Nordstrom’s Success, Case Study Example

Nordstrom’s Classification

Nordstrom is classified as an upscale, department-store retailer. Its prestige ambiance and superior customer service has been notoriously linked to its name. Their store is filled with the latest name brands, designer handbags, top fragrances, and sales associates ready to provide an ultimate customer experience. They are similar to other department-store retailers such as Bloomingdales, Dillard’s, Macy’s, Barney’s and Neiman Marcus. These department stores offer clothing, shoes, accessories, cosmetics, and fragrances for men, women, and children as well. Nordstrom’s may carry the same products as these other upscale department store retailers, but they differentiate themselves in other ways. They distinguish themselves from the unparalleled commitment to customer service. Their approach has been references to as “greed through love”, giving individual attention to great long-lasting professional relationship.

Level of Service

Nordstrom has defined itself by its level of service. Coauthor of Nordstrom’s way, Robert Spector, gives an example of their customer commitment, with the story of a woman who had one leg. This woman, having no need for the second shoe bet the associate that he would not sell her just the one shoe. The Nordstrom’s sales person, contrary to the customer’s belief, agreed to sell her one shoe, in return gained a customer for life. That customer had probably been to many other retailers, and asked the same question. If she only needs one shoe, why would she want to pay for two? By taking the minimal loss and selling her just what she needed, who knows how much more money they have made with the positive word-of-mouth that they have gained from her telling this story.

Another example given to the level of service Nordstrom has been branded with is the urban myth that has been forwarded around the internet for years. It was in reference to their generous exchange policy. A man claims he was able to return snow tires to Nordstrom’s, even though they had never retailed auto parts. Even though there is a large amount of doubt to the validity of this rumor, it still reinforces the company’s reputation of putting their customers first. With any return, a company generally loses money; however, Nordstrom believes that they will more than make up their loss by the satisfied customers coming back.

Six Components of Nordstrom’s Retailing Mix

Nordstrom’s has depended on the retailing mix of product, promotion, place, pricing, presentation, and personnel. This retail store is known for its high-end product. They are expected to have the latest styles, names, and fashions available. The customer’s anticipate finding the product they want, at a comparable price. They have implemented a computerized inventory system that gives both the sales people and the buyers the tools to make good decisions on meeting the demands of each individual store. This will keep product on the shelves in the right size, color, and demand of that specific market.

Nordstrom uses word-of-mouth as a tremendous promotional tool. Going above and beyond to create the ambiance of the customer getting the personal attention they want. There are many reputable stories floating around on the care that the company operates with. A sale person noticed one of his customers left his boarding pass at the store. The clerk took a cab, paid for out of his own pocket, to make sure that the customer did not miss their flight. This is by far, the best promotional tool that Nordstrom’s has access to. And it has worked well for them. They of course use the traditional means of promotion via media outlets, but that is typically a much costlier avenue.

The locations of Nordstrom are very strategically selected. Having one-hundred fifty-seven stores in over twenty-seven states, Nordstrom’s is still continuing to grow. They plan to expand into locations such as Boston, and other United States markets that are in need of such a retail store. A factor that has aided in Nordstrom’s demographical success is their placement. Eric Nordstrom personally goes to each location before agreeing to put one of his stores there. He goes off of his gut feeling. Statistically many places may look good on paper, but Eric says he does not feel that it is a good fit for his company.

Nordstrom’s brags of their pricing policies and the price consistencies. It is a high-end atmosphere, which creates an environment that customers feel like they treat themselves. They don’t participate in the yo-yo sales attempts to lure consumers in, like one-day sales, weekend coupons, or friends and family promotions. Their pricing is comparable with their competitors and it is reflective of the integrity of their product.
The presentation of Nordstrom’s is clean and prestige in appearance. The sales people dress in apparel sold at the store. They use business cards to keep customers coming back to them. Even as a department store retailer, they have an upscale appearance reflective not only in the real-estate, but the product, personnel, and other amenities.

Nordstrom’s personnel are notorious for their service. Demanding employee service is one thing, employees who go above and beyond is what disguises Nordstrom from every other department store on the market. Their compensation package must be reflective of the quality of employees they get and retain. Many associates have made a career out of working for Nordstrom’s. They continue an on-going relationship with their customers, they are not just clerks. This is probably the strongest component of Nordstrom’s retailing mix.

Nordstrom’s Challenges

There are challenges that every retailer faces. When there are multiple stores selling the same product, sometimes the service is not enough to keep customers coming back. Consumers are resorting more and more to buying online. There are very competitive major department stores carrying the exact same product. If there is one closer in location, or one has the famous one-day sale, it could make the customer choose the competitor over Nordstrom’s.

In many malls they have Nordstrom’s, Dillard’s, Bloomingdales, and Macy’s on each anchor. Having that many options in one geographic area is a challenge Nordstrom has to address as well. Foreign competitors are surfacing, offering new product to the consumers. Some are selling similar product for better price. Shopping malls are declining in clientele. These are all areas that Nordstrom has to overcome in order to keep the sales increase that they are accustom to.

Changing Competition

Nordstrom’s has always stood by its integrity of providing the experience their customers have come to expect. To provide an upscale and apparitional atmosphere where the consumers feel like they are treating themselves. They have never been participants of the price-promoting practice. They feel that their regular prices hold the integrity of their store. Recently, major department store, JC Penny has followed in the pricing-practice that Nordstrom has stood by for years.

Nordstrom has continued to challenge their competition by the customer service they have become notorious for. Lior Arussy explained Nordstrom’s approach for changing competition as, “greed through love”. The salesperson does not address the customer as a means to get through the eight hour day, but as a continued business relationship with their clients for years. Their sales show a continued increase, even when other retailers are struggling. It’s the little things, the extra mile that has given them the continued success. Owner Eric Nordstrom explains, “But it’s not easy sustaining it. Retailing is not for everybody. It’s a competitive, high-energy business. Every day, you’ve got to open your doors and sell something. Even if it’s just one shoe.” This mentality has made Nordstrom’s the successful retailer it is.