• Nordstrom is a successful high end retailer, operating in the us and canada. Family interests still
control 31% of the shareholding. The family offered a buy-back in 2018 which was not successful .
• The company recently reported its fourth quarter and full year sales and earnings for the year
ended February 3, 2018. Sales for the full year rose to $15.1 billion, a 4.1% increase over 2017.
Comparable store sales increased 0.8% for the full year, boosted by an increase of 2.6% in
comparable store sales in the fourth quarter. Specific results for the Nordstrom brand, which
includes U.S. and Canada full-line stores, Norstrom.com and Trunk Club, showed comparable
store sales rose 2.4%.
• For the Nordstrom Rack brand(including HauteLook.com and Nordstromrack.com), comparable
sales rose 3.7%.
• The company now operates 116 Nordstrom full-line stores and 1 Nordstrom Local store in the
U.S. and six Nordstrom full-line stores in Canada. Along with those locations, there are 232
Nordstrom Rack stores as well as 11 other units which include Trunk Club, Jeffrey, and Last
Chance clearance stores. In 2018, aside from the New York City opening, the company will open 7
Rack stores in the U.S. and 6 Rack stores in Canada.
• Nordstrom focusses on customer service and quality high-end products. To ensure low inventory
in its operation, the store has regular stock movement from its premium stores to its discounted
Rack stores and from there finally to its Last Chance outlets., where there are no returns or
exchanges
• Nordstrom is still heavily committed to a bricks and mortar presence in retailing. It refurbished
its original Seattle store over 4 years from 2014. It has a vision to provide the ultimate shopping
experience for high end products.
Hc3141 week 6 Nordstrom case 2
• Nordstrom have a policy to provide strong customer focus and attention to detail
and a guarantee return policy. They check inventory and stock availability at other
stores as a norm. Sales staff are compensated well. Lately there have been reports of
overly competitive behaviour between sales staff threatening the customer -focussed
culture, however.
• Top management shape the culture actively with story-telling and visionary
leadership.
• Question 6.1. What is Nordstrom’s segmentation strategy? Who does it serve?
• Ans. Nordstrom focuses on an affluent customer base, providing exceptional customer
service, and high-quality merchandise in an upscale environment. It has a high
proportion of US manufactured products.
• It then caters to price-conscious customers through its separate discount stores. In this
way stock turnover is guaranteed in its prestige stores similar to Zara’s strategy in
mass marketing of fashion.
• It creates unique shopping experiences and is very aware of its image.
Hc3141 week 6 Nordstrom case 3
• Question 6.2.
• With regard to its core department store segment, what does
Nordstrom offer its customers?
• Ans. Nordstrom’s offers outstanding customer service to its
customers, who appreciate things like home deliveries and thank
you cards from Nordstrom employees, as well as Nordstrom’s liberal
return policies.
• Using the Porter model described in Chapter 5, which generic
business level strategy in Nordstrom pursuing?
• Ans. Nordstrom serves a niche market. The company follows a
focused differentiation business model to attract and retain high-end
customers.
Hc3141 week 6 Nordstrom case 4
Question 6.3.
• What actions taken at the functional level have enabled Nordstrom to successfully
implement its strategy?
• Ans. Nordstrom selects only a high-quality sales force, and they compensate
employees well for providing outstanding customer service. This increases the
store’s customer responsiveness. Store management is also focused on supporting
employees, which also improves customer responsiveness. Nordstrom increases
their efficiency by incorporating innovative tools such as mobile checkout devices
that eliminate the need for customers to wait in line to check out.
• What is the source of Nordstrom’s long-term competitive advantage? What
valuable and rare resources does Nordstrom have that its rivals find difficult to
imitate?
• Ans. Nordstom’s long-term, sustainable competitive advantage is their superior
customer service. Competitors find it difficult to imitate the quality of Nordstrom’s
workforce, which is a valuable and rare resource. In addition, Nordstrom’s “luxury”
touches in stores, such as having a piano player in most of their locations, are also
valuable and rare resources, although they might be a little easier to duplicate than
other Nordstrom resources.
Hc3141 week 6 Nordstrom case 5
Impacts of online transition and new workforce demographics.
These classic strategies have left Nordstrom exposed with its traditional reliance on
expensive large retailing spaces. It has invested in online activities in all divisions but is
struggling to reengineer its operations and identity.
It’s not the most tech-savvy aspect of digital transformation, but it is one of the most crucial:
Nordstrom is known for its culture of corporate humility. New executives start by working
with associates on the store floor to understand employees and customers, and top leaders
still answer their own phones. That culture spreads to all employees who know they can do
whatever it takes to serve customers.
Nordstrom’s digital transformation is a step in the right direction with powerful uses of data
(loyalty programs) and in-store experiences to generate repeat business. However, the
company needs improved mobile and e-commerce experiences, especially with Nordstrom
Rack. New stores are smaller spaces , drop-ins for online purchases to be altered or sales staff
to have personal follow-up and customer support. Nordstrom Local stores don’t have any
inventory but instead feature juice bars, nail salons, seamstresses and fitting rooms for online
orders.
Nordstrom hasn’t fully arrived at digital transformation, and the jury is still out on if it will survive.
It is responding to demographic changes in the workforce with the majority of employees being
milennials who value ethical,challenging work but not long-term loyalty. Nordstrom has a
simple HR mantra- use good judgement at all times- that fits these expectations
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