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Nordstrom Case Study Analysis

Nordstrom—“High Touch” with “High Tech”
How does Nordstrom stay profitable despite dips in consumer spending, changing fashion trends, and
intense competition among retailers? One answer: Acute attention to detail and well-laid plans.

All in the Family

The fourth generation of family members that runs Nordstrom has brought the store’s time-honored and
successful retail practices into a new era. “Nordstrom, it seems, is that rarity in American business: an
enterprise run by a founding family that hasn’t wrecked it,” says one business writer. The company
provides a quality customer experience via personalized service, a compelling merchandise offering, a
pleasant shopping environment, and increasingly better management of its inventory.

Secret of Success
The secret of this company’s success lies in its strategic planning efforts and the ability of its
management team to set broad, comprehensive, and longer-term action directions, all of which are
focused on the customer experience. The current generation of Nordstrom family members was quick to
spearhead an ultramodern multimillion-dollar, Web-based inventory management system. This upgrade
helped the company meet two key goals: (1) correlate purchasing with demand to keep inventory as lean
as possible, and (2) give customers and sales associates a comprehensive view of Nordstrom’s entire
inventory, including every store and warehouse.

Demand Planning
Instead of relying on one-day sales, coupon blitzes, or marking down entire lines of product, Nordstrom
discounts only certain items. “Markdown optimization” software assists in planning more profitable sale
prices. According to retail analyst, Patricia Edwards, this helps Nordstrom calculate what will sell better at
different discounts and forecast which single items should be marked down. If a style is no longer in
demand, the company can ship it off to its Nordstrom Rack outlet stores. It’s all part of Nordstrom’s long-
term investment in efficiency. “If we can identify what is not performing and move it out to bring in fresh
merchandise,” says Pete Nordstrom, “that’s a decision we want to make.”

Inventory Planning
Although inventory naturally fluctuates, Nordstrom associates can easily locate any item in another store
or verify when it will return to stock. Customers on their smart phones and associates behind sales
counters see the same thing—the entire inventory of Nordstrom’s stores is presented as one selection,
which the company refers to as perpetual inventory. “Customer service is not just a friendly, helpful,
knowledgeable salesperson helping you buy something,” says Robert Spector, retail expert and author of
The Nordstrom Way. “Part of customer service is having the right item at the right size at the right price at
the right time. And that’s something perpetual inventory will help with.”

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The upgraded inventory management system was an immediate hit. As of launch day, Nordstrom found
that the percentage of customers who purchased products after searching the website for an item
doubled. It also learned that multi-channel customers—those who shop from Nordstrom in more than one
way—spend on average four times more than one-source customers. This profit more than offsets the
cost of hiring additional shipping employees to wrap and mail items from each store. Now Nordstrom
doesn’t have to turn away the customer who spied a red Marc Jacobs handbag but found it out of stock in
her local store. She can buy it online or at the store counter and it will be shipped to her, even from a
store located across the country.

Keeping It Lean
By displaying stock both on its website and in its stores, Nordstrom has realized some very meaningful
sales and customer service results. Items don’t stay in stock very long. The chain turns inventory about
twice as fast as its competitors, thanks to strong help from online sales.

Fast-turning inventories are a sign a retailer is well managed, making it more attractive to investors. “The
old, classic Nordstrom way is that if you sell more stuff, that compensates for any deficiency you may
have in terms of technology,” says Robert Spector. “They didn’t want to replace the high touch with the
high-tech. The challenge, not only for Nordstrom, but for other retailers, is how you strike that balance
between having up-to-date systems and giving that personal service.” “Traditional retailers have
traditional ways of doing things,” echoes Adrianne Shapira, Goldman Sachs retail analyst, “and
sometimes those barriers are hard to break down.” But Nordstrom’s commitments to planning are paying
dividends.

Source: Schermerhorn Jr., J.R., Bachrach, D.G. (2016) Nordstrom—“High Touch” with “High Tech”. In
Exploring Management (Cases for Critical Thinking).

Case Analysis Questions

Answer the following in up to 350 words each.

1. Determine the specific planning objectives and measures Nordstrom could use to assess the success
of its Web-based inventory integration.

Up until now I feel that Nordstrom has managed to revolutionize its web presence/integration without
loosing sight of that highly important customer relation interaction. Now with the world changing pandemic
we have experienced Nordstrom may continue to provide its excellent service via Drive-up option. Still
ensuring customers the great and attentive experience as well as the attention to some customers still
growing health concerns. Another great idea would be the innovative feature ive seen in some sunglass
companies where they allow you to take a selfie and in their case or for their product try on the
sunglasses of your choice on the photograph you upload. I understand that might me a bit contradictory
and could perhaps entice fear of loosing that upscale personal touch that Nordstrom is known for. But it
can also become another opportunity for growth. We have to also realize that now only because you
“virtually try on” an article of clothes does it or will it give you the most accurate portrayal of how it will look
on your actual person. It will entice the customer to want to walk into the store and try it on personally.
This can be a trial offered to a group of selected clients or it can be a temporary feature. Depending on
the success of the feature Nordstrom can determine whether it be a feature offered for only certain items,
seasons (flu season), or even selected products. By maintaining that control they are able to even
proceed with optional courtesy emails, chats, or calls regarding their overall experience. Maintaining that
personal touch as well as excellent customer service experience whilst evolving with our ever so
changing times is highly important

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2. Explain how Nordstrom could make use of participatory planning for continuous improvements in
areas such as product purchasing, floor displays, and sales associates’ job satisfaction.

