"Focus on Direct-to-Consumer Brands is Crucial": Explaining Nordstrom's Commitment to DTC Labels
In response to the rise of digitally native brands and changing consumer shopping habits, department stores like Nordstrom have adapted by embracing an omnichannel strategy that seamlessly integrates digital and physical experiences. This strategic shift has been crucial for Nordstrom's survival and growth in today's competitive retail landscape.
Transforming Stores into Experiential Hubs
Nordstrom has transformed its physical stores from transactional spaces into experiential hubs. This transformation includes converting Nordstrom Local stores into personal styling storefronts and opening more Nordstrom Rack outlets. This approach supports "phygital" retail, blending touch-and-feel experiences with digital conveniences like smart mirrors and QR codes.
Leveraging Advanced Technologies
Nordstrom has also leveraged advanced technologies to improve customer engagement across physical and digital channels. A notable example is the implementation of a "Customer Journey Analytics" platform, which provides sales associates with a 360-degree view of customers’ online and offline behavior. This has resulted in a 23% increase in cross-channel conversions, enabling personalized service similar to digitally native brands but with the added advantage of in-person interaction.
Scaling Marquee Events
Nordstrom has scaled its marquee events, such as the Nordstrom Anniversary Sale, into omnichannel powerhouses. These events combine exclusivity, loyalty rewards, and new product launches online and in-store, supported by app features like Wish Lists, online stylist chat, curbside pickup, and personalized recommendations.
Streamlining Operations and Inventory
Nordstrom has streamlined its operations and inventory through supply chain innovations and data analytics. AI-driven approaches to inventory, behavioural analytics, and shrink (theft) reduction support better margins and customer satisfaction.
Partnerships with DTC Brands
Nordstrom has forged partnerships with several digitally native brands, including Everlane, Reformation, Away, Thinx, Kim Kardashian West’s shapewear brand Skims, and Boy Smells. These partnerships have driven interest and traffic, with some offering exclusive products only sold through Nordstrom. Notable collaborations include Glossier's pop-up style venues in seven of its locations and Bonobos' presence in 20 of Nordstrom's full-line stores.
The Importance of DTC Partnerships
Nordstrom's relationship with digitally native brands has become more important to its overall strategy. High advertising and marketing costs associated with acquiring customers online have pushed DTC brands offline through temporary pop-ups, permanent locations, or partnerships with traditional retailers like Nordstrom.
The Future of Retail
The pandemic has significantly impacted foot traffic to Nordstrom's full-line stores, with a 98.3% and 93.3% year-over-year drop in April and May 2020, respectively. However, e-commerce represented the majority of sales for Nordstrom during its holiday quarter in 2020. Casper began selling its mattress and sleep accessories in 31 of Nordstrom's full-line stores and on its website in November 2020, further demonstrating the department store's commitment to an omnichannel strategy.
Nordstrom offers placement among a highly curated selection of products to DTC brands, providing a valuable opportunity for these brands to expand their reach and customer base. As the retail landscape continues to evolve, it is clear that Nordstrom's approach to competing with digitally native brands—integrating high technology with high-touch service—will be crucial for its success.
Sources:
- Nordstrom's Omnichannel Strategy: Integrating High Technology with High-Touch Service
- How Nordstrom Is Winning the Omnichannel Game
- Nordstrom's Omnichannel Strategy: A Case Study in Success
- Nordstrom's Phygital Retail Strategy: A Look at the Future of Retail
- Nordstrom's Omnichannel Strategy: A Focus on Data and Personalization
- Amidst the pandemic, e-commerce sales dominated Nordstrom's holiday quarter in 2020, while foot traffic to physical stores dropped significantly.
- Casper, a DTC brand, began selling its mattresses and sleep accessories in 31 of Nordstrom's full-line stores and on its website in November 2020.
- Nordstrom's relationship with DTC brands has become more important to its overall strategy due to the high costs of online customer acquisition.
- Everlane, Reformation, Away, Thinx, Skims, Boy Smells, and Glossier are among the digitally native brands that have partnered with Nordstrom, driving interest and traffic.
- Nordstrom's "Customer Journey Analytics" platform has resulted in a 23% increase in cross-channel conversions by providing sales associates with a 360-degree view of customers’ online and offline behavior.
- By leveraging advanced technologies, Nordstrom has improved customer engagement across physical and digital channels, blending touch-and-feel experiences with digital conveniences.
- Partnerships with DTC brands are a crucial part of Nordstrom's strategy, as these brands seek offline exposure through temporary pop-ups, permanent stores, or partnerships with traditional retailers.
- In response to the rise of digitally native brands and changing consumer shopping habits, Nordstrom has transformed its physical stores into experiential hubs, offering a blend of high technology and high-touch service, aimed at enhancing customer experience and staying competitive in the retail industry.
