Nordstrom NYC opened. Department Store Evolution.
Is the Shoe Bar the future?
More than 120 years in business. Continuous transformation
Nordstrom, since its start more than 120 years ago selling high segment footwear, has been evolving in line with its customers to become the best service exponent in the segment of Department Stores specialized in fashion, footwear and accessories.
Last October, it opened its first full size store in the heart of NYC, 35,000 sqm. and 7 floors dedicated to the woman to complete the previous opening of an adjoining building dedicated to the man. It has taken eight years to execute it since the building was completed.
Nordstrom is a retail business with sales exceeding USD 15 billion, 75.000 employees but without substantial growth or adequate end profitability in the recent years.
More than 30% of its sales are already digital
No one could have imagined a decade ago that more than 30% of their total sales became digital. The transformation of the business into omnichannel has been a priority and focus of the bulk of its major investments in the last 5 years.
The impact has materialized in a transfer from sales to digital activity, without the total having increased substantially and experiencing an increase in costs in the business. The same story is repeated in the different retail sectors. Omnichannel is necessary but not sufficient to ensure survival and success in profitability.
Its Off-Price Nordstrom Rack stores already account for 1/3 of its total sales and with higher relative growth than the Full-Price Traditional Department Store.
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Innovations in the recent NYC store
Among the omnichannel initiatives Nordstrom has implemented include:
- Priority and emphasis on areas to collect goods purchased online (click & collect)
- Ease of returns with an express “self-service” system kiosk
- Collection and processing of returns of goods purchased online from other competitors
- Diversity of alternatives for the customization of the goods; from sports shoes to jewellery
- Background stage and optimal brand pop up space for Instagram…
They also include:
- Single common treatment of environment and space for different brands
- High efficient fitting room areas
- Buying and selling second hand items
- Joint development of the Nike store for women adapted for Nordstrom format
Food & Drink and Retail Customer Experience
But, without any doubt, the biggest change lies in the treatment of Food & Drink operations across all floors and departments, adapting and integrating Food & Drink to each customer segment and in line with its shopping itinerary.
Its maximum exponent is the Shoe Bar, where the purchase of footwear lives together with the consumption of drinks. Between pair and pair, cocktails to the customer’s taste. Who was going to tell us that Drinks and Shoes worked so well together!
Department Store format. Dynamo or Dinosaur
Department Store format, across its different typologies, has some common elements of the business such as:
- Need for a higher specialization towards personal products and services. Exceptions such as John Lewis (UK) in the home sector are rare
- Strong commitment to improve customer experience and integration with highly developped Food & Drink operations
- Strength in the area of financial services as an additional income
- The role of International Brands shop windows now has to live together with the direct presence to the consumer DTC (digital and own stores)
- Strong investments and digital transformation that transfers your sales (like liquids) from your stores to omnichannel without adding real growth and increasing costs
- Unique real estate assets that have been authentic “oxygen ” for these businesses
- Non-optimal performance in shopping malls vs high street locations
- Rationalization of the number of current stores
- It is not easy to replicate the model on a large scale and internationally. Singularity
Nordstrom keeps on innovating in search of its profitability.
Who was going to tell us that Drinks and Shoes worked so well together!
More info: carlos.dominguez@mheconsumer.com
