“We are not economists. It’s hard to read the mood of the consumer. They like good execution. Maybe the bar is a little higher than it used to be on that. So we are super focused on executing for her.”
“We want to be the place that has the coolest stuff,” stated Nordstrom, the president of stores for Nordstrom Inc. “It’s not about price. It’s not about one single brand. It’s about what’s cool.
“If you come into our store on 57th and Broadway, we have a one-off Nike experience that is unique in the world. It’s super cool. There are super rare products Nike only made 30 pairs of in the world and they are at our store, and it’s $99, $139. These are not thousand-dollar shoes. They are Nikes. But they are super rare and they are of-the-moment. Then you go upstairs and we have a super unique Burberry installation. It’s a little more expensive but it’s not about price. It’s about what’s cool.”
Nordstrom’s Everlane shop at the 57th Street flagship ups the cool quotient. The brand is transparent on how its products are priced and sourced. “There are a lot of customers that say ‘I love Everlane and I’ve been their biggest fan since Day One’…or mostly, ‘I have never heard of this,'” Nordstrom observed. It’s something new to the store and relevant to customers, and part of the retailer’s efforts to rev up a challenging apparel business, become more au courant and distance itself from past perceptions as very traditional, style-wise.
Brands such as Everlane, as well as Reformation — also carried by Nordstrom — “see us and they see our customer and they see our service offering as, in some cases, the best option for them to introduce their brand. It’s not about price. It’s not about how can I get in this channel and get the most units. It’s how do I tell my story about my brand. And these brands have great stories. We are going to bring that brand to life in a way you can’t do only online.”
While having “no crystal ball” on the consumer mind-set, Nordstrom has a pretty sharp vision of Nordstrom in the future. It involves:
• Digital sales escalating to over 50 percent of the company’s total sales over time, from the current 30-plus percent.
• Nordstrom Local locations springing up around the country, in addition to the five operating in Los Angeles and New York City.
• Sustainability becoming more important. “We have a good platform to be able to try things…What we are excited about is what it unlocks for us in terms of attracting new customers,” Nordstrom said, adding that nordstrom.com’s listing of products sourced sustainably has been a “big win.”
• Stepping up the gifting business.
• Furthering the aura of discovery in the stores by introducing “cool” products.
“We are engineering our business in a world where at least 50 percent of our sales will be done purely digital,” said Nordstrom. “What does the store need to be? What is the role of the store? What’s the layout? Where do [the stores] need to be? How many of them do you need? We think that’s a really fun problem to have. We don’t have 900 stores. We have 116 and they are in good locations. They may need to be configured differently. We may need to move them around town a little bit.
“We started opening these Nordstrom Locals. So far they have been really well-received. We think there is an opportunity for more of those, as part of the recipe” of re-engineering the stores.
“But there are two things a store does really well, much better than a web site or your phone — that sense of discovery, of bumping into something that you didn’t come to look at, and service,” said Nordstrom, the cousin of Nordstrom Inc. copresidents Erik and Pete Nordstrom. “How do we deliver those two things in a way that is super compelling. In some places, like New York, you need 320,000 square feet to bring that to life. In Columbus, Ohio, it might be something else. We have an opportunity to go to every market where we do business and start to figure out what is the right recipe.
“It’s not about making big wholesale investment changes to our fleet,” Nordstrom stressed. “It’s about starting to plant those seeds about how we can start to use those places better to serving customers as we become increasingly digital over time.”
Nordstrom is creating express service hubs for alterations, order pickups and returns and installing them in the most convenient space on the first floors of highly productive stores. “It’s a struggle. It throws all of our metrics out the window,” Nordstrom said.
“If our stores five years from now look like they do right now, we will be failing. It’s expensive to reallocate space in the store. But it’s absolutely necessary… We have to be constantly asking, ‘How do we use our most productive square footage in our store to be more relevant to customers?’ It’s not about the product that’s sitting there. It might be about service. It might be about food and beverage. It might be about other things to create a different kind of environment we’re not used to seeing.
