Reimagining Retail: Nordstrom
On a recent trip to Seattle, my luggage was lost and I found myself without anything to wear except for the clothes on my back. I urgently needed a suit for a business meeting and decided Nordstrom was the best place to start given I was in the retailer’s hometown.
After making my way to the downtown flagship store, I discovered that Nordstrom’s suit selection did not fit my build and ended up at Suitsupply, where the in-store experience won me over. Suitsupply had a variety of ‘European’ fitting styles with on-the-fly alterations, allowing me to walk out of their store wearing my new suit.
Nordstrom’s mission statement is, “to provide outstanding service every day, one customer at a time.” But after my experience, I found myself asking, “What is outstanding service and how can a department store like Nordstrom deliver it in today’s retail environment?”
Below are four key strategies Nordstrom should take to heart, in order to be known as the outstanding customer service leader, one with a customer experience that shoppers will yearn for.
Open the door to new business models
Over the past decade, new retail business concepts such as single-brand e-commerce, subscription services, showroom ecommerce stores, and even Amazon, have further redefined the definition of outstanding retail service. These companies offer experiences for customers that shake up normalcy: free shipping and returns, click and collect and customized marketing, for example.
E-commerce has also given birth to new distribution and engagement models. Most retailers have chosen one of two options: either become an all-in-one destination, or offer a highly focused, high-quality differentiated experience to consumers. Whichever they choose, department store retailers like Nordstrom need to urgently reinvent their role in the distribution value chain.
Expand beyond traditional online sales
By investing in its best-in-class mobile app and buying Trunk Club, Nordstrom has adapted to online transformations better than most of its peers. However, Nordstrom underestimates the limits of its time-honored sales model and remains locked in a traditional retail mindset.
In early 2016, Nordstrom CFO justified reducing online inventory as a means to cut increased costs. Choice is a key component of customer satisfaction but for Nordstrom, owning the full breadth of inventory customers seemed too expensive. Nordstrom prides itself on outstanding service but in order to do so in today’s retail world, they and others must provide the endless aisle shoppers have come to expect in e-commerce.
Change the approach to digital floor space
Department store buyers have always acted as curators, but now more than ever, they must loosen their reigns on curation to not restrict customers’ choices. For example, while Nordstrom’s merchandisers must retain the role of curator for in-store products, they must adopt the role of conductor for online products, quickly getting new and innovative products into their customers’ hands.
Digital floor space is virtually unlimited, but owning inventory is not a scalable option. Some retailers have begun to incorporate dropship, but must look further at more scalable, cost-effective options such as online marketplaces.
Adopt a platform model
In their prime, department stores were destinations where customers went not simply to buy goods, but also to experience products and receive advice. But in the digital era where the customer is in control, these stores cannot solely provide the myriad of products and services that today’s customers expect. This can only happen through online partnerships with trendsetter brands and service providers. By becoming an online platform for all actors of fashion connect, department stores can fulfill these expectations without major investments.
With a platform model, instead of being constrained by scalability issues, Nordstrom realizes their ‘assisted commerce’ goals at scale. This model allows them to crowd source recommendations and sourcing of products, collect valuable data on its customers, and inform buyers and private line development.
In 2014, Erik Nordstrom, president of Nordstrom Direct, stated that through the Trunk Club acquisition, the company wanted to “… evolve with customers by finding more ways to deliver a great shopping experience.” Nordstrom and other department store retailers can still do this. By redefining customer expectations, opening the door to new business models, expanding beyond traditional online sale and changing the approach to digital floor space using a platform model, these stores can provide a great shopping experience across channels and remain relevant now and for future generations.
Adrien Nussenbaum, U.S. CEO and co-founder, Mirakl.