Problem
Nordstrom
In 1901, John W. Nordstrom founded a small shoe store in Seattle, which would eventually grow into a fashion specialty chain store called Nordstrom. Nordstrom has remained in the family for four generations and now sells top-quality, brand-name clothing, accessories, jewelry, cosmetics, and fragrances. John Nordstrom set a strong foundation for the company back in the early 1900s. He built Nordstrom on the belief that the company should always provide the highest level of customer service possible, along with top-of-the-line merchandise. As a shoe retailer, Nordstrom offered a wide range of products to fit most everyone's needs and price point. Source: Chuck Pefley/Alamy Stock Photo When John Nordstrom retired, his sons Everett, Elmer, and Lloyd continued to run the business with the same customer-focused attitude. As the company expanded into fashion, stores were stocked with a wide range of high-quality clothes at various prices to appeal to most shoppers. Nordstrom believed it was better to carry too many sizes in each style than not to carry enough, so that customers wouldn't get frustrated by their size not being available. The brothers also instituted a policy of "decision-by-consensus," which helped move the company along even when disagreements arose.
Nordstrom grew into the billion-dollar retailer it is today under the leadership of the family's third generation-Bruce, John, and Jim Nordstrom-and Jack McMillan. Their philosophy focused on empowering the managers and salesforce to make decisions that favored the customer, not the company. The company rewarded energetic individuals with an entrepreneurial spirit and preferred to hire "nice" people who could be trained to sell, rather than seasoned salespeople who weren't nice.
It was during this time that the company also decentralized its purchasing process. Regional managers were given the freedom to purchase styles and clothes that fit the needs and tastes of that particular area-that is, managers in Minnesota bought very differently than managers in southern California. To cater to each region, the company encouraged its sales force to regularly ask customers for feedback about what products and styles they would like to see in Nordstrom stores. Jim Nordstrom explained, "When we go into a market, our first buy is the worst." Today, Nordstrom continues to set the standard in customer service and loyalty. The company is so well known for its customer service that true tales of "heroics," or unusual acts of customer service, still circulate today. Perhaps the best-known story is how, in 1975, a customer came into a Nordstrom store wanting to return a set of tires originally bought at Northern Commercial Company, an Alaskan firm that Nordstrom had purchased. Although Nordstrom had never carried or sold tires, it happily accepted the return and instantly refunded the customer cash for his purchase. In another example, a saleswoman noticed that a customer had left her plane ticket on the store's counter. She called the airport and asked for the customer to be issued another ticket, but the airline refused. The saleswoman immediately jumped into a cab and hand-delivered the ticket to the customer at the airport.
There are many other examples of such exceptional customer service, and Nordstrom's "no questions asked" return policy remains intact today. Its sales representatives send thank-you cards to customers who shop there, warm up their customers' cars on cold days, and have hand-delivered special orders to customers' homes. Nordstrom installed a tool called Personal Book at its registers that enables salespeople to record and (later) review and recall customers' specific preferences to better personalize their shopping experiences. Nordstrom's sales associates have the freedom to sell merchandise in any department, giving them even more opportunities to develop their relationship with the customers. Nordstrom also provides customers with multiple channels for shopping, allowing them to buy something online and pick it up at a store within an hour.
The moment one enters a Nordstrom location, it is evident that the stores were developed with the customer in mind to create a pleasant, efficient experience-"a memorable experience." The company believes that it has 15 seconds to capture the excitement of a customer who walks in the door. Aisles are kept neat and uncluttered, big display windows create a bright and open atmosphere, and the layout is easily navigated. The dressing rooms are large and well lit with fixtures that imitate natural light; escalators are significantly wider than elsewhere, to allow both couples and parents with children to stand next to each other; and every component is positioned to create a more residential feeling. The layout of the stores is efficient and free of clutter, a strategy that has been copied by retailers around the world.
Nordstrom's customer loyalty program, The Nordy Club, rewards customers on four different levels based on their annual spending: members ($0-$499), insiders ($500+), influencers ($2,000+), and ambassadors ($5,000+). All members receive free basic alterations on regular-priced items, access to free styling workshops that help them curate their own look, curbside pickup of online purchases, and reward points that can be used as store credit. Higher-level members receive more points for each dollar spent, early access to sales events, and in-home stylists who come to customers' homes to offer expert styling advice and tailoring services.
Nordstrom currently operates 380 full-price and off-price stores in 40 U.S. states, Puerto Rico, and Canada. Full-price outlets include Nordstrom full-line stores, Nordstrom.com, Trunk Club (a personalized mid-level to high-end men's and women's apparel boutique acquired by Nordstrom in 2014), Jeffrey (luxury fashion boutiques in which Nordstrom bought a majority stake in 2005), and Nordstrom Local (no-inventory stores launched by Nordstrom in 2017). Off-price outlets include Nordstrom Rack stores, Nordstromrack.com, HauteLook (an online retailer that offers flash sales on designer goods, acquired by Nordstrom in 2011), and Last Chance clearance stores. The company's long-term and often costly customer focus has reaped great benefits for the company. Not only has Nordstrom emerged over the past 100+ years as a luxury brand known for quality, trust, and service, but its customers remain loyal even in hard times. Many customers choose to shop at Nordstrom, rather than at its competitors, because of their existing relationship and the hassle-free return policy. Nordstrom remains strategically focused on customer service and constantly looks for new ways to deepen and develop its customer-salesperson relationship.
Task
1. What role does service play in Nordstrom's positioning? Does service play the same role in online and in-store experiences?
2. How else can Nordstrom continue to provide exceptional customer service and increase brand loyalty?
3. How should Nordstrom address the growing popularity of online shopping? Can it successfully compete in the online space? Who are Nordstrom's biggest competitors, and how do they stack up?