“We’ve been in the food and beverage business for 40 years or so. We have restaurants in all of our stores. We have coffee bars in all of our stores. It’s a core part of what we do. We opened up a couple of stores in the late Nineties without restaurants and they were failures. We had to go back in and add the restaurants. For our customers, it’s a big part of the experience in our stores. In our store on 57th and Broadway, we have four restaurants, two stand-alone bars and one is in the middle of the shoe department. I recommend a bar in the shoe department. It works — better than I thought.”
On gifting, Nordstrom said: “There are lot of customers who can be better serviced during that peak time, mid-November all the way through Christmas. There are some simple things we can do. It’s about gifts at different price points. It’s about gift wrapping services. It’s about navigation in the store to make what is a typically super stressful, annoying process a lot more fun, whether it’s in stores or nordstrom.com. We are going after gifting in a way we have never done before” this holiday season.
Sustainability is also “a big subject for us,” Nordstrom said. “We’re excited about what it unlocks for us in attracting new customers, if we can figure out how to create some compelling experiences.” And re-commerce and rentals are “big opportunities,” Nordstrom said, though he added, “How somebody is going to be making money on that stuff is still to be determined. Somebody is going to figure it out because the customer is going there.”
He explained that the Seattle-based, $15.5 billion retailer has a local market strategy where it’s not merely about “the business you do in the four walls of the full-line store. It’s about the business you do digitally. The business you do in a Rack offprice store. “We look at towns like New York, Los Angeles or Chicago and think about how we can do a better job for those customers. How can we get more market share? What do those customers want? How do they want to shop? What are the points of friction and how can we leverage all of our assets, to create a more seamless experience?”
The market approach began in Los Angeles last year with the opening of Nordstrom Local service hubs and continued with New York City, where two Nordstrom Locals operate.
“As an example, if you live on the Upper East Side, you can shop for anything we have in any of our stores around here on your phone. You can have that merchandise delivered to our Nordstrom Local on 73rd Street the same or next day, come in and try it on and get it altered. You can have a pretty darn good shopping experience without ever having to come to the [full-line] store. Customers have lots of different occasions they are shopping for. Sometimes it’s just to replace that lipstick in an experience that’s as friction-free as possible. Other times, I want to try on dresses for two hours…We want to be good at all those journeys.”
Nordstrom Locals and the local market strategy will be rolled out to major Nordstrom markets, including Chicago, San Francisco, Miami and Dallas. “It’s going to be different for every market,” Nordstrom said. “In Chicago, we have 17 Racks. These are super convenient places for people to go. They typically have great parking. They are right on the intersections to Whole Foods or whatever. If we can make them pickup or drop off locations, or places where you can get alterations done, we are going to be a more convenient alternative for a lot of customers. A lot of the stuff we sell needs to be altered. We sell a lot of unfinished pants and deliver them to customers’ doorsteps. Here in New York, maybe you have your local tailor or dry cleaner but mostly outside of New York City, it’s tough. We happen to be the largest employer of tailors in North America. A great tailoring experience is an additive to the whole shopping experience. We are trying to be more aggressive about raising awareness,” on Nordstrom services and shopping alternatives.
Nordstrom has a reputation for keeping one step ahead on service and new technologies, though Nordstrom modestly said, “We feel like we are always playing catch up on technology. Most of the stuff we try doesn’t work. We try a lot of stuff. We fail way more often than we succeed.”
He spoke of adopting ship-to-store a year and a half ago and being surprised by the outcome. “We thought for the majority of our customers who are typically more suburban, it would be of value to them. But the biggest adoption of ship-to-store was in Dallas,” where many people have mansions and big driveways facilitating deliveries.
“Dallas customers would rather drive to our store to pick up an order than have it delivered to their house.” That reinforced the idea that Nordstrom has to keep evolving and experimenting to learn. “If you look at a lot of the great department stores of the Forties, Fifties and Sixties that are no longer here, they thought they perfected the model,” and stopped evolving. “The minute you stop, it’s over,” Nordstrom noted. “We try out a lot of stuff. We fail more often than we succeed trying to keep up with our customers. We have a significant case of anxiety and paranoia over where customers are going and what kind of technologies they are adopting.”