.nike.com/news/hyperadapt-adaptive-lacing). More than 10 years in the making, Hatfield commented, ‘This project was maybe the most difficult in the history of footwear’. ¹⁸ Nike later came up with the name HyperAdapt 1.0, the numbering (‘1.0’) was uncommon for footwear and was a reference to software development. The self-lacing system, referred to as Adapt technology, involved a cable system with a motor that automatically adjusted the lacing pressure and fit to the contours of the foot using sensors and an algorithmic pressure equation. In addition, the shoe had buttons on the tongue, allowing users to manually adjust the shoe’s fit. After a full charge, the battery that powered the motor lasted for about 2 weeks. The LED lights at the bottom of the shoe indicated the battery level: a blue light meant completely charged, yellow was halfway and red signalled that the battery was running low. The shoes’ battery was charged wirelessly with a magnetic puck. Also, several LED lights were featured on the back of the shoe, which lit up when the mechanism started adjusting fit, accompanied by a whirring sound from the motor. The shoe’s upper was woven entirely out of Flyweave, a soft, pliable polyester. ¹⁹ The shoe had no sensors for tracking sports activity and it did not sync with Nike+.

Given its high price (US$720), the shoe was not considered a mass market product. Furthermore, the system featured many cables, motors and lights, leading to a tangled, delicate and rather heavy set-up that was not waterproof. Also, the full automation was questioned, as a lot of users reported manual adjustment was required for a good fit. ²⁰

Nike Adapt BB

In January 2019, Nike introduced the Nike Adapt BB (see https://news.nike.com/news/nike-adapt-bb). Instead of an everyday lifestyle shoe, this was a self-lacing shoe that enhanced the performance of (semi-)professional basketball (‘BB’) athletes. Eric Avar, Creative Director at Nike, explained, ‘We picked basketball as the first sport for the Adapt technology because of the demands that athletes put on their shoes’. ²¹

During a basketball game, players frequently alternated between periods of high intensity and rest ²² . Hatfield commented,

If you’re playing for three hours, there might be only an hour of it when you actually need your sneakers tight. The rest of the time, when you’re standing around for free throws, jump balls, sitting on the bench, you should loosen your shoes up. ²³

Indeed, during rest, a loosened shoe would allow blood in the feet to flow better, which aided recovery and injury prevention ²⁴ . Moreover, players’ feet typically swelled half a size during a game. Hatfield commented, ‘You should see the feet of professional athletes, they are trashed. Their toes are [crushed], the blood flow is terrible, they have actual health issues’. ²⁵ Basketball players typically laced their shoes prior to the game and did not change the tight fit for hours. For some players, coaching or other staff took care of the lacing, as it was impossible for the players to get enough torsion on their own to achieve full lockdown.

Nike worked on a solution for this problem, in collaboration with professional athletes emphasizing customization, providing a perfect fit for the wearer’s feet. The shoe provided a fit that was almost custom-moulded, preventing a player’s foot from moving around inside the shoe, even in extreme cut or stop-short situations, which helped prevent inflammation. ²⁶ Nike believed the shoe could be considered an extension of the body, with both working synergistically together to improve the athlete’s experience and performance. ²⁷ Hatfield commented, ‘We aim to help athletes to have, not only a more comfortable experience playing sports, but also actually have a longer career and have fewer injuries, because the shoes are actually working for them and with them’. ²⁸

Prior to launching the shoe, the self-lacing technology ²⁹ had been rigorously tested, including in the laboratory with thousands of impact and impulse cycles, as well as with athletes on court. ³⁰ As the Nike Adapt BB was a high-performance shoe, it used the latest innovative materials: a high-tenacity Flyknit outer shell ³¹ , a QuadFit mesh inner shell ³² and Lunarlon foam for the sole ³³ . In addition, the shoe featured buttons with LED lights on the sole. Nevertheless, Nike claimed that the system did not add extra weight. ³⁴

Once the shoe was put on, it could be adjusted to the foot by manually pressing the LED light buttons, Hatfield explained, ‘The buttons allow players to loosen the shoe during a timeout and they can then easily be tightened when back in the game to ensure perfect comfort control’. ³⁵ In addition, a mobile application, called ‘Nike Adapt’ and available for both iOS and Android, could be used to adjust fit, through a Bluetooth connection. The app featured large L(eft) and R(ight) sliders, which could be slid up and down to adjust the tightness of the laces. Through the app, the user could also make the shoe go back to the ‘zero state function’, which was completely loosened. Moreover, players could save specific levels of tightness in the app, for different types of usage, such as in-game, training or rest. Hence, by selecting a saved mode, the shoes would automatically go back to that setting. Also, different LED light colours could be paired with the different modes, making it easier to recognize the active mode by sight. The app also enabled the user to choose any of the 14 different LED light colours at any time. ³⁶

The shoes also came with a Qi wireless mat, to wirelessly charge the battery in the shoes. The mat was plugged into electricity via a USB-C cable, enabling charging via PC or a wall plug. Fully charged, the battery lasted up to 4 weeks, depending on usage intensity. To address a potential fear of low batteries, which could result in the wearer being stuck in the shoes, Nike made sure there was always enough energy to loosen the shoe. Moreover, the battery level could be checked by using the app and battery level alerts came in the form of an LED light and sound notification.

