Global Case Study:Nordstrom Vietnam

Amara Myricks, Charae Parks, Kourtney Wintson, Shayna Watts

History of Nordstrom

•Nordstrom was started by a poor immigrant from Sweden named John W. Nordstrom and his friend, Carl F. Wallin.

•Nordstrom, who had come into some money from gold mining in Alaska, was interested in investing. Wallin, who owned a shoe repair store seemed the natural choice.

•In 1901 a shoe store called Wallin & Nordstrom opened in downtown Seattle.

John W. Nordstrom

Wallin & Nordstrom Shoe Store 1901

•In 1928, Nordstrom retired and sold his share of the company to his sons, Everett and Elmer. Soon after Nordstrom’s partner Wallin retired and sold his share of the company to the Nordstrom sons.• In 1933, Nordstrom’s third son Lloyd became a part of

Nordstrom, Inc.

•Under the brothers’ influence the store grew to be the largest independent shoe chain in the United States.

•By 1960 the chain had expanded to eight stores across the state of Washington and Oregon, the original store in Seattle becoming the largest shoe store in the country.

•Nordstrom brothers decided to venture into clothing apparel. In 1963 they bought a Seattle-based clothing store called Best Apparel. A few years later the company purchased another fashion retail store in Portland, Oregon creating a new experience under the name, Nordstrom Best, where customers could shop for shoes and apparel in the same location.

•In 1966, men’s and children’s clothing were introduced to the store. Nordstrom Best was so successful that within two years the brothers opened two more stores in Washington with the same concept.

•The Nordstrom brothers then retired and left the company to the third generation.

•A few years later the company went public, and in 1973 became the largest-volume West Coast fashion specialty store and officially changed the name to Nordstrom, Inc.

•Two years later they had expanded to Alaska and opened the first Nordstrom Rack as a clearance center for full-line merchandise. From there they expanded into the California market and by 1988 opened their first East Coast store in Virginia.

•Nordstrom today is still growing nationally and satisfying costumers daily.

Market Information•Nordstrom products range from wedding dresses and designer collections to home décor… and, of course, Shoes.

•They provide a wide variety in many different product categories that keep them one of the top selling high-end department stores.

•Currently the Nordstrom, Inc. name has over 207 locations in over 28 states and is looking to expand into Canada and San Juan, Puerto Rico.

•Their competitors are retailers such as Macys, Saks 5th Ave., Bloomingdales, Lord & Taylor, and Neiman Marcus.

•Nordstrom in a upper mid-scale retailer whose target market is middle and upper middle class women of varying racial backgrounds, ranging from their twenties to early-fifties, that are interested in affordable fashion for themselves and their families.

•Nordstrom advertises through catalogs and email, and also by putting advertisements in magazines typically directed towards minority groups.• They have advertised in publications such as

Essence, Latina, and Ability magazine, a magazine that features celebrities with disabilities.

•Similar to how they separate their product categories, Nordstrom advertising through email often focuses on lifestyle aspects of the customer catering to information collected by each individual rather than advertising to one main customer.

•One of the advantages of this company is that they have been around for a while and have a positive image; catering to people with disabilities and often using models with disabilities for their marketing. They also have the ability to anticipate costumer needs and adapt to them.

•As of this past fiscal year, ending in January 2011, their sales had reached $2327.9 million.

•In 2008, Nordstrom was leading its competitors in online sales with $169 million. However, in 2008, competitors like Bloomingdale’s and Macy’s opened two new stores in Dubai. By then Saks and Neiman Marcus had already opened international stores.

•Although Nordstrom’s has opened its online shipping to 30 countries outside of the United States, they have yet to open any brick and mortar stores on any foreign soil

Current International Expansion

• operates internationally in Canada and The United Kingdom.

• offer online shopping to about 36 countries and accepts different currencies

“leave it better than we found it”

Social Responsibility

Social Responsibility (cont.)

•Crochet Kids is an international non-profit organization that employs Ugandan women to crochet men’s and women’s fashion hats and accessories.

•They are paid fair wages and also receive training and education that helps support and better their families.

•Nordstrom teamed up with KK in 2010

Recycling

Within their distribution centers, they recycle plastic, glass, metal, paper, corrugated and organic waste.

Their purpose is to recycle everything instead of throwing the usual disposables into wastebaskets.

have managed to redirect 82% their waste from landfills and into recyclable waste cans and plan to achieve 90% by the end of the year

“In addition, the materials had to be easy to procure, assemble and ship—all while reducing material usage and waste…This saves materials by eliminating unused carrying space and now the handles are longer to be more comfortable.”

managed to save about 459 tons of paper and 1.2 million yards of ribbon

new packaging and tags are slightly shorter, metallic silver, and come with an attached ribbon on top of the boxes

They also have redesigned their bags from plastic to a non-woven acid free bag

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COUNTRY INFORMATION

Background

Located in Southeastern Asia

63 Provinces and Cities Current population: 90

million people Central

Government :Hanoi France, founded Vietnam,

beginning in 1858 and completed by 1884,

After World War II, became more economically liberal

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Consists of 90 million people

