Can Nordstrom.com compete on experience over price?

Discussion
Ken Worzel, President, Nordstrom.com - Photo - James Tenser
Mar 24, 2017
James Tenser

Competition in online retail has long been characterized by a relentless focus on low prices and free delivery. In a world where cheap and fast usually wins, Nordstrom.com is bucking that trend by focusing on intelligent automation and ease of use.

“We compete on fashion authority, service and experience,” said Nordstrom.com president Ken Worzel, at this week’s Shoptalk conference in Las Vegas.

Mr. Worzel, who joined Nordstrom in 2010 as EVP of strategy and development, was named president of Nordstrom.com last September. At Shoptalk, he outlined a pilot at a Seattle area store that uses online interaction to deliver a superior unified shopping experience.

It begins with shoppers “discovering digitally” on the website or mobile app, he said. Items purchased from Nordstrom and elsewhere are tracked in a “digital closet.” Norstrom’s intelligent app proposes compatible items and generates “push” notices inviting customers to the physical store.

Upon arrival, a shopper can anticipate finding properly-sized selected items in a dressing room with their name on it, Mr. Worzel said. The intent is to make the shopping visit as efficient and successful as possible.

“For us, 10 minutes in and out of the store is our benchmark,” he said. “Often customers find they have some extra time and decide to shop some more.”

Mr. Worzel said Nordstrom.com is attempting to “erase the boundaries between physical and digital by using the device in their pocket.”

Nordstrom is also exploring the use of natural language search on mobile devices or newer appliances such as Google Home, he added. Voice has potential to make the experience easier on the input side, he said, but it so far remains a challenge to connect with a visual output.

When it comes to providing rich descriptive information about its offerings, Nordstrom.com relies heavily on its 3,000 brand partners. An area of technical development, he said, is to “open up our ecosystem” to these affiliates.

A more streamlined, intuitive, unified shopper experience requires “a great deal of technology behind the scenes,” said Mr. Worzel. “We ask ourselves, how do you not have your organizational structure show up to your customer? That’s a big challenge.”

DISCUSSION QUESTIONS: Is there a place for experience-first retailing online? How well is Nordstrom.com positioned to win and hold that niche in the face of low price competition?

Braintrust
"It is a very on-brand move, but more importantly recognizes that consumers are shifting dollars from products to experiences. "
"I am 100 percent confident that any channel they decide to use (digital, online, mobile, etc.) will have a consistent experience..."
"...their ability to execute at a large scale is something we just haven’t seen happen yet. Looking forward to seeing how this turns out!"

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14 Comments on "Can Nordstrom.com compete on experience over price?"

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Max Goldberg
BrainTrust

Every online retailer does not need to compete on price. Nordstrom demonstrates how innovation, customer service and experience can be a winning strategy. Competing solely on price is a slippery slope, since giants like Walmart and Amazon can beat a low price on a whim. Kudos to Nordstrom for not joining the low-price lemmings.

Ken Cassar
BrainTrust

Nordstrom is absolutely going down the right path by focusing on experience and service over price, powered by technology. It is a very on-brand move, but more importantly recognizes that consumers are shifting dollars from products to experiences. Rather than trying to win a race to the bottom (price-wise) Nordstrom is playing a game that caters to its strengths as a brand.

Ken Lonyai
BrainTrust

I’m not seeing the breakthrough here. This is what all retailers must do. The fact that they’ve waited so long to “get it” underscores why Amazon has gotten as big as they are.

The technology has existed to make this type of “omnichannel” experience possible for a long time. It has simply taken (as we’ve said many times before) retailers this long to finally begin to feel the impetus to invest in it. Nordstrom might have some benefit from getting there ahead of some competitors, but anyone that wants to survive needs to move in this direction quickly. So Nordstrom would be smart to get more innovative or before they know it, others will be on equal ground.

Adrian Weidmann
BrainTrust

Nordstrom is leveraging existing technologies into a process that bridges mobile, online and the physical store in a collaborative and disciplined manner. Fantastic! You don’t need to turn your store into Disneyland steeped in sensory overload. What you need is to establish, maintain and consistently deliver a valued, respectful and meaningful experience to your shopper through their entire shopping and brand journey — before, during and after the purchase. This is about creating and implementing a customer-for-life strategy.

Shep Hyken
BrainTrust

Nordtrom’s reputation has never been about having the lowest price. It’s been about fair pricing and excellent service. Their brand reputation is second-to-none in the retail industry. I am 100 percent confident that any channel they decide to use (digital, online, mobile, etc.) will have a consistent experience that is on par with the legendary service and experience they are known for. That means they won’t change lanes and start competing on price.

Tom Redd
Guest

Can we create a rule for BrainTrusters that says “do not use the word Amazon”? Comparing Amazon to Nordstrom is a cop out.

