Nordstrom’s Market Position, Research Paper Example

1. Compare Nordstrom’s market position relative to that of its competitors, including Macys, Neiman Marcus, Saks, and Bloomingdales. You can draw a map or a diagram to show their relative positions in the map. You can use price and fashion orientations in your map.

Nordstrom’s market position is relative to that of their competitors which includes Macys, Neiman Marcus, Saks, and Bloomingdales. The most common market position would be comparable to Macys. Their core customer is 35-64, 50,000-60,000 in income, and are moderately fashionable. The other retailers have core customer income base in excess of 100,000 and are highly fashion-driven. Nordstrom’s market position is focused strongest on women’s clothing, which is 36% of their merchandise. Macy’s, Neiman Marcus, and Bloomingdales market focus well less on the women’s clothing than that of Nordstrom’s. Saks was actually higher at 42%. The biggest variation for Nordstrom’s market position primarily offers a “premier selection of fashion apparel [and accessories] for men, women, and children with classic, contemporary, and couture designs.”

2. Describe Nordstrom’s customer base. Who is Nordstrom’s target customer? Do you shop at Nordstrom? Why or why not?

Nordstrom’s customer base was primarily filled with the upper middle class women. These were women of all ages. In order to understand Nordstrom’s market position, it is beneficial to look at the behavioral profile of the actual shoppers. “According to a behavioral profile of actual shoppers, the Nordstrom customer was “more likely than average to be employed full or part time, slightly less likely than average to be married” or have children, and slightly younger and more wealthy than the traditional department store shopper.” (Weinswig & Hwang) Their target customer, upper class profession women. I personally am not a Nordstrom shopper. The few experiences that I have had with Nordstrom’s were just not inviting. The store has an ambiance that is upper-class and if you do not fit the role it makes it difficult to enjoy. The product was great and the store was beautiful, but it is not the store I would choose to shop at unless I had a specific reason for going there.

3. Explain the inverted pyramid model operating in the business system of Nordstrom. Is this an effective strategy? Why and cite some concrete examples.

Nordstrom’s has implemented an inverted pyramid to reflect their priority in their overall business. As the top of the pyramid, the biggest part is composed of their consumers. The next step is the sales staff, and support team. Department store managers follow the sales staff. Then falls the store, regional, general managers, buyers, and merchandising mangers. Lastly, is the executive team and the board of directors? This has been beneficial for Nordstrom’s business. They have the priority centralizing around the customers. The sales people are ranked based on their personal performance and they dictate their pay, no one else. A concrete example of this being beneficial for the company is the bonus structure put into place for the sales people. According to Brooke White, “You didn’t have to worry about the whole company. Somebody else could worry about it. You were completely focused on your assignment. So we said, ‘Let’s have the bottom 50 people in the inverted pyramid also worry about this to some degree.’” The people who are on the front line benefit more than the executives etc. because of what they choose to put into this strategy.
4. What is the central issue or problem at Nordstrom prior to the turnaround strategy implemented by JWN?

The problem at hand was that the product being pushed onto the core customers was not what they had grown to love or even want. The buyers failed to listen to their demands as well. Mr. Bruce realize that while the goal of merchandising to a younger, more fashionable customer was “absolutely perfect,” the execution had inadvertently told “the more mature customer that we would never want to get rid of, that we weren’t interested in serving them anymore.” This was a big problem that needed to be addressed. They used their salespeople to approach the customers to see exactly what they wanted to see changed. Once the management team was on board, they immediately began to see changes.
5. Discuss the the following key functional areas of problems at Nordstrom: Merchandising, Customer Service, Information Technology, Finance or Over Expansion, Leadership, Marketing, Store Operations and Personnel or Buyers’ Incentives.

Nordstrom’s problem with merchandising was the product being used. There were redundancies in the merchant organization that demanded to be changed. They worked on identifying the merchandise categories that will benefit for a more centralize approach. Customer service was based on pushing product on customer that they did not want in order to get a paycheck. The restructuring allowed a better system in place that allows the employees that do offer the best customer service an incentive. This gave the consumers the service they have grown to love and expect while compensating their sales staff. As they progressed it was important for their information technology to improve as well. They implemented a perpetual inventory system, a new Point of Sale, Personal book, and a system for replenishment. This allowed them to track and supply the product they worked hard to supply for their customers. There was a time when Nordstrom’s debt was really high and they did not have the excess to make the changes they needed to. They got them in line, and they are considered to be “rock solid”. Leadership was solid at the top. Blake and his brothers were known for the way that they lead the company. They were non-discriminative and addressed all associated personally on a first name basis. It created an atmosphere where the leaders were approachable. Nordstrom’s used the full-price selling strategy. They have one annual sale, and two semi-annual sales. They also had their own loyalty program which allowed consumers to save money as well. Store operations put the sales people on the top. They are the ones who interact with the customers and truly define the store. They implemented buyers incentives which gave the customers a discount based on their spending.

6. Based on your analysis on number 5, choose ONE key area that would be considered as NORDSTROM’s competitive advantage or weapon in the retail industry TODAY. Justify your answer by giving specific examples or actual personal store experience case(s).

Nordstrom’s competitive advantage would be their marketing strategy. Take into consideration the amount of money department stores spend on getting customers into their store. Nordstrom’s does not have to spend that money. They have the product that consumers have grown to expect, and they are willing to spend their money on that product. Sending sale flyers out or coupons can be bothersome and expensive. For example, I have went to a retailer based on an item they have advertised in their paper. It was sold out and unavailable. As a consumer, that experience did not make me want to return to the store. If I know a store sells a certain style or product that I want, I will go their regardless because they have set a standard a positive standard for themselves.
7. Where is Nordstrom now in the retail industry (do extra research here)?

Nordstrom’s is still currently among the top retailers of their market to date. They have created a shopping experience that is created by their leading innovators and talented teams. Nordstrom’s is a fashionable specialty retailer that has grown to have global reach. They still are leaders in their market in clothing, shoes, and accessories. During their 2011 fiscal year, they reach the highest level of net sales to date of 10.5 billion. Their current standing consists of 257 stores in the United States. There are 117 full-line stores, 2 Jeffrey boutiques, 1 clearance store, and 137 Nordstrom Racks. In 2014 the company is planning on opening three new full-lines stores. Future plans are to open their first store in Manhattan by 2018. Nordstrom Rack expects to have 230 stores by 2016 as well. They are also in the planning process to open their full-line stores in Canada.

Work Cited:

Weinswig, Deborah, and Tina Hwang. NMGA: Evaluating Strategic Alternatives – What Next? Citigroup/Smith Barney. Mar 2005. Print.