Is Nordstrom Perfect?
Attending Shop.org this past week, a keynote presentation by Jamie Nordstrom, president of Nordstrom Direct, got me thinking: Is Nordstrom really "perfect" or might we learn from their failings as well? In the retailing industry, we tend to lavish our attention on retailers known for strong sales and customer service, such as Nordstrom, Costco, Apple, Publix, Trader Joe’s, and the like, while demonizing others such as Sears Kmart, Best Buy (lately), Toys "R" Us (sometimes), A&P, Winn-Dixie, etc. And we’ve always got those that we have a love-hate relationship with such as Walmart, Target, Macy’s, Kroger, The Gap, and so on.
Mr. Nordstrom’s presentation didn’t really give away any company secrets, but was well received and did list some key strategies and tactics:
- Improve customer service. Although their reputation in this area is stellar, Mr. Nordstrom says it is their #1 goal each year because it leads directly to increased revenue and because the customer is clearly in the driver’s seat these days.
- Leave decisions to those closest to the customer. Nordstrom’s main rule for associates is "use good judgment."
- Accelerate openings of Nordstrom Rack. Since they do not believe it cannibalizes their full line stores, they have plans to double the number of Rack stores by 2016.
- Create seamless experiences for customers whether online or in-store. Focus on what’s best for the customer, not who gets credit for the sale.
- Increase investment in physical stores. They have recently added more personal stylists (trusted advisors) and plan eventually to remove registers altogether in favor of tablets.
- Use social media and try new social media venues. The ROI is not clear, but it is important to get customers talking about fashion, and social media is a good way for retailers to learn from their customers.
- Increase speed of shipping. Nordstrom eventually hopes to offer same day shipping.
- Invest in and partner with brands that can help them grow and offer points of differentiation, such as TopShop, Bonobos, and HauteLook.
- Offer complete visibility of in-store inventory online. It is OK to have edited assortment in stores, as customers want a selection of their favorite brands, but they must be able to access everything online.
- Create a customized environment for shoppers in stores. Some want more self-service, some want a lot of help — it is important to tailor the experience to each shopper’s wants/needs.
Jamie Nordstrom did not elaborate on how the chain is dealing with the store vs. online turf challenge that many retailers are experiencing other than to say that they were able to work it out because of the cultural history they have, of putting the customer first. We’ve all heard the legends of Nordstrom taking back returned product (specifically the tire story) that they don’t even sell. True or not, they have a great service reputation, but I wonder if we in the industry give them so much credit that we fail to learn from the few failings they might have.
Discussion Questions
Does it help for retailers to search for flaws in “perfect” retailers such as Nordstrom ? What areas do you see where Nordstrom might improve?
Most retailers are all too familiar with how to do things the wrong way so seeking out flaws probably isn’t all that instructive.
There’s an old, and possibly apocryphal, story told about Sam Walton’s early days. As the story goes, Sam would pack up his team in a van and have them scout out competitive operations.
At first they would come back and report all the things wrong they had discovered the other retailers doing. “Listen, I can make mistakes on my own,” the story has Sam say. “What I need to know is what are they doing right that we can copy.”
True or not, it’s good advice. Nordstrom isn’t perfect. Neither is any retailer. Every company does some things poorly and has its fair share of just flat out dumb practices. After all they are operated by human beings who are all far from perfect. But, that doesn’t mean that focusing on flaws — unless they mirror your own flaws — is all that useful an exercise.
The short answer is no — developing a business around a proactive competitor’s weaknesses is a very weak strategy. There are instances where a behemoth company with a huge piece of market share leaves opportunities on the table, but those are less likely in retail than in say, software. Additionally, most retailers are much farther from perfection than those they’d be trying to find flaws in, so fixing their own issues would be a much more valuable investment.
BTW — there must be something wrong with me, because the list Al compiled from Nordstrom’s presentation in no way sounds innovative. I would consider it the common sense strategy that every merchant must work from — yet most do not.
Searching for flaws in a successful retailer is distracting, in my opinion. With so many moving parts something that appears to be a flaw at Nordstom could actually be part of the model that works for them and changing it could impact their number one focus which is customer delight.
What Nordstom and other great retailers do best is focus on one or two key objectives that they not only preach, but live by. Some retailers will tell you that customer service is important and then you enter the retailer to find that is not the case and in fact what the retailer is focused on is cutting labor costs or a dozen other objectives that have short term gains.
