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[12 comments]

Nordstrom Makes Room in Stores for Online Jewelry

January 7, 2014

Nordstrom recently began testing a collection of merchandise from Blue Nile, the online-only jeweler, displayed in a case at its flagship store in downtown Seattle. Mechandise, however, is for display only, with all purchases made through bluenile.com with the assistance of an on-site Blue Nile representative.

For Blue Nile, having a retail presence in Nordstrom's Wedding Suite helps build brand awareness but also enables brides and grooms a chance to physically see the product before making a purchase. Shoppers can try on 75 engagement rings and 40 wedding bands worth up to $20,000.

The test will last six months with the potential to expand to Nordstrom's 17 other Wedding Suite Salons across the country.

"We're definitely looking at this well beyond the holiday period," Julie Yoakum, chief merchandising officer at Blue Nile, told The Seattle Times. "The hope would be to expand to other Wedding Suites."

Several reports pointed to how Amazon, Google, Piperlime, Warby Parker, Indochino, Justfab and other e-tailers have opened temporary pop-ups for the holiday or even permanent stores to similarly increase brand awareness and let consumers try products. However, it's rare for an e-tailer to open inside a brick and mortar store.

Besides the rent it may receive, Nordstrom is said to benefit from traffic that could support its wedding gown and gifts categories as well as potentially extend its reach to avid e-commerce shoppers. Nordstrom has been particularly aggressive in investing in its own e-commerce capabilities, while buying flash-sale website HauteLook in 2011 and, the following year, acquiring a minority stake in Bonobos, a custom-made men's clothier.

Similar to the Blue Nile set-up, more than 100 Nordstrom doors contain Bonobos kiosks.

Shea Jensen, national weddings director at Nordstrom, told the Seattle Times, of the Blue Nile partnership, "For us, the most exciting thing is the opportunity to meet new customers and introduce them to the Wedding Suite."

FINANCIALS:     [NYSE:JWN] [ NASDAQ:NILE]

Discussion Questions:

What do you think of Nordstrom opening kiosks in stores for bluenile.com and bonobos.com? Should brick and mortar stores outside luxury retailing likewise be receptive to agreements with niche e-retailers?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that brick and mortar stores outside of the luxury segment will display goods for niche e-tailers similar to what Nordstrom has done?

Comments:

Great PR piece; driving sales? Doubtful - different customers. The high-touch, high service of Nordstrom with an online site all about saving money from costly brick and mortar retailers. The gimmick of "no, no, no, you can't buy it here" makes it even more dubious. But, like the H&M discussion - great PR.

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Bob Phibbs, President/CEO, The Retail Doctor

Retailers have long used a strategy of "leasing" space within their stores. The cosmetic counter is perhaps the most prominent of these areas. Other retailers, such as JC Penney, have taken it a step further in having an equity position in Sephora.

The use of e-commerce kiosks, with the relationship properly managed, is another logical way for brick & mortar and e-commerce to capitalize on each other strengths, while managing certain weaknesses or areas in which brick & mortar may choose not to compete - high priced jewelry items that Nordstrom may not want to inventory.

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Roger Saunders, Managing Director, Prosper Business Development

This "smacks" of in-store innovation gone ... RIGHT! For years we all supported the notion of store-within-store concepts (like Starbucks in just about every other type of store). So, why not evolve that same concept to include leading online retailers? You get new customers, longer stays in the store, and a chunk of every sale without having to invest in product or staff.

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Kevin Graff, President, Graff Retail

Nordstrom and Blue Nile both gain something by this arrangement. Blue Nile gets exposure to Nordstrom's high-end clientele and Nordstrom gets to display higher-end jewelry that it may not want to carry. Nordstrom also gets customers into its stores that otherwise might not shop there. In addition, both gain publicly about their brands.

However, my quick internet search found neither company references the other on their web site. I assume that is still a bridge too far, but may change if Nordstrom elects to roll the concept out to its other Wedding Suite locations.

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Steve Montgomery, President, b2b Solutions, LLC

In a world where the walls dividing the physical and virtual store are becoming more porous by the moment, we should expect to see this kind of innovation more and more frequently, and in both directions.

"Kiosk" may be a quaint term. I'd prefer "outpost" and "inpost" to describe merchandising that penetrates the boundaries of the incredible dissolving store.

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James Tenser, Principal, VSN Strategies

For a niche segment it is a safe addition to the bricks and mortar retailer. Not only will it add more value and reasons to shop the store, it will also give the retailer a sense of the volume they could capture in that category.

At most it is a short term play, as history would demonstrate the store-in-store model doesn't last for long. Especially if all transactions happen through the etailer site. Who owns that customer?

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

Years ago we would have all scratched our heads at category killers and channel blurring. This is the next generation of channel blurring as smart retailers and etailers look for the best way to maximize ROI and satisfy their customers. Consumers are now accustomed to finding a wide variety of categories at all types of retailers, and the savvy marketers at these organizations are testing the waters to find the right fit for their business.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

I'm in total concurrence with Kevin Graff's comments: He wrote: "This "smacks" of in-store innovation gone ... RIGHT! For years we all supported the notion of store-within-store concepts (like Starbucks in just about every other type of store). So, why not evolve that same concept to include leading online retailers? ***You get new customers, longer stays in the store, and a chunk of every sale without having to invest in product or staff." Plus more likelihood of additional purchases. And additional publicity and advertising - more exposure. All positive.

Gilon Miller, Marketing/Sales VP, Upstream Commerce

I see this as something that will be springing up all over. Yes, retailers have been doing store-within-store for as long as I can remember. There were lots of good reasons then and lots more now.

With the ease of shopping online, methinks that in-store shopping is turning more into the showroom concept. Don't just lay out racks of stuff all over the place but place it in context. Show us other things that go with and have the right people there to assist along the path to purchase.

And, while you're at it, let the suppliers put some skin in the game.

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

It's fantastic for both parties. A department store doing things it should be doing; selling select, interesting merchandise that isn't everywhere else (sort of) and the brands doing a more cost effective job (test?) of getting physical than opening their own stores.

Of course, history tells us that if the online brands go nuts at physical retail, they're about a millisecond from opening their own stores, but I would think the retailers understand that. After all, Ralph Lauren's doing all three, right?

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Lee Peterson, EVP Creative Services, WD Partners

I see a bigger trend here: online retailers are pursuing or leveraging a brick and mortar presence and brick and mortar retailers are leveraging more digital technologies in their physical stores.

I disagree with the statement: it's rare for an e-tailer to open inside a brick and mortar store. There are more and more online retailers considering these options, perhaps following the success of the Apple stores. For example IR500 online retailer Beau-coup (which sells party favors and the like) merged with Swoozies in September 2013 (a specialty retailer of gifts with about 8 stores).

Even more exciting is how brick and mortar retailers are bringing digital into the stores:

  • Digital store fronts (like the ones that Rebecca Minkoff is experimenting with in the Westfield Mall in San Francisco
  • Arming store associates with tables and using ibeacon to send the personalized shopping behavior and recommendations to that association as soon as a customer walks in
  • Personalized push notifications with deals or recommendations as soon as you walk into a store
  • Limited in-store inventory but tablet based access to the full size and style inventory online which can be ordered then and there.

Dominique Levin, CMO, AgilOne

Partnerships like this that connect the dots of online and bricks and mortar shopping make a great deal of sense. Whether it is increased publicity, unique product availability or gaining additional customers (and purchases), this can be a win-win situation for all parties involved.

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Brian Numainville, Principal, The Retail Feedback Group

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