NORDSTROM REVEALS WEB PLAN
Byline: Valerie Seckler
NEW YORK — Internet crash? E-commerce collapse? Fear not, virtual merchants! The best is yet to come.
That about sums up the bold vision of Dan Nordstrom, chief executive officer of Nordstrom’s 28-month-old upscale fashion e-tail site, where, he said, business exceeded the company’s plan for the fourth quarter, a sales trend that “has gotten stronger, relative to plan,” during the first fiscal period of 2001. In typical dot-com fashion, however, the ceo declined to divulge figures, but he did say apparel is producing about half the sales, with the balance evenly split between shoes and accessories.
The fourth-generation Nordstrom, who launched the Nordstrom.com e-tail site in October 1998, believes fashion commerce and content are just a broadband connection away from clicking big online. Despite the current clamor for speedy, streamlined sites and the backlash against multimedia extravaganzas, Nordstrom still envisions a vital role for fashion on the Internet.
“At some point, people will have access at home to fast, broadband Internet connections,” Nordstrom observed during an exclusive interview with WWD from Seattle, where the offices of the dot-com sit just down the block from corporate parent Nordstrom Inc. “That’s the point at which we expect fashion products to really take off.
“With most people now using 56K modems, you have to have a pretty spare presentation on the Web site,” continued Nordstrom, who began his career like many in his family, as a stock boy for women’s shoes at one of Nordstrom’s “physical stores,” as he calls the 77 full-line fashion locations in the company’s chain of 120 brick-and-mortar units. “More speed, better search tools, an environment that’s merchandised in a way that makes sense — those are things that are increasing business online.”
“But if you do it before [cyber shoppers] are ready,” Nordstrom cautioned, “you’ll wind up alienating a lot of people.”
Unlike many of the first-generation e-commerce chiefs, Nordstrom, 38, pointed out he’s staying on a measured growth path — despite the fact the Nordstrom.com unit, comprising the company’s Web site and catalogs, was created in 1999 to spur growth in direct channels, with a cash investment of $10 million from the corporate parent, plus $15 million from minority investor Benchmark and another $1 million from Madrona. The division lost $29 million on sales of $310 million in 2000.
Until shoppers are fully equipped to appreciate the faster performance, Nordstrom’s Internet business will be targeting profit by shifting into a controlled growth mode from its former manifest destiny mentality.
“A year ago, it was my intention to land-grab — enter as many categories as we could on the Internet, as quickly as possible,” Nordstrom related. “A year later, it’s the opposite. Almost everybody’s gone from hyper-growth mode to maturation mode in a very short period. Our focus is on taking the existing business and refining it.”
Nordstrom.com aims to do so, in part, the ceo said, by:
Adding some “significant brands and designer labels” this fall to the 24 fashion e-boutiques that have gone live on the site since fall 2000.
Entering new categories online for fall, including a substantial beauty department.
Fleshing out its executive ranks in the past 10 weeks or so, with the hire of two former Lands’ End executives, Frank Buettner, as vice president and chief operating officer, and Joan Mudget, vice president of quality control. Plus, Lori Liddle joined as executive vice president of sales from Mattel Direct, and Kevin Hillstrom was named vice president of direct marketing.
Extending a Web-enabled backroom technology from footwear to apparel, allowing clothing customers to buy items from the Web site that are out of stock at the physical store they’ve visited.
“We’ve sold thousands of pairs of shoes that way,” Nordstrom recounted. “It’s cut our delivery time on those stockouts to five-to-eight days, from a matter of weeks.
“One of our multiyear Internet initiatives,” Nordstrom added, “is to develop an inventory system that will enable our online customers to view all types of fashion merchandise at all of our stores.”
“We now have 330,000 stock keeping units online — that’s all essentially fashion merchandise: apparel, footwear, accessories,” Nordstrom said. About 80 percent of the assortment falls under national brands or designer labels, such as ABS By Allen Schwartz, BCBG Max Azria, Cole Haan, Dana Buchman, DKNY Jeans, Eileen Fisher, Elie Tahari, Emme, Kenneth Cole, Laundry by Shelli Segal, Lauren by Ralph Lauren, Liz Claiborne, Lucky Brand Dungarees and Nike.
There are also seven brands offered in both swimwear and lingerie areas, but those goods are not displayed in e-boutiques the way apparel, accessories and footwear are. Atop each of the e-shops sits a persistent navigation bar and search tools to guide the site’s customers.
“Our goal last year was to establish the Web site as a top Internet destination for apparel brands,” Nordstrom said. “Gap and Lands’ End do it well, too, but they’re in their own private label niche. In national brands and designer names, we are able to represent a deep and wide assortment online,” he continued. “Our DKNY Jeans e-boutique, for example, is better stocked than many of our competitors’.”
A Nordstrom e-boutique typically carries 30 to 40 items, according to a spokeswoman. When WWD visited the site’s virtual shop for DKNY Jeans Friday, it displayed 30 items, including silk dresses, sleeveless sweaters, and poplin skirts amid the jeanswear. By comparison, the search engines at NeimanMarcus.com and eLuxury.com failed to turn up women’s wear under DKNY, while SaksFifthAvenue.com had two dozen DKNY women’s items displayed.
One advantage Nordstrom brings to cyberspace, said Heather Dougherty, analyst at Internet consultant Jupiter Media Metrix, is its merchandise mix.
“With an assortment that goes from Levi’s to Armani and Ferragamo, it can straddle the market between true luxury retailers like Saks and Neiman’s, and upscale players such as Bloomingdale’s,” Dougherty, a self-described fan of Nordstrom’s Net destination, told WWD. “First and foremost, they have done an amazing job with how they have merchandised the branded boutiques — the navigation is seamless. They’ve been very smart about taking things one step at a time.”
Evie Black Dykema, senior online retail analyst at Internet consultant Forrester Group, agreed, noting Nordstrom.com topped Forrester’s consumer-based PowerRankings for 2000, ousting two-time winner LandsEnd.com as the U.S.-based e-tailer providing the best online experience.
“The site’s superior features, customer service and delivery enable it to outshine all competing online apparel sellers,” Dykema said. “The brand boutiques are some of the best found online.”
Ask Nordstrom how he feels about doing business online, versus the stores and catalogs he came from, and he quickly acknowledges the challenges of the Internet. Nonetheless, he said there are no plans to return the dot-com unit, now a limited partnership, back to the corporate fold this year, despite industry rumors to the contrary. “It’s interesting from the perspective that you don’t have much of a road map,” Nordstrom said. “In this business, software becomes your store, and the ability to execute software effectively becomes similar to using the store environment effectively, whether you’re displaying merchandise or serving the customer. You’re kind of in a perpetual state of invention,” he added, “which is both exciting and sometimes frustrating.”