Turning a Business Around, Nordstrom-Style

Dec 29, 2003
George Anderson

By George Anderson

Three years ago when Blake, Peter and Erik Nordstrom took over management of
the department store chain named after their family, there weren’t many outside
the company who thought they could turn the then struggling retailer around.

One analyst, who advised investors to sell their holdings in Nordstrom Inc.,
thought the three were too “concerned about the company’s vaunted customer-service
levels and not concerned enough about profits.”

As it turned out, the family emphasis on staying true to the values and practices
which made Nordstrom famous was exactly what was needed to generate greater

The Puget Sound Business Journal reports, “While its department-store
competitors have mostly struggled this year to post even flat comparable-store
sales, Nordstrom’s sales at stores open more than a year have been rising steadily
since May. The company has bested analyst expectations by a wide margin in the
past two quarters, and saw its stock shoot up to more than $35 a share in November
after it reported a 147 percent increase in third-quarter income and raised
its earnings guidance for the fourth quarter.”

Moderator’s Comment: What has turned Nordstrom around
over the past three years? What will it need to do to continue building on its
reversal of fortune?

Customer service is what made the Nordstrom name famous.

Analysts who criticized Nordstrom for sacrificing profits
because family management insisted on sticking to the company’s culture of service
made the mistake of seeing associates as purely an expense.

Poor recruiting and training practices put expensive
employees in place. Finding the right people and providing the needed training
creates opportunities for building customer loyalty, sales and profits.
Anderson – Moderator

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