managing the customer experience research project

8/2/2019 Managing the Customer Experience Research Project

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Managing Customer Experiences

Ketki Karachiwala


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About Nordstrom

Nordstrom, Inc. is an upscale departmental chain in

the United States, founded by John W. Nordstrom and Carl F.

Wallin.In 1887, a 16-year-old boy left his home country of

Sweden for the promise of New York City. He arrived with

only five dollars in his pocket, unable to speak a word of

English. His name? John W. Nordstrom.

The first years in the land of opportunity were hard. To make ends meet, young John

labored in mines and logging camps as he crossed the United States to California and

Washington. Then one morning in 1897, he picked up a newspaper and read the front-page

headline "Gold Found in the Klondike in Alaska." The very next day, he made plans to head

north. Things were no easier in the Klondike. The labor was hard, the terrain difficult, and there

was an over-supply of eager workers. But within two years, John had earned $13,000 in a gold

mine stake and returned to Seattle. Back in the Northwest, John was eager to invest his money.

He had befriended a man while in Alaska, Carl

Wallin, who owned a shoe repair shop in

downtown Seattle. It wasn't long before the

two decided to go into partnership and open a

shoe store together.

In 1901, the two opened their first shoe

store, Wallin & Nordstrom, in downtown

Seattle. This was the start of what would become the retail legend of Nordstrom, Inc. From the


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beginning, John's business philosophy was based on exceptional service, selection, quality and

value. The company built a devoted customer base; and in 1923, the partners added their second

store.In 1928, John Nordstrom retired and sold his share of the company to his sons, Everett and

Elmer. Carl Wallin retired a year later and also sold his share of the company to the Nordstrom

sons. A third son, Lloyd, joined the team in 1933.

The company's name was changed to Nordstrom Best in 1969. In 1973, "Best" was

dropped from the company's name, and the store assumed its current name of Nordstrom.It was

moved to the New York Stock Exchange in 1999 under the ticker symbol JWN after John W.

Nordstrom, its founder.

The 1975-1991 Logo

The Target customer

Nordstrom sells apparel, shoes, cosmetics and accessories to customers who are typically

between 25-54 years of age and generate a household income in excess of $100,000 .

Expansion

The exterior of a typical Nordstrom department store at The Florida Mall located in Orlando,

Florida.Nordstrom has grown from a regional department store to a national chain by opening


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new stores rather than by acquisition of other retailers. By 1975, Nordstrom expanded into

Alaska (the only time by acquisition) by purchasing Northern Commercial Company and opened

its first Nordstrom Rack clearance store in Seattle.

Nordstrom Rack, the company's off-price clearance

store.

PLACE TWO: In 1976, Nordstrom opened a series of

stores called Place Two to sell a more limited selection

of apparel in smaller markets. By 1983, there were ten

Place Two stores, but the cost of upgrading the smaller

stores, especially from a systems perspective,

outweighed the benefit, and the division was

discontinued.

FLAGSHIP: In 1998, Nordstrom replaced its downtown Seattle store with a new flagship

location in the former Frederick & Nelson building across the street. At 383,000 square feet

(35,600 m2), the downtown Seattle location is the chain's largest store. By contrast, the smallest

Nordstrom store (as of September 2008) opened in 1980 in Salem, Oregon and has a total area of

just under 72,000 square feet (6,700 m2).

DIRECT: The Company also expanded into direct sales in 1993, beginning with a catalog

division led by John N.'s son Dan that was followed by an e-commerce business.


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Nordstrom.com's fulfillment and contact center is located in Cedar Rapids, Iowa. Currently, it

has distribution centers in Ontario, California; Portland, Oregon; Dubuque, Iowa; Upper

Marlboro, Maryland; and Gainesville, Florida.As the stores expanded in size, restaurants were

added beginning in 1979, reaching their peak with the then-largest (and most

expensive) Westfield San Francisco Centre California flagship store that opened in 1989, that

included no fewer than four restaurants as well as an English pub. Recently, the "Espresso Bar"

from older stores has been discontinued and re-introduced as the "eBar" with offering a variety

of quick-fix snacks, and an expanded "hot

bar" drink list. Smaller stores (mostly

consisting of two-stories) now have an "in-

House Cafe," which offers the same menu

but with seating. Nordstrom has also revised

its four restaurants (found in select larger

stores), the casual "Classic Cafe" and

"Marketplace Cafe," the "Cafe Bistro"

specializing in brick oven entrees and the

"Nordstrom Grill" offering food and

alcoholic beverages.

