The Nordstrom Formula: Service x 3
By George Anderson
The secret to Nordstrom’s success is service, service, service. The retailer, more than any of its current rivals many would argue, has turned the art of customer care into a winning strategy for business growth.
A report in the Los Angeles Times says the department store chain is actively seeking new locations to open stores as consumers respond to its personal way of doing business.
Robert Buchanan of A.G. Edwards & Sons said, “Customer service, by and large for the department stores, is still abysmal.”
The fact that Nordstrom is exemplary in this area, said Mr. Buchanan, means the retailer does not “have to change its plan one iota.”
Ann Harrison, a 46-year-old substitute teacher who lives in Fullerton, Cal., offers a consumer’s insight into why shoppers choose Nordstrom.
“I like that they will help you and go get clothes for you,” she said. “Now you go to a store, and salespeople are talking to boyfriends on the phone or to each other. I just got fed up with that. I decided I’ll pay more to get the service [at Nordstrom]. It’s worth it to me.”
Betsy Sanders, a former Nordstrom executive, believes the company does have areas that need improvement. “They have to focus on making the merchandise mix even more special. They have to work harder,” she said.
Moderator’s Comment: Where does Nordstrom fit in the new world of department store retailing following the Federated/May
merger? What will others do to wrestle customers from Nordstrom and what do you expect its response to be? –
George Anderson – Moderator
I’m with Don and Len on this one – too much pressure from associates trying to “help” you can be annoying. My take would be to ease the suggestive selling techniques and have the associates stop trailing behind you so much, especially in the men’s departments (see discussion today on selling to men).
Ms. Sanders is correct. Nordstrom cannot depend upon “service, service, service” to maintain growth and profitability. Over the past 10 years, the company attempted to grow rapidly within specific metro markets. The efforts were not successful. Managing the merchandise assortment mix is the single most important element (outside of location) to their expansion plans.
Think about it. Nordstrom appeals to higher income customers. Are these really a homogenous group? Or are there distinct segments, differentiated through fashion (lifestyle) preferences? Do the lifestyle/psychographic descriptors remain the same throughout the country for groups with the same levels of disposable income, age, and other demographic descriptors? The answer is no.
Some merchants at Nordstrom are already learning to craft their assortments around 2 – 3 distinct customer lifestyle profiles. They are learning to balance the style count and inventory depth based on how the demand fluctuates across stores for these 2- 3 lifestyle variants.
Look deeper, people. Service is important. It may be the primary dimension of differentiation from Federated. However, attractive, informed, pleasant and cooperative people bringing me merchandise I don’t want isn’t really going to be a successful formula.
And the need to focus on local market assortments increases dramatically as Nordstrom expands within markets.
The financials will improve when the assortments become more unique. Too much of what they sell is so similar to other stores. That creates tremendous price pressure. If Nordstrom had the sourcing and design strength of H&M, it would be unbeatable.
Service is a fine goal. But frankly, Nordstrom’s can be a bit intimidating and annoying.
There is an art to good salesmanship and that’s knowing when to back off. Just having someone follow you around to try and sell you something is not particularly appealing. I know this is blasphemy to some, but Nordstrom’s is not the ultimate service model. They need to teach their associates subtle suggestive selling. The best I’ve ever seen at this is Paul Stuart’s on Madison Avenue in New York.
The merchandise mix also needs fixing. Nordstrom’s might consider another banner that would cater to customers now shopping at H&M or those who have reached a bit higher level in the fashion food chain.
Nordstrom USED to be the epicenter for retail service, but the last five times I’ve visited, the service has been sub-par, to be kind. Now I’m not a 90 year-old curmudgeon who remembers the days of full service gas stations (I’m only 41, I don’t remember that, just heard of it), just someone who expects a smile, a quick and friendly greeting and true assistance.
They have a perceived higher level of service which continues from their hey-day, but I experienced young, oblivious, rude people who chose not to help. I, for one, am tired of hearing about the “Nordstrom type service”. It doesn’t exist anymore.
I agree that Nordstrom’s focus on service may only go so far. I’ve read that the market for upscale clothes has stagnated and the flood of bridge lines from the likes of Jones New York and Calvin Klein has met with a tepid response. I got an email from Nordstrom saying it is replacing the gift department with “Nordstrom at home.” This is what department stores are going to have to do – add non-clothing departments. As department stores try to attract younger shoppers, they risk losing older ones to stores like Talbots.
