Nordstrom sees a digital future
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A Nordstrom employee uses a mobile device for a payment at the flagship store in December in downtown Seattle. The company is working on new mobile-payment options.
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SEATTLE -- As someone who works in downtown Seattle and lives in nearby Renton, Wash., Chelsea Shipp tends to not be very far from a Nordstrom store at any given time.
But because she finds the Web's 24-hour browsability and home delivery hard to beat, the longtime Nordstrom customer increasingly goes online when she wants to refresh her wardrobe.
"If I just need a pair of black pumps, I don't need to go to a store," Ms. Shipp, 31, said. "I know the size and style I'm looking for, so why not buy it online?"
Ms. Shipp, a sharply dressed management consultant, represents the changing face of Nordstrom customers.
The Internet is Nordstrom's fastest-growing channel and, with $1.5 billion in cash on hand, it's spending heavily to support that growth.
The 111-year-old company is working on new mobile shopping options and personalization features, so that visitors to its website might soon receive recommendations based on their online and in-store buying habits.
It's also testing a same-day delivery service for a possible broader rollout, and it's expanding its merchandise assortment online to give customers more selection.
"If you're listening to customers, they're telling you that their expectations around how they want to shop are evolving," said Jamie Nordstrom, who oversees the company's website as president of its direct division.
"Many customers today don't have several hours to shop like maybe previous generations did," he said. "They're looking to be efficient, and they're looking for help."
Last spring, President Blake Nordstrom said he hoped to look back on 2011 as the year Nordstrom "got behind what it took to be best of class online."
Analysts credit Nordstrom's technological changes for much of its recent financial success. Nordstrom reported nearly $2.5 billion in sales for both November and December, representing a 12.3 percent increase over the 2010 holiday season. By comparison, retail-industry sales for the same period rose 4.1 percent from a year ago, according to the National Retail Federation.
The direct division generated $705 million in the fiscal year that ended Jan. 29, 2011, up from $563 million in the previous year. It also accounted for 7.5 percent of total retail sales, compared with 6.7 percent a year earlier.
Chief Financial Officer Michael Koppel told analysts in a quarterly conference call last August the company will spend about 15 percent of its planned $2.5 billion capital-expenditure budget on technology upgrades over the next five years.
"It's a cost of doing business that you have to do right, because this is how many customers want to shop," said Sucharita Mulpuru, who follows the e-commerce industry at Forrester Research in Cambridge, Mass.
First Published January 28, 2012 12:00 am
