With permission, presented here is a recent article from the official blog of Planet Retail, a provider of global retail intelligence.
With the launch of a dedicated e-commerce site for Nordstrom's fast-growing Rack banner, Nordstrom furthers the evolution of its business model from an upscale department store to a multi-format, multi-channel retailer. It mimics an evolution that largely has taken place in grocery and mass retailing but has lagged among many dinosaurs in the department store sector.
Nordstrom has always been among the pioneers in multi-channel retailing, simply because the premise of serving its customers whenever, wherever and however they want naturally aligns with the company's laser-like focus on customer service. While other retailers are now focusing on inventory transparency and seamless fulfillment across channels, Nordstrom laid the groundwork in those areas many years ago.
With the infrastructure set, the new decade brought Nordstrom the opportunity to look for completely new avenues of growth.
Initiative 1: Roll out Rack. The company began aggressively expanding the off-price Rack concept, with a total of 230 stores — more than twice the number of full-line department stores — planned by 2016. (It has 140 locations today and will open an additional 27 stores in fiscal 2014.)
Initiative 2: Enter the flash sale business. After the company acquired HauteLook in 2011, it introduced Nordstrom branding on the site and promoted HauteLook to its core department store customers via e-mail marketing campaigns. That was just the beginning of the integration. Last year, Nordstrom began accepting HauteLook returns at Rack locations, which the company has said is driving weekly traffic in the thousands to Rack outlets, including many who leave having made a Rack purchase. HauteLook even began including a limited assortment of Rack merchandise accessible from a link on the homepage. At the time, I viewed the decision to bolster Rack's e-commerce presence via HauteLook as a precursor to a dedicated Rack site, where the company could gauge consumer response, generate incremental sales and build awareness.
Initiative 3: Launch e-commerce for Rack. For its final act, Nordstrom solidified the integration between Rack and HauteLook online. The company built the Nordstrom Rack e-commerce site and new mobile app on a shared platform with HauteLook, enabling shoppers not only to shop Rack 24/7 but also access HauteLook's limited-time flash sales events through a single log-in, place items in a single basket and check out via a single transaction.
How likely is Nordstrom Rack to succeed as an online business?