My mother has shopped at Nordstrom, but has dropped thousands of dollars at Lord & Taylor, which seems to be in direct competition with Nordstrom, since both chains sell mostly clothes and lack furniture and appliances. She does not like the fact that Nordstrom’s salespeople are so eager to sell and are too “pushy.” My mother used to like to browse Lord & Taylor because they had better sales. However, when Lord & Taylor eliminated popular lines such as Liz Claiborne and closed the locations near our house, my mother stopped going there.
If Federated decides to keep Lord & Taylor, it might consider pursuing internet commerce for L&T as it does Macy’s and Bloomingdales. Although my 50-something mother doesn’t step foot into Nordstrom, she does order from it online. I think Federated should consider keeping the Lord & Taylor brand if it wants to compete with Nordstrom.
One of the things that sets Nordstrom apart from most department store chains (Dillard’s being an exception) is that the founding family still exerts a major influence on strategies/operations. So far, this influence seems to be a positive one. If that will continue as more generations come in remains to be seen. (And how sad/ironic that Federated, which was originally created to allow family-owned stores to compete w/chains, an issue even in the 1920’s, ultimately became the agent for the destruction of that lineage. R.I.P.: Filene’s, Kaufmann’s, Field’s, M&F, S&C, Hecht’s, Lazarus, Rich’s, Burdine’s, et. al.)
Guess I am the odd ‘man’ out on this one so far. Particularly as a man (but not necessarily that women don’t), I want help. I have never had an experience at Nordstrom that wasn’t exceptional and worth the special trip. For other department stores, this isn’t even close to the case, even where service has improved at (the late) Marshall Field’s.
Service, service, service is the way to growth. It’s a matter of complete and total distinction above the rest. Assortment; product? Sure. But, if service wasn’t so much a point of differentiation, why are so many seeking alternatives to the department store? The alternatives offer the same or equal service (which is generally none) with better pricing or some other value differentiation point other than service.
Nordstrom is a special experience. I have never felt pressured there. I have felt very personalized and a true intent to find the right item for me to be satisfied. Certainly, there was an intent to sell. However, I felt the intent was matched with the desire of satisfaction. I will continue to make special trips there for this reason. In particular, my holiday excursions to their store have been extremely remarkable. Even at a time when you would think that service would be at a premium, it was consistent and pleasurable.
They deserve note for being able to maintain their core philosophies in a market where pressure has caused so many to do otherwise.
So, to tie in to the other article today, maybe as a man I am different. Nevertheless, they are one of the greatest retailers today. I hope it never changes.
I am not sure, but you can imagine that the training of Sales people at Nordstrom is focused on customer service, first and foremost. Personally, I have experienced a sales girl who was focused on serving one customer, to the point that she had to ignore others. This is the kind of single-mindedness that customers appreciate.
I can also see how the Nordstrom model is so successful because they are now one of the few department store alternatives. You go to a discounter or many specialty stores, and one doesn’t expect service (or are very surprised if you get any). However, walking into a department store today, particularly if you are old enough to have experienced the kind of special service these great retail experiences offered decades ago, the customer expects something more.
The buzz about Nordstrom’s service has reached legendary levels. So while many customers may not actually experience their service during a shopping trip, seeing customers who are being handled well adds to the legend. It’s what I call the “illusion of service.”
Lastly, I really appreciate how Nordstrom employees keep track of customers’ purchases, likes and dislikes, color preferences, sizes, etc. Without the use of visible technology, the knowledge base allows the retailer to continue relationships, not start anew each time the return customer enters the store.
Sometimes I get the impression that Nordstrom is still playing off the reputation it earned in the 1980’s as a legendary service provider.
That said, while service remains a very important differentiator for Nordstrom, it may not on its own justify a price differential on known items in the minds of many consumers. When combined with a unique, fashionable merchandise mix, however, exceptional service supports a luxury/quality image.
I’ve spent a lot of time in the Seattle area of late, and I have met a number of current Nordstrom devotees. Seems like the chain continues to enjoy a strong position within its “home” markets, as much for its selection as its service. As it expands into new markets, however, the competing appeal of Bloomies and Neiman’s may be harder to beat.
