Nordstrom pushes boldly into the digital future
If you go with Geekwire columnist John Cook’s take on Nordstrom’s fourth quarter performance, the department store chain "is in a bit of a pickle." Sales through the company’s 117 department stores during that period reportedly slipped 3.3 percent. Sales per square foot fell 2.4 percent, and the total of $3.6 billion in sales from all channels was pretty much flat vs. the year-ago quarter.
Of course, the holiday quarter was tough on a lot of big chains due to severe weather, economic uncertainty and … well, Amazon. (Curious how Amazon’s name comes up these days in reference to nearly every quarterly report.)
Also curious was how Kyle Stock of Bloomberg Businessweek saw the same story through different eyes. While acknowledging Nordstrom’s difficulty in getting foot traffic during the holidays, this columnist paints a picture of a progressive, tech-savvy retailer pushing boldly into a certain omnichannel future. While many chains still seem to be treating their web and mobile businesses as a necessary evil, Nordstrom’s aggressive investments in digital landed them a 30 percent boost in online business from a year earlier. It was the online channel, in fact, that probably saved the chain from having a disastrous year.
Nordstrom’s total sales growth over the last two years has seesawed from roughly the negative 20 to positive 30 percent ranges. Meanwhile, its online business has consistently grown 20 percent or more, quarter after quarter.
And management is far from resting on its laurels, digital-wise. The company announced plans to spend 30 percent of cap expenditures on technology, up from its historic 20 percent. Mr. Stock of Bloomberg Businessweek estimates that internet sales now account for about a third of company revenue, this compared to Macy’s — a competitor that’s no slouch at e-commerce — doing about 11 percent of its sales online.
Further, Nordstrom is heavily committed to its mobile efforts, both on the consumer and in-store customer service sides. According to RIS News, Nordstrom is working hard to integrate tablet devices into store operations, largely to improve POS efficiency. The company also points to learning quite a bit about mobile shopper behavior from its Nordstrom Rack customers and is rolling out some "pretty big improvements" to its mobile site in the spring.
Perhaps most important to Nordstrom’s success is the thread of humility that seems to run through management. "There’s a lot of newness that keeps coming out and our line of sight in that world is really only roughly a two to three year period," Nordstrom EVP and CFO Michael Koppel told RIS. "To say that we’re going to reach a peak and then it’s going to stop, I think, would be misleading on our part."
- What Happens When a Department Store Website Isn’t Terrible? Nordstrom Finds Out – Bloomberg Businessweek
- Nordstrom Focuses on Mobile Customer Experience – RIS News
- With sales falling at department stores, Nordstrom plans bigger online push – Geekwire
In Nordstrom’s push on the digital front, both online and in-store, do you see hints at a futuristic model for department stores? If so, what does that model look like? What percent of sales do you expect Nordstrom will see from digital channels in, say, five years time?