Coping with the repercussions of COVID-19 has been a challenge for many. However, numerous retailers have used these difficult times to find sources for innovation, develop new opportunities and navigate change the best way they know how.
Nordstrom executives recently shared their outlook for the future and changes to their store model during a “Fireside Chat” with Telsey Advisory Group. We’ve outlined some of the key takeaways from the chat:
Labor Model Adaptability
Having a flexible labor model has allowed the brand to pivot when recent hardships arose. They’ve been able to quickly transition their full-line stores to provide more of an experience and service to consumers rather than just solely selling products. With services such as pickup, returns, styling and alterations becoming a big part of their value proposition they have already shifted their labor model to reflect those activities.
Their goal has been to invest in labor differently to provide more comfort for consumers in-store and ensure a safe shopping experience. They know who their consumers are, but now they just need to clarify how to successfully serve them. Having a flexible and easily adaptable model from the beginning has allowed them to do that.
Conservative Inventory Approach
With reopenings, Nordstom has taken a conservative approach when it comes to inventory. Instead of ordering merchandise for future seasons and having to mark down merchandise from previous seasons, they significantly reduced inventory levels. They used their stores as hubs to fulfill e-commerce orders, so they didn’t have a lot of leftover items to sell at reduced prices. It’s also been a little harder to increase inventory because of the shutdown. Taking this approach has allowed them to slowly ramp up products levels in-store and remain flexible for the future.
Staying Connected with Consumers
Nordstrom has found that staying connected with their consumers is crucial during these times and wants to continue pushing this theme as a part of their core business model.
“And part of what’s been invigorating about these times is it’s really forced us to be super connected around what’s relevant for customers, whether that’s the experience or the offer. We think we understand our customers well, and we’re really committed to trying to evolve how we do it, so it’s more relevant for their lives. So, I think that’s really the big theme for us,” said Peter E. Nordstrom, President, Director and Chief Brand Officer.
“When we talk about Nordstrom market strategy, what we’re talking about is the opportunity to provide an enhanced level of service and selection for customers and in mostly our top markets where we have a lot of assets. We have products. We have people. We have place. We have a lot of inventory close to customers. We’ve got a lot of folks who can help serve customers, and we have a lot of physical locations to serve customers. That’s really our Nordstrom market strategy. And you see that we’ve already rolled that out in our top 5 markets, so in L.A., in New York, in Dallas, in San Francisco, Chicago. We’re going to roll it out in another 5 top markets by the end of the year. And really, what that allows us to do is to provide customers with a lot more selection,” said Kenneth J. Worzel, Chief Operating Officer.
Off-Price Model Exceeds Expectations
The company’s numbers are exceeding what they had originally planned for this quarter, especially Nordstrom Rack stores. Nordstrom Rack has been trending way above their sales goal since reopening.
Nordstrom Rack has an off-price model and features significant markdowns from a variety of brands. This retail model has seen success due to the “treasure hunt” it provides for shoppers. These types of stores serve as a chance for consumers to take a break from their day and search through consistently changing merchandise. With the combination of reopenings and pent up consumer demand, this could be a likely reason why Nordstrom Rack is performing so well, combined with the physical need to shop in-store.
The Future of Physical Experiences
“We still think that there’s a great future in the experiential shopping experience that you can get in a physical location, particularly in a great mall,” said Worzel.
There’s still a lot of potential for creating experiences in physical stores and enhancing the customer’s journey, and Nordstrom realizes how important it is for the future of retail.
“We think, ultimately, post-COVID, those really important retail centers are going to continue to be really important and they’re going to be places we want to be to provide customers with a really experiential shopping and discovery journey when that’s what they’re looking for,” added Worzel.
These are just a few of the many takeaways from Nordstrom’s “Fireside Chat.” Like many retailers, this has been a crucial time for Nordstrom to navigate through the hardships and pave a pathway for the future of the brand. Nordstrom execs are confident that they will make it through this, and they will continue to put their customers first throughout all aspects of their company.
“So we’re going to battle through this time. We’re going to be there for customers. We’re going to earn their confidence and trust. And we believe there’s always room for the best-in-class of whatever it is, and we are going to be the best-in-class in what we do, and that’s the retailer of choice for our customers,” Nordstrom said.
Source: Nordstrom Fireside Chat – Transcript
Photo Credit: Nordstrom – Multimedia Press Kits
About Nordstrom, Inc.
Nordstrom, Inc. is a leading fashion retailer based in the U.S. Founded in 1901 as a shoe store in Seattle, today Nordstrom operates 380 stores in 40 states, including 116 full-line stores in the United States, Canada and Puerto Rico; 248 Nordstrom Rack stores; three Jeffrey boutiques; two clearance stores; six Trunk Club clubhouses; and five Nordstrom Local service hubs. Additionally, customers are served online through Nordstrom.com, Nordstromrack.com, HauteLook.com and TrunkClub.com. Nordstrom, Inc.’s common stock is publicly traded on the NYSE under the symbol JWN.