Beating the Odds: Nordstrom’s Omnichannel Prowess

Beating the Odds: Nordstrom’s Omnichannel Prowess

Written by Leong KexinMarch 4, 2020

Beating the Odds: Nordstrom’s Omnichannel Prowess

The burgeoning crisis of the retail apocalypse continues to loom over brick-and-mortar stores as the industry continues to experience more threats. Business Insider has confirmed at least 2,200 stores closing for 2020, following the closure of over 9,000 stores last year. 

In light of the increasing closure of brick-and-mortar stores, more departmental stores are investing in e-commerce to compensate. Nonetheless, the online space also forces multi-label retailers to compete with a new generation of direct-to-consumer model brands. Multi-label retailers are at risk of losing out on sales to the new disruptors as more consumers are swaying towards purchasing directly from the digitally native brands. 

Despite the challenges plaguing the industry, one retailer that stands out is Nordstrom. The long-established retailer solidified its presence in New York with the opening of its flagship store in Manhattan last year. The seven-story, 320,000 square-foot space is a jarring contrast against the face of the retail apocalypse. Additionally, Nordstrom’s online business has shown consistency as its e-commerce performance contributed to the increase of its third quarter’s earnings as it grew 7% from last year.

Nordstrom’s growing online and offline presence symbolises its omnichannel prowess. Current consumers are used to constant stimulants from various brands and are no longer making purchases exclusively from one medium. “The economics of serving customers are greatly enhanced by having combined digital and physical assets in a given market,” said Anne Bramman, the CFO of Nordstrom. As a result, Nordstrom continues to expand its omnichannel strategies to increase multiple touchpoints for consumer engagement. 

Differentiated Offline Services

Nordstrom has taken its offline stores’ services to new heights by appealing towards consumers’ demands in ways that online retail lacks.

Bar at Nordstrom's NYC flagship
A bar located on the shoe floor of Nordstrom, NYC. Image Credit: Bloomberg

Its massive flagship store in Manhattan is home to more than just clothes. Curated pop-up stores, a cocktail bar on the shoe department floor, and a facial massage studio are some of its extensive amenities aimed to increase footfall via experiential retail.

Nordstrom Local
Styling service at a Nordstrom Local. Image Source: Forbes

On a smaller scale, Nordstrom has also rolled out a local market strategy by opening stores that act as “service stations”. Aptly named as Nordstrom Local, these stores not only provide online order pickups and returns, but also other services including personalised styling, dry-cleaning and tailoring. Nordstrom’s local market strategy bridges connections with its consumers by taking into account consumers’ affinity for online shopping while still being able to experience the brand. 

“Our key differential when we serve customers well is when they engage with us either with services and/or across channels, all of a sudden, the level of spend goes up, their level of satisfaction goes up, and our sales go up,” said Kenneth Worzel, the COO of Nordstrom during a recent presentation of its local market strategy. Its first location for Nordstrom Local in Los Angeles has already shown significant rewards and engagement, as customers are spending 2.5 times more on average

The Success of Off-Price Strategy

Branded as Nordstrom Rack, these outlet retail stores operate as a critical component of an inventory management strategy. The move protects Nordstrom’s brand equity by minimising discounts on luxury goods displayed at its full-price locations. Excess or out-of-season inventory is offloaded to Nordstrom Rack outlets where it can appeal to a different consumer demographic. Nordstrom Rack serves as an alternative shopping channel to serve new customers who have never purchased from its full-line stores.

Reports have found that mid-market consumers are becoming increasingly strategic with their apparel expenditure. Therefore, they are more inclined towards discounts. Nordstrom Inc’s quarterly profit exceeded Wall Street expectations with Nordstrom Rack generating a third of its sales and increased its shares by 10%.

Tapping into the Opportunity of Resale

Nordstrom resale venture
See You Tomorrow, Nordstrom’s new resale venture. Image Source:

2020 is set to be the year of optimising resale offering for Nordstrom. In addition to its partnership with Rent the Runway for RTR Revive, the retailer has also announced the launch of its first resale store in its New York flagship store and online. Driven strongly by a shift in consumers’ shopping habits, the resale market is expected to triple in three year. This marks a profound directional retail change for Nordstrom by catering towards the advanced demand for more accessible and sustainable luxury goods. 

Targeted Assortment Ranges

Besides its impeccable services, Nordstorm also believes that catering to multiple markets is a key differentiating factor from its competitors. From Vans to Valentino, the variety of brands under Nordstrom’s wing does not seclude its revenue source from just one market and allows it to connect with a wider range of audience.

“Hopefully our mix and what we’re doing feels more relevant to people. You can’t do that in Bergdorfs. We think that’s going to create a competitive advantage for us,” said co-president Pete Nordstrom

The retailer’s assortment mix strategy is revealed in the chart below. More than 8,000 data points were analysed on products retailing online for and across the US market from September 2019 to February 2020, as tracked by Omnilytics.

Nordstrom vs Topshop Brand Performance

Topshop on carried three times less the amount of SKUs compared to Nonetheless, the former achieved a higher overall sell-out percentage driven by full-priced items. This ties in with Nordstrom’s strategy of keeping discounts to a minimum on its main platform while offloading dated inventory to its off-price outlets. had a higher discounted products percentage which also contributed to its lower median price.

Nordstrom vs Topshop ageing analysis

Upon analysing the ageing of the online presence of SKUs by both retailers, Topshop on recorded an assortment age of 30 days and less, which contrasted’s span across 180 days. This indicated a deliberate strategy to maintain high newness and minimise discounts on the Nordstrom website.

Nordstrom top 3 subcategories

A deeper look at the biggest category by both retailers revealed that Topshop on placed greater emphasis on the more casual subcategories such as t-shirts and crop tops whereas prioritised blouses.

Nordstrom New In Blouses

The new-in on blouses highlighted a disparity between the two retailers. Topshop on showed similar styles of longer sleeves with button-down detailing and in a variety of prints while stocked up on more progressive styles such as milkmaid sleeves and organza material. The distinction in style preferences reflects the retailers’ respective target consumer demographics. 


The shopping habits of consumers are increasingly complex than just mere opting to shop at one channel or the other. In an industry where consumers are spoilt with options, specialising in only one area could run a retailer the risk of losing out to competitors. 

Despite a dip in Nordstrom’s Q4 earnings, the brand has caught up with the ever-changing shifts in shopping habits by adopting an omnichannel strategy that evolves to match the pace of the consumers. Its new flagship store exemplified Nordstrom’s foresight to strengthen its brand positioning by incorporating experiential retail. In conjunction with increased online purchases, Nordstorm bridged the gap in e-commerce by rolling out Nordstrom Local outlets to provide quality services to customers. Additionally, Nordstorm strategised its digital store by curating assortment mix accurately to meet its online consumer demographic while maintaining high newness. In return, Nordstrom’s expansion of multiple avenues to cover various touch points yielded rewarding results.   

This article has been updated since its original publish date.

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