{"id":16658,"date":"2016-11-17T22:12:19","date_gmt":"2016-11-18T03:12:19","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/what-to-do-when-the-internet-knocks-on-your-stores-door-nordstrom-goes-digital\/"},"modified":"2016-11-17T22:12:19","modified_gmt":"2016-11-18T03:12:19","slug":"what-to-do-when-the-internet-knocks-on-your-stores-door-nordstrom-goes-digital","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/what-to-do-when-the-internet-knocks-on-your-stores-door-nordstrom-goes-digital\/","title":{"rendered":"What to do when the Internet knocks on your store\u2019s door: Nordstrom goes digital"},"content":{"rendered":"<p><strong>The Nordstrom Promise: The Evolution of \u2018Customer Service First\u2019<\/strong><\/p>\n<p>Since its founding, Nordstrom has had a very clear guiding principle: customer service comes first [1]. Historically, it depended on its sales associates to bring this mission to fruition. However, in the 1990s Nordstrom realized that the internet was fundamentally challenging their operating model; customers were engaging in commerce in an entirely different fashion than ever before. In order to continue to provide the highest service and stay true to its value proposition, Nordstrom had to adapt. By 1998 they had launched their e-commerce platform Nordstrom.com and have continued to evolve ever since [2]. They remain dedicated to serving customers on his or her own terms: \u201cOur customers desire a relevant experience no matter how they choose to shop\u2026 in stores or online\u2026Our goal is to build a seamless \u2018One Nordstrom\u2019 customer experience [3].\u201d<\/p>\n<p><strong>The Nordstrom Way: How Nordstrom Has Operationalized Digital Transformation<\/strong><\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Geekwire-for-TOM.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-16655\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Geekwire-for-TOM.jpg\" alt=\"geekwire-for-tom\" width=\"920\" height=\"508\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Geekwire-for-TOM.jpg 920w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Geekwire-for-TOM-300x166.jpg 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Geekwire-for-TOM-768x424.jpg 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Geekwire-for-TOM-600x331.jpg 600w\" sizes=\"auto, (max-width: 920px) 100vw, 920px\" \/><\/a><\/p>\n<p>As industry alarmists were proclaiming that the emergence of e-commerce meant the death of the store, Nordstrom held firm to its customer promise and swiftly adapted its model. While today they still have over 300 physical locations, they have invested $3 billion in their digital business in just the last 5 years, growing their online net sales by over 50% [4]. By integrating systems, creating a supporting organizational design, and continuing to offer superior customer experiences, Nordstrom has adapted to the new way of doing business:<\/p>\n<ul>\n<li><strong>Integration of systems:<\/strong> Retailers are dependent on visibility \u2013 without the right product, in the right place, for the right person, at the right time, the best customer service means nothing. Nordstrom has implemented two major initiatives to solve the visibility gap posed by the introduction of a new channel. First, in 2002 Nordstrom rolled out a perpetual inventory system that enabled their sales and corporate associates to have visibility of inventory across channels [5]. Second, they launched a new point of sale system to allow associates to track customers purchase behavior and requests on and off line [6].<\/li>\n<\/ul>\n<ul>\n<li><strong>Organizational Design:<\/strong> While systems provide the base for successful operations, Nordstrom realized that to operate successfully digitally, they needed to take their efforts a step further. In 2010 Nordstrom launched the Nordstrom Lab, a centralized innovation group funded through IT, to \u201cjumpstart projects aimed at changing the way customers shop [7].\u201d More recently these resources have been embedded into the business to ensure that the digital mindset is integrated into everything that Nordstrom does. Similarly, Nordstrom made significant efforts to ensure alignment between the business, finance, and technology, going as far as creating a Technology Business Office that reports directly to the CIO [8].<\/li>\n<\/ul>\n<ul>\n<li><strong>Customer Experiences:<\/strong> As a result of its integration of systems and strong organizational support, Nordstrom has been able to offer its customers numerous digital experiences. From projects that allow customers to buy online and pick up at their store, to TextStyle communication for single text buying, to buyable pins on Pinterest, to acquisitions of e-commerce start-ups such as Trunkclub and HauteLook, Nordstrom has differentiated itself from its competition [9][10].