How customers shop at Nordstrom may be due for a dramatic change in the next few years.
At its “Investor Day” gathering in Los Angeles Nordstrom showed off its futuristic vision of the shopping experience as part of a greater plan to establish itself as the “best fashion retailer in a digital world.” Nordstrom is in the middle of a beta test with 800 people in its top market of Los Angeles to weave together smartphone-based shopping features with the in-store experience to speed up what it calls the “customer journey.”
At the event, Ken Worzel, Nordstrom’s chief digital officer, said the company customers who use both digital and in-store resources buy more and are happier with the experience.
“When we get customers to engage beyond one of our channels, their spend goes up dramatically, their engagement goes up dramatically and their satisfaction goes up dramatically,” Worzel said.
The plan doesn’t involve a spate of new technology offerings. It relies on a combination of initiatives Nordstrom already out there and getting them to work together via an app.
It starts with the smartphone. Customers can find clothes they like on social media and then reach out to personal stylists who then put together digital Style Boards with a variety of customized looks. If the customer likes them, he or she can mark items to try on in-store.
Nordstrom will then route the customers to the closest store, and when they arrive, they will find a dressing room with their name on it and the items already inside ready to be tried on. A tablet within the dressing room lets customers contact an employee to get replacement clothes and pick out items they want to purchase via mobile pay.
Nordstrom plans to eventually expand testing of these experiences to all of Los Angeles, Worzel said. Nordstrom has 16 full-line stores in Los Angeles, which is a $1 billion market for the company with more than 4 million customers. The company wouldn’t say when it plans to roll out the app more broadly.
Nordstrom executives said 2018 will be a big year for the company, as it continues to adjust to a changing retail landscape. Nordstrom is forecasting $15.2 billion to $15.4 billion in net sales in 2018, and it expects net sales to grow 3 to 4 percent per year up to 2022.
This outlook “positions this year as an inflection point of-long term profitable growth” for the company, said Anne Bramman, Nordstrom CFO. Nordstrom executives expect investments like personal clothing service Trunk Club and HauteLook, which powers Nordstrom Rack’s website to mature in the coming years, contributing to the bottom line, rather than eating away at it.
Nordstrom shares slumped 6 percent as the event unfolded but recovered slightly as the day went on.
The company’s confident outlook comes just a few months after it suspended plans to take the company off the public markets.
Today, Nordstrom has 373 stores in the U.S., Canada and Puerto Rico, 239 of which are Nordstrom Rack stores.
As companies continue to grapple with online retail, many of the largest retailers are working to figure out how to best blend their in-store and digital experiences. Walmart has made a flurry of moves in what retail wonks call “omni-channel” in recent months as have other large companies like Target and Kroger.
Even Amazon is making a huge push in this direction. The tech giant has spent the last few years building up a big brick-and-mortar footprint to complement its online presence, primarily through the purchase of Whole Foods Market.
Despite Amazon’s stranglehold on e-commerce and its growing brick-and-mortar portfolio, Nordstrom executives downplayed the threat posted by the tech giant. Very few of Nordstrom’s top selling items or brands are available on Amazon, said co-president Erik Nordstrom. He was quick to distinguish between marketplaces like Amazon, which aim to sell pretty much everything, and Nordstrom.
“We’re not a marketplace; we are not looking to be the everything store,” Erik Nordstrom said.