Currently, Nordstrom operates 115 full-line department stores, 86 Nordstrom Rack clearance

stores, two Jeffrey Boutiques, and one final clearance store (Last Chance) all located in 28

different states. They have recently sold (2007) their stand-alone boutique chain Faonnable.


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In February 2011, Nordstrom announced the acquisition of HauteLook, an LA-based online

retailer that offers flash sales on

designer goods. The deal includes

Nordstrom paying $180 million in

stock and a three-year "earn-out"

payment based on Haute Look's

financial performance. While

Nordstrom was growing nationally, it

focused on catering to customers'

needs, individually. Instead of categorizing departments by merchandise, Nordstrom created

fashion departments that fit individuals' lifestyles. Today, Nordstrom has grown from one

downtown Seattle shoe store into a nationwide fashion specialty chain with renowned services,

generous size ranges and a selection of the finest apparel, shoes and accessories for the entire

family.

The company's philosophy has remained unchanged for more than 100 years since its

establishment by John W. Nordstrom in 1901: offer the customer the best possible service,

selection, quality and value.

The company positions itself as an "affordable luxury". Despite having a smaller decline

in net sales compared to some of its main competitors, on the basis of the crucial same store sales

retail metric, Nordstrom struggled just as bad -- Nordstrom's same store sales in 2009 declined

by 4.2%compared to Saks' -14.7%and Macy's-5.3% decline in same store sales. A portion of

this difference can be attributed to its fashion focus on "wear-to-work" apparel, which it offered


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under its own private label. The companies reflecting the growing demand in its "affordable

luxury" products.

Competitors

Nordstrom's competitors in the mid-tier department store industry include Macy's

Inc., Dillard's and J.C. Penney. These companies provide near-luxury full-price items but also

have discount stores as well. Mid-tier department stores are the most affected by the economic

downturn because they rely on aspiring middle income consumers to generate revenue-- middle

income consumers typically cut back spending and look for discounts as a way to save money

during tough economic times.

Nordstrom also competes with companies in the luxury retail industry which include Saks Fifth

Avenue and companies in the discount retail industry like Kohl's. Nordstrom occupies a

positioning between discount and luxury department stores in terms of the price it sells its

merchandise at.

Customer Service

Customer service is embedded in all aspects of their company culture and seen as a vital means

of achieving strategic competitive advantage. As such, these companies screen, hire, train and

reward based on people who understand and act in accordance with their deeply held customer

service philosophy. For Nordstrom, service is more an act of faith, than a response to a set of

carefully crafted company policies or procedures.


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The idea here is that because Nordstrom doesnt have many rules, employees dont have to

worry about whether they are breaking any. The company values good judgment, and hires

people who they believe are capable of demonstrating it.

Here are some other elements of the Nordstrom culture as described by Spector and McCarthy.

Nordstroms culture encourages entrepreneurial, motivated men and women to make theextra effort to give customer service that is unequalled in American retailing. not service

like it used to be, but service that never was.

Their system is embarrassingly simple we out-service, not outsmart, the competition. The truth is We cant afford to boast. If we did, we might start to believe our own

stories.

Our success is simply a matter of service, selection, fair pricing, hard work and plainluck!

It was never that we were so great, it was just that everyone else was so bad. We know

that at this moment, someone, somewhere is getting bad service at Nordstrom

When you stop worrying about the money and concentrate on serving the customer, themoney will follow. (People who succeed in sales understand this paradox.)

Nordstrom boasts the highest sales per square foot performance in the retail industrybyalmost double.

The customer is always right is not a clich at Nordstrom. Decision by consensus is how the Nordstrom brothers run their business. Disagreements

are worked out behind closed doors and a united front is always presented to the public.


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When the company expands to other regions, it dispatches an advanced force of veteran"Nordies" who carry the culture with them and imports it to new employees.

Nordstrom never acquires other chains, because it is too difficult for those employees tobreak old habits

Nordstrom employees are instructed to always make a decision that favors the customerbefore the company. They are never criticized for doing too much for a customer; they

are criticized for doing too little.

