{"id":19158,"date":"2016-11-18T16:19:46","date_gmt":"2016-11-18T21:19:46","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/nordstrom-balancing-bricks-with-clicks\/"},"modified":"2016-11-18T16:19:46","modified_gmt":"2016-11-18T21:19:46","slug":"nordstrom-balancing-bricks-with-clicks","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nordstrom-balancing-bricks-with-clicks\/","title":{"rendered":"Nordstrom: Balancing Bricks with Clicks"},"content":{"rendered":"

Since its inauspicious beginning as a Seattle-based shoe shop at the turn of the 20th<\/sup> century, Nordstrom has grown into one of the leading specialty retailers in North America (~350 stores in the U.S. and Canada).\u00a0 The Company seeks to become the preeminent specialty retailer by \u201coffering customers the most compelling shopping experience possible\u2026[by] offering customers the best possible service, selection, quality, and value.\u201d[1] As a retailer, Nordstrom has invested hundreds of millions of dollars in the procurement, development, and operations of brick-and-mortar stores that collectively total 29 million square feet [2]. With the digitization of retail, most notably seen through the launch of e-commerce in the 1990\u2019s and the more recent proliferation of mobile devices and social media, Nordstrom has to be nimble as it reevaluates the role its historical operating model (great customer service at brick-and-mortar stores) will play during its next chapter in order to continue to provide the \u201cmost compelling shopping experience\u201d.<\/p>\n

E-Commerce<\/strong><\/p>\n

Once viewed as separate channels with their own unique strategies, brick-and-mortar retail and e-commerce are increasingly interconnected. Successful retailers have developed an omnichannel<\/em> strategy that integrates<\/em> brick-and-mortar retail and e-commerce, leveraging their respective strengths to provide greater value to customers. As Nordstrom customers increasingly shop the retailer through Nordstrom.com, the Company is faced with two primary challenges: (i) replicating the \u201cdiscovery\/serendipity\u201d of its stores in a medium that has historically been a \u201csearch bar\u201d experience and (ii) repurposes its 29 million retail square feet as its customers complete their transactions in an increasingly digital way.<\/p>\n

Through its +100-year history, Nordstrom has developed a reputation as providing one of the industry\u2019s best retail shopping experiences. While e-commerce still lacks many of the sensory benefits of the in-store experience, Nordstrom has invested tens of millions of dollars in the development and improvement of its online platform. Strong financial results have followed this investment. Since 2006, Nordstrom\u2019s e-commerce sales have grown at a 20% CAGR (vs. 4% for retail sales) and now account for 20% of total sales, up from 6% only ten years ago [3]. As e-commerce becomes increasingly important to the Company\u2019s financial results, Nordstrom has been tasked with rethinking how it uses its stores to provide its customers with \u201cthe most compelling shopping experience\u201d possible. To adapt to the change in its customers\u2019 shopping behavior, Nordstrom has begun using its stores as fulfilment centers for online orders, while also providing customers with the option of same day, in-store pick up of orders placed online.<\/p>\n

Social Media<\/strong><\/p>\n

With more than 75% of adults and 90% of young adults (18 to 29) active on social media [4], this new medium represents an important touchpoint for Nordstrom to stay connected with its customers. While the Company has a strong Facebook (4.2 million followers) and Twitter presence (720K followers), its use of Instagram and Pinterest have proven particularly novel in the retail industry [5]. Through Instagram, a Nordstrom customer can purchase apparel items posted to the Company\u2019s Instagram account in just 1-2 clicks, converting Instagram \u201cLikes\u201d to revenue and satisfied customers. Nordstrom\u2019s mining of Pinterest is also an example of how the Company has adapted to the wave of digitization to provide a more \u201ccompelling shopping experience\u201d. \u00a0Beginning in 2013, the Company began making in-store merchandising decisions based on the apparel items with the highest number of \u201cpins\u201d (equivalent to \u201cLikes\u201d) on Pinterest. Bryan Galipeau, social media manager at Nordstrom explained the Company\u2019s Pinterest strategy by noting that “the customer is voting with their pins to tell us what they think is hot \u2013 and we\u2019re listening closely.” [6]<\/p>\n

Going Forward<\/strong><\/p>\n

In addition to strong e-commerce and social media strategies, Nordstrom has explored text-to-buy programs, mobile points of sale, and digital payment (e.g. Apple Pay) as a means of staying ahead of the digital curve to serve its customers. While all three represent interesting opportunities, the true long-term competitive advantage will come from the Company\u2019s ability to leverage the digital world by capturing and mining detailed data sets on its customers\u2019 purchase behavior and product preferences in order to exceed expectations in new ways. Because of the foresight of Nordstrom\u2019s management team, the Company is well equipped to continue to lead the industry, a favorable position that will depend on its ability to leverage the digitization of retail to its advantage.<\/p>\n

(713 words)<\/p>\n

Sources:<\/strong><\/p>\n

[1] Nordstrom. 2016.\u00a0About Nordstrom<\/em>. [ONLINE] Available at:\u00a0http:\/\/shop.nordstrom.com\/c\/about-us?origin=footer<\/a>. [Accessed 18 November 2016].<\/p>\n

[2] 2016 Annual Report Nordstrom Inc. (NYSE: JWN).<\/p>\n

[3] 2016 Annual Report Nordstrom Inc. (NYSE: JWN).<\/p>\n

[4] Pew Research Center: Internet, Science & Tech. 2016.\u00a0Social Media Usage: 2005-2015 | Pew Research Center<\/em>. [ONLINE] Available at:\u00a0http:\/\/www.pewinternet.org\/2015\/10\/08\/social-networking-usage-2005-2015\/<\/a>. [Accessed 18 November 2016].<\/p>\n

[5] Nordstrom Facebook and Twitter account detail as of 11\/17\/2016.<\/p>\n

[6] Business Insider. 2016.\u00a0Nordstrom’s Pinterest In Stores Plan – Business Insider<\/em>. [ONLINE] Available at:\u00a0http:\/\/www.businessinsider.com\/nordstroms-pinterest-in-stores-plan-2013-11<\/a>. [Accessed 18 November 2016].<\/p>\n","protected":false},"excerpt":{"rendered":"

An overview of how Nordstrom is responding to the digitization of retail.<\/p>\n","protected":false},"author":2455,"featured_media":19159,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-19158","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"\nNordstrom: Balancing Bricks with Clicks - 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\/nordstrom-balancing-bricks-with-clicks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Nordstrom: Balancing Bricks with Clicks - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"An overview of how Nordstrom is responding to the digitization of retail.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nordstrom-balancing-bricks-with-clicks\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Nordstrom-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"650\" \/>\n\t<meta property=\"og:image:height\" content=\"366\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/nordstrom-balancing-bricks-with-clicks\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/nordstrom-balancing-bricks-with-clicks\\\/\",\"name\":\"Nordstrom: Balancing Bricks with Clicks - 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