Nordstrom’s salespeople are typically well groomed and dressed, polite and helpful, and known for their attention to detail. They are selected for their ability to interact with customers in a positive way. During the inter- view process for new employees, one of the most important questions asked of candidates is their definition of good customer service. Thank-you cards, home deliveries, personal appointments, and access to personal shop- pers are the norm at Nordstrom. There is a no-questions-asked returns policy, with no re- ceipt required. Nordstrom’s philosophy is that the customer is always right. The company’s salespeople are also well compensated, with good benefits and commissions on sales that range from 6.75% to 10% depending on the department. Top salespeople at Nordstrom have the ability to earn over $100,000 a year, mostly in commissions. The customer service ethos is central to the culture and organization of Nordstrom. The organization chart is an inverted pyr- amid, with salespeople on the top, and the CEO at the bottom. According to the CEO, Blake Nordstrom, this is because “I work for them. My job is to make them as successful as possible.” Management constantly tells stories emphasizing the pri- macy of customer service at Nordstrom in order to reinforce the culture. One story relates that when a customer in Fairbanks, Alaska, wanted to return two tires (which Nordstrom does not sell), bought a while ago from another store on the same site, a sales clerk looked up their price and gave him his money back! Despite its emphasis on quality and luxury, Nordstrom has not taken its eye off operating efficiency. Sales per square foot are $400 despite the large open-plan nature of the stores, and inventory turns exceed 5 times per year, up from 3.5 times a decade ago. Both of these figures are good for a high-end department store. Management is constantly looking for ways to improve efficiency and customer service. Today it is putting mobile checkout devices into the hands of 5,000 salespeople, eliminating the need to wait in line at a check- out stand.
a. Describe Nordstrom’s market segmentation strategy.
b. Explain Nordstroms’s source of competitive advantage in terms of cost, differentiation, and added value.
c. Explain the strengths and weaknesses of nordstronr’s approach to implementing its “generic” strategy.