Nordstrom believes that too many rules, regulations, paper work, and strict channels of

communication erode employee incentive.

Nordstrom is informally organized as an inverted pyramid with the top positionsoccupied by customers and sales people. Every tier of the pyramid supports the sales

staff.

The unconditional money back guarantee is designed for the 98% of customers who arehonest.

Employees have access to sales figures from all departments and stores in the chain, sothey can compare their performances.

Outstanding sales performances are rewarded with prizes and praise, as are good ideasand suggestions.

Part of good customer service is (Store Design) creating a memorable experience: Storepresentation must be understood immediately. Nordstrom states that it only takes 15

seconds to impress their customers. That's why Nordstrom has more seating, better

lighting, larger fitting rooms, wider aisles, and a more residential feeling.


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Nordstrom feels that the best training courses come from parents. Previous retailexperience or a college degree has never been a prerequisite for succeeding at Nordstrom.

Nordstrom hires the smile and trains the skill. Nordstrom would rather hire nice peopleand teach them to sell, than hire sales people and teach them to be nice.

At Nordstrom, the priority is on Selling, and the key to successful selling is providingoutstanding customer service.

If you treat customers like royalty and let them know that you will take care of them, they

will usually come back to you.

When customers enter a department, sales people always make sure they areacknowledged. They are relaxed and unhurried in order to help the customer feel the

same way.

At its best, Nordstrom never forgets that it doesnt have all the answers. They know thatthe customers have all the information that they need, and that sales people are the most

valuable people in the company!

The underlying Nordstrom culture and philosophy is not difficult to pass on to the nextgeneration because its simple: Give Great Customer Service.


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References

http://www.wikinvest.com/stock/Nordstrom_(JWN)

http://dealbook.nytimes.com/2011/02/17/nordstrom-to-acquire-online-retailer-hautelook/

http://en.wikipedia.org/wiki/Nordstrom

http://www.washington.edu/alumni/columns/june10/nordstrom.html

http://shop.nordstrom.com/c/company-history

http://www.xavier.edu/xlc/about/Customer-Service-A-Culture,-Not-a-Department.cfm

http://shop.nordstrom.com/c/brands-list

http://www.hoovers.com/company/Nordstrom_Inc/rctjri-1-1njea3.html
http://www.wikinvest.com/stock/Nordstrom_(JWN)http://www.wikinvest.com/stock/Nordstrom_(JWN)http://dealbook.nytimes.com/2011/02/17/nordstrom-to-acquire-online-retailer-hautelook/http://dealbook.nytimes.com/2011/02/17/nordstrom-to-acquire-online-retailer-hautelook/http://en.wikipedia.org/wiki/Nordstromhttp://en.wikipedia.org/wiki/Nordstromhttp://www.washington.edu/alumni/columns/june10/nordstrom.htmlhttp://www.washington.edu/alumni/columns/june10/nordstrom.htmlhttp://shop.nordstrom.com/c/company-historyhttp://shop.nordstrom.com/c/company-historyhttp://www.xavier.edu/xlc/about/Customer-Service-A-Culture,-Not-a-Department.cfmhttp://www.xavier.edu/xlc/about/Customer-Service-A-Culture,-Not-a-Department.cfmhttp://shop.nordstrom.com/c/brands-listhttp://shop.nordstrom.com/c/brands-listhttp://www.hoovers.com/company/Nordstrom_Inc/rctjri-1-1njea3.htmlhttp://www.hoovers.com/company/Nordstrom_Inc/rctjri-1-1njea3.htmlhttp://www.hoovers.com/company/Nordstrom_Inc/rctjri-1-1njea3.htmlhttp://shop.nordstrom.com/c/brands-listhttp://www.xavier.edu/xlc/about/Customer-Service-A-Culture,-Not-a-Department.cfmhttp://shop.nordstrom.com/c/company-historyhttp://www.washington.edu/alumni/columns/june10/nordstrom.htmlhttp://en.wikipedia.org/wiki/Nordstromhttp://dealbook.nytimes.com/2011/02/17/nordstrom-to-acquire-online-retailer-hautelook/http://www.wikinvest.com/stock/Nordstrom_(JWN)

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