<\/li>\n<\/ul>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/WSJ-for-TOM.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-16656\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/WSJ-for-TOM.png\" alt=\"wsj-for-tom\" width=\"823\" height=\"612\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/WSJ-for-TOM.png 823w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/WSJ-for-TOM-300x223.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/WSJ-for-TOM-768x571.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/WSJ-for-TOM-600x446.png 600w\" sizes=\"auto, (max-width: 823px) 100vw, 823px\" \/><\/a><\/p>\n<p><strong>From Bricks to Clicks and Back Again: What Nordstrom Needs to Consider Next<\/strong><\/p>\n<p>A recent New York Times article headline read, \u201cAn age of online shopping has, surprisingly, led to an exciting time for shoppers to get back out onto city streets to explore new, innovative shops [11].\u201d As the debate regarding \u201cbricks and clicks\u201d rages on, industry experts are cautioning traditional retailers against underestimating their biggest asset, their stores [12].<\/p>\n<p>With increased pressure on profitability and the recent departure of several key leaders in their digital organization, I believe Nordstrom should shift its digital focus from new customer offerings to technologies that improve the operations of its store. Examples of viable technologies include:<\/p>\n<ul>\n<li><strong>Smart Shelves: <\/strong>Nordstrom is known for its policy of price matching competitors; online this simply manifests as a \u201cPrice Matched\u201d label, likely enabled by a few clicks of a junior employee or an automated algorithm. Implementing this in stores requires much more labor and time. In its next phase, Nordstrom should consider investing in \u201csmart shelves\u201d which could allow prices to be changed real time on the store floor [13].<\/li>\n<\/ul>\n<ul>\n<li><strong>Beacons:<\/strong> In addition, beacon technology could take Nordstrom\u2019s service to the next level. Thus far they have treaded a careful line of leveraging beacon technology to push targeted messages to customers in store via blue tooth [14]. However, I believe Nordstrom should push to further enable this technology sending personalized information to customers, before competitors beat them to the punch. Retailer Target\u2019s beacon-powered Cartwheel app has already been downloaded by 18M customers [15].<\/li>\n<\/ul>\n<p>Nordstrom demonstrated it could keep up with the introduction of the internet. The question remains, will its service-centric model be up for the next phase of digital evolution?<\/p>\n<p>(794 Words)<\/p>\n<p><strong>Content Footnotes<\/strong><\/p>\n<p>[1] Micah Solomon, \u201cWhat Any Business Can Learn From Nordstrom Customer Service,\u201d Forbes, January 26, 2016, <a href=\"http:\/\/www.forbes.com\/sites\/micahsolomon\/2016\/01\/26\/what-any-business-can-learn-from-the-way-nordstrom-handles-customer-service\/#546c97b14d45\">http:\/\/www.forbes.com\/sites\/micahsolomon\/2016\/01\/26\/what-any-business-can-learn-from-the-way-nordstrom-handles-customer-service\/#546c97b14d45<\/a>, accessed November 2016.<\/p>\n<p>[2] Nordstrom, Nordstrom Company History, <a href=\"http:\/\/shop.nordstrom.com\/c\/company-history\">http:\/\/shop.nordstrom.com\/c\/company-history<\/a>, accessed November 2016.<\/p>\n<p>[3] Nordstrom, Annual Report 2015, p. 4, <a href=\"https:\/\/materials.proxyvote.com\/Approved\/655664\/20160311\/AR_278376\/pubData\/source\/Nordstrom,%20Inc%202015%20Annual%20Report.pdf\">https:\/\/materials.proxyvote.com\/Approved\/655664\/20160311\/AR_278376\/pubData\/source\/Nordstrom,%20Inc%202015%20Annual%20Report.pdf<\/a>, accessed November 2016.<\/p>\n<p>[4] Nordstrom, Annual Report 2015, p.5.<\/p>\n<p>[5] Jake Batsell, \u201cNordstrom gets in step with tracking its inventory,\u201d Seattle Times, February 10, 2002, <a href=\"http:\/\/community.seattletimes.nwsource.com\/archive\/?date=20020210&amp;slug=nordstrom10\">http:\/\/community.seattletimes.nwsource.com\/archive\/?date=20020210&amp;slug=nordstrom10<\/a> , accessed November 2016.<\/p>\n<p>[6] Jeanne W. Ross, Cynthia M. Beath, and Ina Sebastian, \u201cWhy Nordstrom\u2019s Digital Strategy Works (and Yours Probably Doesn\u2019t),\u201d 性视界 Business Review, January 14, 2015, <a href=\"https:\/\/hbr.org\/2015\/01\/why-nordstroms-digital-strategy-works-and-yours-probably-doesnt\">https:\/\/hbr.org\/2015\/01\/why-nordstroms-digital-strategy-works-and-yours-probably-doesnt<\/a>, accessed November 2016.