It’s a mix of curiosity, openness to new types of supplier partnerships, and expanding the online assortment that plays a major role in Nordstrom Inc.’s merchandising strategy.
There’s also a fairly regular turnover of retailer-carried labels that help keep assortments fresh and weed out what becomes less relevant.
“We have 10% seller revenue every year based on things that are no longer valid and new things that come in,” said Pete Nordstrom, the company’s president and chief brand officer, who is expressed Tuesday morning at the National Retail Federation. annual “Big Show” convention at the Javits Center in Manhattan. A socially distant Nordstrom appeared onscreen from Seattle, where Nordstrom is based, rather than in person, during his conversation with Phil Wahba, senior editor at Fortune Magazine.
“There’s always this evolution of brands which is one of the great things about being a department store. It’s important to consider being open to things that we weren’t open to before.
Nordstrom said the company is working to become more important to brands, especially those most coveted by Nordstrom shoppers, by expanding the offering to more than just hit stores, which means more merchandising on nordstrom.com.
“Burberry, for example, sells a lot of good stuff,” Nordstrom said. “They have stuff for pets, for kids. They have all kinds of things and our customers want to buy them. We want to be the best place in North America for Burberry. We need to find a way to offer the breadth of what they do.
Nordstrom, he said, has expanded the “openness” of what the company offers shoppers, particularly in the areas of home and activewear.
“We’ve never been in home trading in a huge way,” Nordstrom said. “As online became a bigger part of our business, we realized, my goodness, that we could have a great online offering that could also be supported in a physical environment. way to do more.
In February 2021, Nordstrom Inc. announced plans to expand its digital assortment from 300,000 items to potentially 1.5 million over the next three to five years.
Last year, Nordstrom opened a two-level hospitality area at its flagship women’s store on Manhattan’s 57th Street. It’s full of new arrivals and gift items, as well as one-of-a-kind items, including coffee table books, stylish kitchenware, throws, and pillows.
“Home is such a big business with a lot of competition,” Nordstrom said. But in New York, there was “an eye for doing things that were unique to New York.… A big part of what makes a service like this work is its spontaneity: “I didn’t come looking that, but it’s cool so I want to buy it.’ That’s the fun part of retail for us and I think that’s something we’re good at, and then we have to make sure we have what people expect of us and make sure we’re in stock for it. You think about the home business in the city and how different it is in suburban America.
With its three-month partnership with Fanatics, “We were able to get into business with them in a way where we really didn’t own the product and really served as more of a platform to offer it to our customers. online and let’s see where it takes us. It really reflects where we can go and how things have evolved,” compared to traditional ways of working with suppliers and brands.
Nordstrom seeks to capture a larger share of the wallet from current customers and a new audience of sports fans and offers thousands of licensed sports products through Fanatics for the first time. “Obviously, our customers also buy this stuff. When you get into this activewear and want to represent all of the teams and all of the communities that we serve, that’s a lot of SKUs,” Nordstrom said. “The starting point is to offer things broadly and over time to focus on where customers might be interested. They [Fanatics] have different things they do with different partners. It is still early for us to be prescriptive on this subject. We are really much more in learning mode. They have been excellent partners. They have a lot of abilities. They have a lot of customer data and information. So that’s the start. With something like that, curation, I’m not sure it’s that important,” at least initially. “It’s really not much of a problem, especially with something like this.”
Speaking generally about Nordstrom’s intention to grow its assortment online, he said, “It’s good to have new choices. It’s good to have a lot of choices and it’s not good to have something overwhelming. I don’t think our goal is to be the aggregator of everything. We want to have a point of view. Our point of view is really broad. We want to focus on quality. »
He said it’s important “to know how we page and work the website so that it complements the broader base of what we do. We want the brand to stand out online as well.
“I don’t have a crystal ball on how this all works, especially how it works with our brick-and-mortar stores. Every day we learn, grow and evolve. I hope it’s in a way that makes customers happy,” Nordstrom said.
Last July, Nordstrom acquired a minority stake in the Topshop, Topman, Miss Selfridge and HIIT brands owned by London-based fashion site Asos. This is an unusual type of partnership, given that Nordstrom does not invest in the in-market brands it sells in stores and online. The deal is designed to help grow and secure the future of the four British brands, in particular fashionable and affordable brands Topshop for women and Topman for men, and reflects Nordstrom’s efforts to strengthen its appeal to younger shoppers.
“Asos grew out of our relationship with Topshop. It was a really big deal for us and still is. Topshop was sold, Asos ended up buying it. There was a reason we got together. With Asos partnership, “we’re still in the getting started stage,” Nordstrom said. “The way we do business together is really different” from how Nordstrom traditionally does business with brands. have never sold to anyone else,” Nordstrom said, adding that his business in this case functions more as a platform to deliver the full breadth of what Asos offers. “We’re working on all the parts infrastructure.”
As Nordstrom’s online assortment expands, searchability, personalization and data become even more important, so the shopper experience is not overwhelming.
During the pandemic, Nordstrom’s e-commerce accounted for about 50% of its total sales. It has since returned to around 40%. “We’re not particularly concerned about how much business we have to do in which channel. It will find its natural level,” depending on how the customer wants to shop. “We just want to be able and ready to scale that way in real time.”
Nordstrom has a proven track record of attracting direct-to-consumer brands, and Nordstrom explained why. “What we offer is that we have a lot of customers, high-quality customers, and they can present themselves to them in a way that doesn’t involve marketing to everyone and the expense acquisition of new customers. ”
Additionally, “We’re interested and eager to work with new brands and have that sense of flexibility to do what we can to partner up and that’s been great. The perfect scenario for us is to have a well-known and highly sought-after brand that you can’t find in many places. I don’t think we’re good at publicizing an unknown brand. But we are good at making a known brand bigger and better…. We welcome these opportunities to work with new brands like this. It really is a fun part of the job.
“You don’t have to be in wholesale to be at Nordstrom. There are other ways to do business together. That doesn’t mean it’s all easy to do, but there is a will and a desire to try and find a fit.
Discussing the supply chain bottleneck, Nordstrom said, “At a certain point, there is only so much product you can get through your system. So it’s a limiting factor for us how many units can we cross. Nordstrom, who joined the family business as a stock boy, said when he became a buyer, “We really didn’t talk about unit counts as much as we talked about dollars, because we were looking at levels purchasing and inventory. .” But that has changed.
“Ultimately, you want the inventory you put in a position available for sale to customers as quickly as possible. This requires a lot of expertise and capacity behind the scenes. We have invested in this, but we would be the first to say that we also have a long way to go. It’s different from what it was before. There are critical elements for customers entering the supply chain that never really appeared 20 years ago.
Nordstrom also spoke about the company’s Off-Price Rack business, which had a tough 2021 and dragged down Nordstrom Inc’s results. He spoke about its evolution, first as a clearance vehicle for full-line department stores, then buying into the assortment with brands, then adding Rack.com.
“There’s a skill set and a whole way of doing discounted business that’s a little different than the full-priced banner,” Nordstrom said. “For us to maximize our off-price opportunity, we need to find a hybrid and a home further afield: some of the specific skills that allow our business to run better. That’s always been true to some extent, but we’ve grown to a point where it’s important that we be more intentional about it. There is a great opportunity for us to do better in the rack business and we are excited about it.