Nordstom does it best. Why? Because they have one major focus. Customer experience is first and it is clear when they make any business decision they always evaluate how it will impact the customer. Sounds easy, but in reality it is far more difficult than it looks.
What we learned from Nordstrom: Create a mission that you truly believe in, and then live it. Everything from associate training, store appearance, location, and channels should reflect your mission. Then reinforce your mission and constantly measure your results. You can’t improve what you don’t measure.
Great Examples of strong singular focus:
Costco: Treasure hunt, free samples.
Trader Joe’s: Exceptional and unique private label items back by exceptional, fun and Hawaiian-shirt-wearing associates.
Walmart: lowest price.
No, Nordstrom isn’t perfect…but the company knows it. More important, it’s not complacent about its success and seems to have a long list of self-improvement projects and strategies in the works. The worst thing a great company can do is to rest on its laurels, and Nordstrom is avoiding that trap.
The price/value relationship is their greatest strength as well as biggest weakness. In response, you have expansion plans for Nordstrom Rack. Jamie pointed out that some analysts questioned this move because it would “hurt” the brand. Not so. It actually makes the brand accessible to those who otherwise would have sticker shock when touching a high quality/high fashion item that costs more than their weekly pay. I’m exaggerating of course to make the point, but for most department store shoppers, the average ticket on shoes or apparel is beyond affordable.
Getting a great “buy” at Nordstrom Rack ultimately peels away at emotional barriers to enter the high-end Nordstrom environment. I align this in a way to how high fashion at low prices has raised Target’s price/value quotient, or even Sears and Kmart with celebrity lines. It’s a stretch, but you get the idea.
The customer being at the center of the Nordstrom universe was simple, refreshing and logical when taken all together in Jamie’s talk. Their commitment to aggressively invest in IT/Technology, finding new ways to engage the customer, to test/learn and be willing to fail in order to succeed was the kind of inspirational attitude/philosophy you trust most retailers can and should embrace.
Of course it’s smart. First, “perfect” is relative — perfect within their target market, perfect within some set of boundaries, etc. Then, it’s also a fundamental reality that behind every strength is a weakness — an opportunity for someone else to succeed.
So Nordstrom has wired a pretty good equation within their market (although despite living in prime Nordstrom territory, we shop there only rarely). But some of their and Apple’s appearance of perfection comes because they serve narrowly. For some, following their lead to focus would be wise. But their focus also leaves open tremendous territory to “counter-program” them.
I don’t think it helps to search for flaws in perfect retailers — that’s a fool’s errand.
What we should take away is that they don’t think they are perfect. I had a chance to listen to Mr. Nordstrom’s discussion live and I found a few things very interesting:
1) Leadership helped break down the barrier between who gets the sale online vs in-store. It also helped the online team (the young hipsters) and the store folks (old surly cranks) work together.
2) He glossed over the heavy lifting of system integration — knowing real time in store vs online inventory. Installing tablet solutions to aid in selling on the sales floor and using them as a POS. And having the capability to ship from store and order online and pickup in-store. I was curious to know the timelines and money invested for those.
Searching for the rights has more value than searching for the wrongs. It is also easier and can lift the level of creative across a retail management team. The rights instill the creative side of the brain. The wrongs just make someone content with what they have. Improve the rights and ignore the wrongs.
It’s a lot more profitable to look for what businesses are doing right than what they are doing wrong. Even more importantly, look for the principles driving those “rights” and “wrongs.” The reason is that principles are highly exportable and contextualized in other businesses, whereas, too often we hear, “Well, we can’t do that — because we are selling ice cream, not socks!” It’s the “we can’t do what the winners do, attitude,” that is a killer.
In Jamie Nordstrom’s list, this one illustrates exactly the type of PRINCIPLE I’m referring to: “Focus on what’s best for the customer, not who gets credit for the sale.” Focusing on what is best for the customer requires an intimate and detailed knowledge of the customer — something a true salesman lusts after.
Unfortunately, most of the retail industry is drenched in data. Massive amounts of it relates to the money taken in, the products and merchandising, the real estate, the suppliers, etc. Since everyone is a shopper, it is assumed that shoppers are understood — even when the assumptions are in stark contrast to reality.
