Nordstrom is determined to get closer to its customers
Nordstrom unveiled its “Closer To You” growth strategy at an investor event last week, a plan built on three pillars: expanding its local focus in major markets, making Nordstrom Rack more accessible and increasing “digital velocity.”
Nordstrom will expand its “market strategy” to its 20 top markets that represent 75 percent of sales, up from 10 markets currently, representing half. The strategy leverages physical and digital assets to elevate services, merchandise and delivery. These include smaller Nordstrom Local locations that support pickup and returns. Nordstrom Rack now becomes integrated into the strategy.
Sharing inventory and services, stores in these markets provide on average four times more product available next day and deliver a one-day reduction in shipping speed. Customer counts have increased 20 percent and growth rates are running 200 basis points higher than other markets.
Rack, positioned as a premium off-pricer, in some markets will be introducing “Price Doors,” employing a heavy price-driven merchandising approach. “Hybrid Doors,” featuring a mixed approach, will be used in others. The chain is targeting the high-growth categories of Beauty, Home, Kids and Active in efforts to double their sales.
The company is migrating Nordstromrack.com to Nordstrom’s e-commerce platform “to deliver on our promise of convenience and connection,” and sharing online/offline inventories between the two to increase selection. Online capabilities are seen as a key differential versus other off-pricers. Rack is projected to contribute approximately $2 billion in incremental sales long-term.
Nordstrom sees online assortment potentially expanding to 20 times that offered in stores, up from three times currently, as it leans into drop shipments from vendors, concessions and revenue share deals. Traditional wholesale is expected to provide half of the product over time, down from 85 percent currently. “Extending beyond our traditional wholesale model allows us to increase selection, sharing risk and benefit with our partners,” the company explained in a statement. “It also gives us additional agility and flexibility to adapt to emerging preferences and trends.”
The “Closer To You” theme speaks to creating a unified view of the customer aligned to product and inventory. Nordstrom said, “We need to leverage a broader product assortment and translate it into a curated and personalized shopping experience.”
- Nordstrom Outlines Long-Term Growth Strategy: Closer To You – Nordstrom
- Highlights from Nordstrom’s 2021 Investor Event – Nordstrom
- Nordstrom Sets a ‘Closer to You’ Long-term Growth Agenda – WWD
- As Nordstrom Recasts Itself Under ‘Closer to You’ Model, Digital Sales & Rack Take Starring Roles – Footwear News
- Nordstrom is rethinking the department store model – Vogue Business
DISCUSSION QUESTIONS: What do you think of Nordstrom’s “Closer To You” growth agenda? Which initiatives will likely prove successful versus those carrying excessive risks?