Ethnic groups: Kinh, Tay, Thai, Muong, Khmer, Chinese, Nung, Hmong

Most Popular Language: English

Government System

Communist country Practices the European civil law system Consists of: chief of state (president),

head of government, cabinet, and elections every five years

The National Assembly elects the president while the prime minister is appointed by the president. The National Assembly and President are the only members involved in the elections

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Vinatex: largest textile and apparel industry

One of the main components of maintaining the country’s economy

Second largest exporter after crude oil Country known to produce fiber,

textiles, knitting, complete dyeing, towels, and cotton

Apparel Sourcing

Express, Hucke, Itochu, JC Penney, Jupitar, Kmart, Kowa, Lee Cooper, Li & Fung, Mast Industries, Nichimen, Nissho Iwai, Otto, Sara Lee, Seidensticker, Sumitomo, Tomen, Tommy Hilfiger, Victoria’s Secret, and Wal-Mart

Known for their cotton textile and apparel industry

(2010) Phong Phu Corporation built an $80 million cotton fabric and apparel-manufacturing complex in Da Nang.

Expansion of new apparel industries has created many new opportunities

Members of World Trade Organization› Strengthening it’s numbers in cut and sew

operations and recently investing in spinning and weaving operations.

3 Major Developments for Vietnam’s Success

1. Doi Moi Reformation (1986): gave encouragement to the private sector and allowed market forces to determine the allocation of resources

2. The Collapse of the Comecon (Council for Mutual Economic Cooperation) bloc in 1990-91 and that of the Soviet Union in 1991:prompted the country to link with the West and enter into the International Community

3. They were granted by the USA in normal trade regulations which dramatically reduced imported tariffs in the U.S

Social Customs

Vietnamese culture: Very family-oriented › Men are known to deal

with the outside world while woman are there to care of home.

Religious freedom is documented in the nations constitution

Buddhist country, is free to have other religions such as: Christianity, Catholicism

Social Customs/Norms (Business Aspect)

appointments are required and should be made several weeks in advance

very punctual people and expect people to be punctual as well

Hand shakes: expected before and after the meeting, some may use both hands

very patient and based on building relationships; which are both business and personal

Business decisions are a process and take time, so patient is key in the business culture of Vietnam. Although negotiations can be slow, the business culture of Vietnam remains strong in all aspects of the country’s business relationships.

Social Customs/Norms (cont.)

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Initially began as a single-party state. Following the Vietnam War, the government became a Communist country with strict regulations.

After an economic crisis with almost half of the country starving and facing inflation rates upwards of 800%, the government decided to reform and begin the Doi Moi (renovation) process in 1986.

Now being a more market-oriented system coming from a centralized

economy, this allowed the country to focus more on allowing more private ownership of state-owned businesses, foreign trade, and numerous other implementations.

Since then, they are well known for being one of the fastest growing countries in history growing an average of 7.2% per year since its induction. This resulted in lifting many out of poverty as the level jumped from 58% to 12% between 1993 and 2010.

As a way to also increase their investment potential, Vietnam became a part of the World Trade Organization in 2007.

Vietnam has their fair share of ups and downs. While their economy hit crises and had to repeatedly devalue their currency (most recently in 2010), it automatically created inflationary pressures.

The prices for basic commodities shot through the roof and threatened the progress that has been made thus far.

The government created an economic strategy for the coming years projecting an annual increase of 7%-8% with export levels coming in at 26% (per figure below).

Vietnam GDP Forecast

With this plan in action, foreign investors are beginning to regain confidence in country’s currency as well as its market sector.

Vietnam being in a convenient location makes it easier to base its exports to the rest of Asia unlike its neighboring country Laos who have many added transportation costs due to it being landlocked.

Vietnam is also appealing due to the creation of new entry points for investors through business privatization development, liberalization of bank sectors, and the large, skilled, and low-cost labor force it has to offer.

Cambodia and Laos can pose as competition when it comes to low labor costs and growing GDP levels as well.

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Given the state of the economy, consumer behavior is drastically changing and adapting to more modern standards.

Despite the fact that Nordstrom’s competitors such as: Saks Fifth Avenue, Dillard’s, Von Maur, and Bloomingdales have yet to venture past the UK and Canada, it only makes it more appealing for Nordstrom to be the first to penetrate the growing market.

Modern retailing has increased upwards of 26% in 2009, an increase of 3% from the year before. At this rate the demand for westernized fashion will only be higher in demand progressively over a short period of time.

Typical retail formats are smaller stores in general due to lack of retail space and routine visitations to corner stores. While this is a factor in whether a department store is wanted or even needed, it is emphasized by the fact that Vietnam is considered one of the five most lucrative retail markets to date.

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Ranked 45th in largest goods export and 27th in largest supplier of import goods in 2010.

Also in 2010, the United States measured $14.3 billion in Vietnam imports and $3.7 billion in U.S. exports.

Typical U.S. trade exports include: machinery,

vehicles, food waste/animal feed, iron and steel, cotton/yarn/fabric, red meat, dairy, and feeds and fodders.

US imports from Vietnam include: knits, wovens, furniture/bedding, footwear, electric machinery, unroasted coffee, and tree nuts.

CONCLUSION