The Nike Adapt BB was introduced on 15 January 2019, at the NBA London Games in the United Kingdom, ³⁷ where the shoes were worn by a New York Knicks player and on American soil by a Boston Celtics player. In the following days and weeks, several other NBA players wore the shoes on court ³⁸ . On 17 February, during the NBA All-Star Weekend, the shoes were made available to the public at a price of US$350, ³⁹ more than double the price of most other performance basketball shoes. The press release of the Nike Adapt BB mentioned that software updates and new digital services would become available for users over time, in response to changing environments and preferences. ⁴⁰

Although the shoe was approved for in-game use by the NBA, new rules had been developed to regulate its use. A general restriction, that had been in effect for several years, was that no mobile phones were allowed on the bench while a game was in progress. Violations of this rule could be punished with either a fine or a suspension. Hence, NBA players were prohibited to use the app to adjust their shoes on the sidelines during games, and they could only adjust the tightness of the shoes manually. Moreover, they were only allowed to make manual adjustments during time-outs or while they were on the bench. Finally, the LED lights on the bottom of the shoes were not allowed to be lit on the court during games. ⁴¹

Despite the shoe being extensively tested, an issue had arisen only a couple of weeks after the introduction of the shoe. After an update, Android users were no longer able to connect with the left shoe. Moreover, the malfunctioning had caused the motor and the LED lights to stop working, rendering even the manual buttons useless, and therefore, the shoe could not be properly worn anymore. Users with the iOS application had no issues, which was attributed to this ecosystem being more closed and controlled. ⁴² A Nike spokesperson recommended to try a hard reset of the shoe or to contact Nike’s Consumer Services. ⁴³ This had led to people being stuck in a pair of Adapt BBs, as a user commented,

I played basketball at my local gym and when I was done the shoes would not loosen up! I thought that’s fine, I know how to manually reset them but then the buttons were not lighting up. No joke, I was stuck in my shoes for about 45 min. Thoughts of cutting the shoe came to mind . . . ⁴⁴

There was other criticism and concern as well (see Appendix). The fact that people were walking on top of a lithium-ion battery and electronics was frightening for some, who suggested similar malfunctions as those from Samsung’s battery explosion could happen. ⁴⁵ In addition, people were worried about the shoe’s data-tracking capabilities and the associated privacy concerns. Even if the shoes themselves were properly secured, the mobile apps posed another risk. ⁴⁶ Some people found the whirring sound of the motor disturbing. From a performance point of view, there was scepticism, as many believed a well-fitted shoe could only marginally improve performance. ⁴⁷

Of interest to note, Nike wanted to explore possibilities of leveraging the Adapt technology in applications for disabled people or people who had a difficult time lacing their shoes, such as people with Parkinson’s disease or arthritis. ⁴⁸ Hatfield commented,

A lot of people out there can’t tie their shoes and have difficulty getting into their shoes for a variety of reasons. It’s all about helping what we call ‘abilities’ people who struggle with normal footwear, to get in and out of their shoes. ⁴⁹

This had been a focus for Nike before, ⁵⁰ and Hatfield personally felt strongly for these people:

I have been overwhelmed by the simple interactions with people who have been helped along the way. A good example would be getting a letter from [people] who’ve had numerous surgeries on their feet, and they haven’t been able to run, and they send you a note that says they could start running again because this shoe is so soft and comfortable. Those make me cry. It’s like, wow, collectively, we’re improving people’s lives. ⁵¹

In March 2019, Nike had sought to trademark the word ‘footware’, a wordplay on footwear and hard-/soft-ware from the computing world, for use in relation to shoes that involved remote access to data, processing power and connectivity with other devices. ⁵²

What is next?

Nike believed this was only the beginning of smart shoes and clothing, Hatfield commented,

This project wouldn’t exist if I hadn’t been asked to think 30 years in the future. Power laces sort of made sense to me, so that’s what we embarked upon. What are we going to do thirty years from now? I think we’re on the very cusp of developing intelligent products that have this ability to adapt to the wearer, and we think that’s going to continue to evolve. It’s all about artificial intelligence, adaptability. ⁵³

Some of Nike’s competitors had also started looking into a self-lacing system. Puma would bring self-lacing shoes, Puma Fit Intelligence, to the shelves in 2020. The shoe, which was made for workouts and light running, consisted of a cable system that laced the shoe, which could be adjusted with an app or manually by swiping on the tongue of the shoe. Puma had announced the shoe would be sold at a retail price of US$330. ⁵⁴ Adidas took another approach with their ‘N3xt L3v3l’ shoe concept, which contained interwoven textiles and self-tightening weaves providing a perfect fit for the user. They used the tagline ‘No Chargers. No Phones. No Buttons. No Laces’. ⁵⁵

To succeed in this important domain, several strategic questions needed to be addressed: Would this be their breakthrough for product digitalization? How could Nike further grow and digitalize the product line?