<\/p>\n<p>[7] Kim S. Nash, \u201cNordstrom\u2019s Innovation Revamp Leads to E-commerce Texting App,\u201d Wall Street Journal, May 28, 2015, <a href=\"http:\/\/blogs.wsj.com\/cio\/2015\/05\/28\/nordstroms-innovation-revamp-leads-to-e-commerce-texting-app\/\">http:\/\/blogs.wsj.com\/cio\/2015\/05\/28\/nordstroms-innovation-revamp-leads-to-e-commerce-texting-app\/<\/a>, accessed November 2016.<\/p>\n<p>[8] Price Waterhouse Cooper, \u201cNordstrom: The customer comes first through business partnering transformation,\u201d <a href=\"http:\/\/www.pwc.com\/us\/en\/increasing-finance-function-effectiveness\/finance-effectiveness-benchmark-study\/nordstrom-technological-transformation.html\">http:\/\/www.pwc.com\/us\/en\/increasing-finance-function-effectiveness\/finance-effectiveness-benchmark-study\/nordstrom-technological-transformation.html<\/a>, accessed November 2016.<\/p>\n<p>[9] Nash, \u201cNordstrom\u2019s Innovation Revamp Leads to E-commerce Texting App,\u201d Wall Street Journal.<\/p>\n<p>[10] Nordstrom, Annual Report 2015, p.9.<\/p>\n<p>[11] Tim McKeough, \u201cClicks to Bricks: Online Retailers Find the Lure of a Store,\u201d New York Times, November 10, 2016, <a href=\"http:\/\/www.nytimes.com\/2016\/11\/11\/style\/clicks-to-bricks-online-retailers-find-the-lure-of-a-store.html?_r=0\">http:\/\/www.nytimes.com\/2016\/11\/11\/style\/clicks-to-bricks-online-retailers-find-the-lure-of-a-store.html?_r=0<\/a>, accessed, November 2016.<\/p>\n<p>[12] Anthony Karabus, \u201cThink Tank: How to Combat the Amazon Effect? Reinvest in Bricks,\u201d WWD, October 21, 2015.<\/p>\n<p>[13] Synchrony Financial for Business Insider, \u201c5 ways technology is revolutionizing the way we shop,\u201d Business Insider, October 28, 2015, <a href=\"http:\/\/www.businessinsider.com\/sc\/technology-changing-the-in-store-retail-experience-2015-10\">http:\/\/www.businessinsider.com\/sc\/technology-changing-the-in-store-retail-experience-2015-10<\/a>, accessed November 2016.<\/p>\n<p>[14] Lauren Horwitz, \u201cNordstrom Mines Beacon Benefits in Personalized Customer Service,\u201d TechTarget, <a href=\"http:\/\/searchcrm.techtarget.com\/news\/4500246312\/Nordstrom-mines-Beacon-benefits-in-personalized-customer-service\">http:\/\/searchcrm.techtarget.com\/news\/4500246312\/Nordstrom-mines-Beacon-benefits-in-personalized-customer-service<\/a>, accessed November 2016.<\/p>\n<p>[15] Nancee Halpin, \u201cThe Future of Retail 2016,\u201d BI Intelligence, <a href=\"https:\/\/intelligence.businessinsider.com\/the-future-of-retail-2016-slide-deck-2016-10\">https:\/\/intelligence.businessinsider.com\/the-future-of-retail-2016-slide-deck-2016-10<\/a>, accessed November 2016.<\/p>\n<p><strong>Images<\/strong><\/p>\n<p>[Cover] McKinsey&amp;Company, \u201cDigitizing the Consumer Decision Journey,\u201d June 2014, <a href=\"http:\/\/www.mckinsey.com\/business-functions\/marketing-and-sales\/our-insights\/digitizing-the-consumer-decision-journey\">http:\/\/www.mckinsey.com\/business-functions\/marketing-and-sales\/our-insights\/digitizing-the-consumer-decision-journey<\/a>, accessed November 2016.<\/p>\n<p>[The Nordstrom Way] Taylor Soper, \u201cNordstrom to cut up to 400 more jobs, just one month after slashing 130 tech-related positions,\u201d Geekwire, April 18, 2016, <a href=\"http:\/\/www.geekwire.com\/2016\/nordstrom-lay-off-another-400-just-one-month-slashing-130-tech-related-jobs\/\">http:\/\/www.geekwire.com\/2016\/nordstrom-lay-off-another-400-just-one-month-slashing-130-tech-related-jobs\/<\/a>, accessed November 2016.<\/p>\n<p>[TextStyle] Nash, \u201cNordstrom\u2019s Innovation Revamp Leads to E-commerce Texting App,\u201d Wall Street Journal.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How can a retail behemoth, dragged down by investment in hundreds of stores keep up with the internet of things? When faced with shrinking Black Friday sales, limited international tourist spending, and declining earnings, where will Nordstrom invest its limited dollars? <\/p>\n","protected":false},"author":2468,"featured_media":16659,"comment_status":"open","ping_status":"closed","template":"","categories":[788,2270,1036,219],"class_list":["post-16658","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital","category-digital-disruption","category-digital-retail","category-ecommerce"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What to do when the Internet knocks on your store\u2019s door: Nordstrom goes digital - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/what-to-do-when-the-internet-knocks-on-your-stores-door-nordstrom-goes-digital\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What to do when the Internet knocks on your store\u2019s door: Nordstrom goes digital - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"How can a retail behemoth, dragged down by investment in hundreds of stores keep up with the internet of things? 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