Nordstrom could do this as long as the shoppers head to their favorite store and make sure that they try on certain styles — to assure that the system and their consultant picks clothes that will fit your body. Technology is not ready for that without humans. If they do that, this will work for Nordstrom — I would rather have something fit than just guess.

Ricardo Belmar
BrainTrust

Yes, absolutely! Nordstrom is quite smart to take this direction and not fall into the low-price trap online that would force them to compete with Amazon and Walmart on their terms vs. on Nordstrom’s terms. Retailers are now seeing two major groups of customers — those who shop on price exclusively and those who want an experience more so than low-price. By catering to the experience crowd Nordstrom won’t have to compete on low everyday price. This merged, omnichannel experience they are creating by taking their customers from online to physical stores will serve them well if they execute properly. Their approach reminds me somewhat of what Rebecca Minkoff has done with her stores thanks to Uri Minkoff’s innovative mindset. While what Nordstrom seems to be doing isn’t exactly new (again, just look at Rebecca Minkoff’s execution) their ability to execute at a large scale is something we just haven’t seen happen yet. Looking forward to seeing how this turns out!

Anne Howe
BrainTrust

This concept is spot on. Living 50 minutes from the nearest Nordstrom these days, the idea of having browsing time at home translate to a fitting room of items waiting for me at the store is fantastic. This idea has me ready to jump in the car and drive! Oh, and I’m guessing the USP of fashion authority, service and experience they are known for is going to pay off in the register after my visit. Sign this shopper up!

Scott Magids
BrainTrust
6 months 24 days ago

Many retailers have gone down the path of low-price competition in the online world in response to the reality that consumers can easily search for the best price on whatever they’re looking for. And while that might work if you’re shopping for commodity items, competing strictly on price is usually a losing game for all but a handful of the biggest players. Price competition online will always be with us, but price-only strategies are already starting to bottom out. The only way to go is to compete based on shopper experience, and who better to lead that charge than Nordstrom? Everybody loves a bargain, but retailers will never create a loyal customer base on price alone. Let’s not forget that the shopping is never just shopping — it’s an activity, it’s a fun day out on the town and it’s a memorable experience. It’s emotional. Nordstrom is right on target by combining the best of both worlds in Nordstrom.com — the convenience of online with the more engaging experience that is more typically associated with brick-and-mortar.

Brandon Rael
BrainTrust

The holy grail of the retail universe is to provide a superior, seamless, innovative, friction-less customer experience. Lower pricing and promotion planning could potentially degrade the luxury Nordstrom experience. This is an area where Amazon has the clear advantage. Nordstrom needs to capitalize by focusing on their superior customer experience and service.

By blurring the lines between the digital and physical worlds, Nordstrom is making the right moves to leverage technological innovations to their advantage and prioritize their customers’ needs.

gordon arnold
Guest

Quality of service and materials along with expert customer service has morphed form a value added differentiation that is worth a little more in terms of price to a freebie like BOGO, free delivery and guaranteed lowest price. It maybe seen as admirable that Nordstrom is persistent in their continuing crusade to reinstate these tools to the levels of status they once enjoyed. It is a shame that enlisting consumers with 20th Century values and the agility to participate in the market plans of old is so darn evasive. In an economy that sells 60 inch HD TVs for less than $500.00, we might want to re-visit differentiation tools from the recent past.

Bob Phibbs
BrainTrust

Sorry, you can’t get there when the in-store experience is either a parroted “how are you today?” or nothing. Omnichannel isn’t the goose that laid the golden egg — just the one getting more attention as the in-store experience languishes.

Cynthia Holcomb
BrainTrust

Who is the experience for? The retailer or the customer? Unfortunately, retailers creating linear in-store experiences is much the same as the retailer’s online linear experience for customers. The good news, only several dozen dresses will fit into a dressing room as compared to the 100s and 1000s of dresses a customer must sort through online trying to find something they love and want to buy. Without individual customer input of fit, look and feel preferences, the 10 minute in-store customer experience will fail just as the online customer experience evidenced by 3% conversion.

James Tenser
BrainTrust

Nordstrom online sales have grown to nearly one-fourth of its total revenue by fiscal year end in January, it reported. So its commitment to the online experience should not be doubted.

It’s true that not every shopping interaction follows a linear sequence from clicks to bricks. Shoppers will define their own paths, according to their needs and preferences at each moment. Nordstrom.com seems determined to unify the brand experience, not just integrate the technology, so its customers feel they are dealing with the same company, regardless of the point of contact.

How well it can resist competitive price pressure remains to be seen, and that will depend in part on the active collaboration of its branded suppliers.

wpDiscuz
Braintrust
"It is a very on-brand move, but more importantly recognizes that consumers are shifting dollars from products to experiences. "
"I am 100 percent confident that any channel they decide to use (digital, online, mobile, etc.) will have a consistent experience..."
"...their ability to execute at a large scale is something we just haven’t seen happen yet. Looking forward to seeing how this turns out!"

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