By continuing on the path of positive and successful improvements we recognize that the flow of sales,
customer satisfaction, and associate satisfaction stays consistent and/or improves. Applying continuous
improvement requires full participation of all units of the company when it comes to participatory planning.
Management needs to invest a bit more time and money in empowering and training their employees to
develop each and every aspect that differentiates the department stores from all others. Administrators
should encourage an environment of experimentation and establishing open communication,
collaboration, and trust. Employees must be challenged on a daily basis to develop gradual
improvements, ultimately and cohesively all team members be involved in their work with one communal
goal. By applying these principles through participatory planning, the company can initiate and maintain
ongoing improvement activities. Employees will be happier, work processes will be more efficient, and
companies will also be content with the growth of economic levels. Use of regular feedback, effective
continuous improvement programs, such as job satisfaction, floor presentations, and product purchases,
require continuous evaluation Before making this effort, the companies can evaluate new ideas and
efforts to improve them. An effective approach to gathering feedback related to continuous improvement
is through participatory planning, including the PDCA or Plan-Do-Check cycle. This cycle supports
continuous improvement by assessing the performance difference between where you started to your
ultimate goal. It also provides immediate feedback on the effectiveness of the efforts and changes being
made improvement cycle begins with a new baseline and the goal of approaching the ultimate goal at
hand. Management's job is to empower and train employees, they play such an important part of the
continuous improvement process. The tone that is set during the training process may make or break the
productivity/success levels of the company. These are tools that help overcome psychological or personal
barriers that prevent employees from trying new ideas. In addition, some can be used for continuous
improvement through participatory planning taking into consideration everyone’s ideas, suggestions, and
concerns. You really never know who within your company may bring up the next greatest boom to your
company, plus there’s no bad idea except the one you were to afraid to speak up about.

3. Nordstrom wants to grow in a number of different areas. Research one of its strategies and project it
into the future.

A marketing approach to ensuring customer satisfaction can begin with hiring compassionate employees
who meet their needs and wishes. Recruitment of customer centered employees. The company can
recognize this natural ability of its employees during the application and recruitment process. The
company's future is to resist the tendency to move customers in and out of stores quickly as part of its
efficiency assurance. Customer’s tend to expect and want to be cared for individually. Nordstrom's
customer-focused strategy focused on the company's reputation for outstanding customer experience
design. The company's marketing strategy uses customer experience design as a decisive differentiator.
The company is known for its experience design and the products it sells. Product presentation. Anyone
who has visited a Nordstrom store will remember how much the company values the visual representation
of its products. The presentation draws customers' attention to many other products, even if they aren't
always looking for those items This helps customers try on the product from time to time and also helps
visualize how good the product is for them. Personalized. Customers want to feel understood and valued,
not treated as statistics. They believe that the money they spend on the company deserves extraordinary
treatment. Therefore, the differentiation the company offers may depend in part on its ability to
personalize customer interactions across all channels. This includes knowing the customer's current
situation, previously expressed preferences, and his name These are approaches to creating
personalization for your customers. A great example is that a company salesperson rarely sees it. If the

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customer has a question about the location of the item, the seller will tell them there. This ensures that
customers can remember their personal touch at the company.

4. Refer back to one of Nordstrom’s strategies for growth. What changes, revisions, or updates would
you plan for the company? What stretch goals come to mind?

The company has taken all appropriate steps to appeal to the shopping methods preferred by modern
consumers. One example of this is that the company is doing a lot to serve customers who shop on
mobile devices through its new text to buy program. This program has been very successful. The
company's customers can send orders to the store via SMS and deliver or pick up the goods at the store
The company is developing additional programs to meet the growing needs and wants of consumers.
However, the company can make improvements in the following ways: Improved efficiency. With instant
access to information, the company can greatly improve efficiency. Real-time access to business-critical
information means that companies can respond accurately and quickly to stakeholder and customer
inquiries and concerns. This includes concerns and questions about pricing, payments, returns, order
history, customer finances, shipping and inventory levels. This information should be provided so that it
does not have to be searched on numerous systems. As a result, you can improve the customer
experience and save time by reducing wasted time gathering information Stretch Goal is an additional
goal set in the campaign if the company exceeds its original funding goal. Stretch goals are typically used
to fund additional specific aspects of a business project. To stay profitable and grow, your company
needs goals. The company can have the big goal of being physically present in every state in the country.
This ensures that the company attracts new customers and becomes a popular name. Nordstrom owns
more than 200 shelves and a full line of retail stores and can aim to double these stores in order to attract
more customers and increase sales in so many more parts of the world reaching an even broader
audience.

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