We always tell our clients to spend more time understanding what makes their best people or stores successful and trying to emulate that and less time diagnosing the flaws of underperformers. I’d apply the same principle here.
At the risk of putting words in Al’s mouth, I think the point was that we should (perhaps) seek out the flaw(s) in “perfect” retailers, not to create a counter strategy, but to learn from them.
Nordstrom’s potential weakness, ironically, is a direct result of its stellar reputation…meeting unrealistic expectations: the tire story, for example, has a simple basis in fact (N had purchased Northern Commercial, a full-line Alaskan department store that DID carry tires, and was simply honoring a legacy guarantee), but has morphed into an urban legend that is tough to control.
I also think that perhaps they are too conservative … namely that they should branch out into home furnishings; but I’m hardly the best judge of that, and listening to well-intentioned fools definitely IS a weakness.
I really like what Jamie outlined, damn good advice. Especially the part about investing in stores. What’s more important than the physical touch/vision point? (And don’t say price, I’m SO bored with that.)
But Jamie should take some of his own advice to heart. To me, their store experience is average at best — and maybe that’s what they’re shooting for, but given their greatness at other retail elements (like service), I would hope not. Nordstrom’s environment and lay out feels like a little bit better Macy’s when you’d think they have permission from their customers to be much more adventurous than that. Maybe when a ‘City’ Target moves in close to one of their stores they’ll get the message, but for now; pedestrian is a good word for what they’re doing.
But let’s see. They’re making a lot of noise about new stores (New York!) and new demographics so, perhaps they’ve already got a much better model on the boards. I hope so.
As the author of “The Nordstrom Way to Customer Service Excellence,” who has been writing and speaking about this company for 30 years, I can tell you that the Nordstroms are the last people on Earth to call themselves “perfect.” As one Nordstrom executive once told me, “It’s not that we’re so good, it’s that everyone else is so bad, and we look better by comparison.” After I give a presentation on Nordstrom, invariably people from the audience come up to me to tell me their Nordstrom stories — both good and bad. Yes, plenty of people get less than stellar service at Nordstrom. Nordstrom learns more from the angry customer letters than they do from the joyful letters. So, when Jamie Nordstrom says that the company’s #1 goal every year is to improve its customer service, he’s completely honest. What sets the Nordstroms apart is their genuine humility — and their ability to adapt to the changing needs and demands of the customer.
I don’t think we have to search for flaws in retailers such as Nordstrom, but we can pay attention to areas where they acknowledge need for improvement or areas where they plan to invest in the future.
For instance, if you note their comments about social media, e.g. “The ROI is not clear,” they are telling us that they don’t have it figured out. Good to see this admission, however veiled.
It is not learning from the flaws themselves. It is learning from their reaction to the flaw. The thing that makes Nordstrom and similar retailers great is that they have ALWAYS been customer-centric in everything they do. This shows up in how they invest: in great staff, beautiful environments, localized assortments, technology that the customer wants vs. technology for technology’s sake, etc.
So, studying great retailers like Nordstrom for both their best practices and their reaction to emerging flaws (next practices), is required for all retailers seeking to be world class. You can be sure Nordstrom is paying attention to Amazon, Apple, and others….
Of course. Everyone has weaknesses. How they approach these and their alternatives which they use to solve their weaknesses is what makes for a rich, diverse, retail environment. What works great for one retailer may not work for another. However, every solution has alternatives, and it is how the solution is used which may have greater value for a retailer, rather than the actual success or failure it represents.
Having shopped at Nordstrom’s over the weekend, I can tell you that the chain still has flaws in customer experience. Sales associates have difficulty crossing over department lines and can occasionally be overly “salesy” in their approach.
At the same time, the state of customer service across most retailers in the United States suggests that the time spent studying the flaws of Nordstrom would be better invested in improving the customer experience in their own locations. Unmotivated, under-trained and unappreciated sales associates turn off customers in almost every store you walk into in an average mall, not to mention the grocery store experience. I think this is a classic case of “those who live in glass stones should not throw houses.” 🙂
There is no perfect in retail, and the retailer who thinks they’re perfect is destined to fail. Retail is a daily, dynamic business, changing at every instance. Nordstrom is close to perfect, about as close as anyone can get, but the important thing is, they are always working to try for perfect. And from every imperfection, they learn.