You all can say what is needed for a winning Nordstom’s formula.
But you never walk away from a winning formula of service, serenity / music to soothe you, a quick pass to the dessert bar, and smiling service associates who will walk a mile for your needs.
Why do you think the Nashville, Louisville markets’, etc. consumers want Nordstrom? Specific image of caring, doing, smiling and engaging with the people who spend!!!
You don’t need all shopping segments to be successful and very profitable!!! Hmmmmmmmmmmmmm
One thing I truly miss about leaving Atlanta for Nashville is leaving Nordstrom behind. However, truth be told, I never left them. I still shop them exclusively when I return to Atlanta or travel, or online. While some lines they offer may be limited, their brand menswear is outstanding quality and style that I don’t foresee I will ever stop using.
I appreciate how they continue to keep their stores clear from clutter (even at holidays) and all the junk I have to navigate around at other stores all year. Also, I find their service to be genuine, sincere, and helpful. If I signal that I am only looking, they leave me alone, but stay available.
Finally, the simple act they constantly provide by walking my bag around the counter and thanking me with a handshake while handing it to me is so simple yet makes a big impact. Thank you notes for my purchase arriving in the mail the next week? Status quo for Nordstrom.
My focus selling groceries may be a totally different game than what Nordstom does, but I can attest they have been a big impression on my approach to service and merchandising. What would the high standard be without Nordstrom? It’s scary to think we’d settle for less than the service they offer. It’s not nostalgia, it’s the Nordstrom way…I don’t even consider wasting my time in the many stores they “compete” with that simply don’t compete.
Nordstrom is the only logical heir to the customers that Federated is going to toss overboard with their destruction of Marshall Field’s and (assumedly) Lord & Taylor. They are the last two department stores that my family shops in; all other fashion and home business that used to go to department stores now going to specialty retailers or Target.
As another submittal noted above, the correct merchandise assortment is key. L&T is such a good choice for many people because is has an overwhelming selection of relatively narrow (traditional) categories. I have great service at my local store (Chevy Chase, MD) only because of one salesman. If they have him in a ladies department or gifts the day I go, it’s back to self-service. I have actually called to make certain he is working certain days before going to the store.
Marshall Field’s service, overall, has greatly improved in the past few years and it is tragic to see Federated wipe this great retailer off the face of the map.
Nordstrom is the only department store that I will shop in.
While the company acknowledged that its merchandise mix was off-track a few seasons ago, and I was actually unable to find anything I liked for a year, they are ‘back on track,’ offering styles, brands and price points that appeal to a mature clientele.
Noted also is the store planning, that never includes rounders jammed with markdown/clearance merchandise; or pads that appear to be over crowded; and dressing rooms that are routinely cleared of merchandise.
But the service is what continues to impress me. We consumers have many ‘self-service’ options. Retailers continue to rollout open selling, kiosks with web-ordering and self-checkout; as well as ‘do-it-yourself’ shopping during which you may never see a sales associate until you find a staffed POS terminal for check.
I go to Nordstrom because I want professional associates who treat me like a long-term client versus a one-off sale. I am currently working with an associate who I respect as a service provider.
Finally, I go to Nordstrom because I do not like to shop. As a rule, I find it intimidating and frustrating to find fashion that looks good on me, is workplace appropriate, and has style. However, I leave Nordstrom giddy about the purchases I’ve made; and I’ve seen this reaction in other Nordstrom customers.
Nordstrom’s service seems so exceptional because there is nothing else to compare it to in the department store segment. Sure, you’ll find some one-off’s here and there at Dillard’s or Marshall Field’s but that seems to be an oddity.
The key thing for Nordstrom to remember as it expands is depth of selection is that a Nordstrom in Salt Lake City is not the same as a Nordstrom in Seattle or Chicago. Once customers experience a flagship store like those – they expect it at every location. Usually they are let down when a store opens in their area.
Since Nordstrom seems to only want to operate in certain cities it only makes sense that they should be building one flagship store per city and therefore becoming a destination. Their new trend of multiple locations in a city is disturbing…look at what that did to the retail giants of yesterday. (They’re all becoming Macy’s this year.)