Nordstrom Retail Woes Echoes Others

by Raymond Pucci 0

Retail sales and store traffic are in the doldrums, and Nordstrom’s is emblematic of what is happening across the mainline retail sector. Closing stores, reducing staff, revamping merchandising strategies and marketing programs are all on the table. This familiar scenario is reported in the following article on Nordstrom’s.

Nordstrom could not escape the woes bedeviling the apparel retail sector as the company reported first-quarter profit far below both last year’s level and Wall Street’s expectations.

A major source of the sales falloff was in Nordstrom’s pride and joy: its full-line brick-and-mortar stores. Sales at Nordstrom’s stores open at least a year dropped 7.7 percent compared with a year ago. Its off-price Nordstrom Rack stores held up better, with sales dropping just 0.8 percent.

Fierce online competition, a decline in mall traffic and other demands for consumers’ dollars are eating away at the apparel industry.

To combat that, Nordstrom executives said the company is focusing on several initiatives while also reducing expenses.

It plans to expand its loyalty program to allow customers without a Nordstrom credit card to earn rewards, which could add 5 million customers to the program.

The company plans to roll out its expanded loyalty program May 18, aiming to capture the one-fifth of Nordstrom customers who are not now part of its loyalty program, Blake Nordstrom, company co-president, said during the conference call. Those one in five customers’ purchases represent 40 percent of Nordstrom’s sales.

Retail stores can only shrink so much, and ultimately merchants must find ways to attract and retain shoppers. Expanding its loyalty program is a step in the right direction for Nordstrom’s to increase their market. Amazon has discovered how its Prime customers are frequent shoppers and big spenders. Starbucks’ loyalty program that offers mobile order and pay has proved highly successful. Nordstrom’s is rolling out the new loyalty program very quickly and we shall soon see the impact on store traffic and sales.

Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group

Read the full story here

Featured Content