Retailer Analysis Report
Company Description
“Nordstrom, Inc. is a leading fashion retailer offering compelling clothing, shoes, and accessories for men, women, and kids. Since 1901, we've been committed to providing our customers with the best possible service—and to improving it every day” (Nordstrom, 2021). On their website, Nordstrom uses the term “an incredible eye for what’s next in fashion” which is a perfect representation of their brand. Their main goal is for each customer to express themselves and not just through fashion. They are a top seller of trendy clothing items and accessories. Their goal is to inspire people to wear what they want to and what makes them feel good about themselves. Carrying items from baby clothing, to Louis Vuitton bags, to sneakers, they have clothing for all types of people.
History
The founder of Nordstrom, John W. Nordstrom was born in Sweden. He left Sweden for America in 1887 not knowing a word of English and with no money. John. W Nordstrom traveled the United States in search of gold and soon ended up in Seattle with a 13,000 stake. Later John came across a shoemaker named Carl. F Wallin offered John a partnership in his shoe store. Their first store, Wallin & Nordstrom opened in Seattle, Washington. Soon their business grew and they opened up their second Seattle store in 1923. Carl and John both retired and sold their stores to both of their sons; Everett, Elmer, and Llyod.
Soon the Seattle shoe store became the largest shoe store in the entire country, with multiple locations across Washington and Oregon. Soon after this, the company changed its name to “Nordstrom Best” and offered not only shoes but men's and children wear. The sons of the founders handed Nordstroms Best down to their children who renamed it to the current name, Nordstrom. At this point in 1971, the company was worth over 100 million dollars. In 1973, a clearance extension of Nordstrom opened which is currently still called Nordstrom Rack. Nordstrom is continuously and still is a growing company. Soon Nordstrom was all the way in states such as Alaska, California, and even the East coast. The third-generation brothers retired in 1995 but stayed involved with the company, they then were on the board of directors. After this, in 1998 Nordstrom started doing e-commerce. E-Commerce, especially today, is a growing form of shopping because of how easy it is to access the internet. Nordstrom continuously is growing with the demands of the economy. Nordstrom now also serves 97 countries.
In 2000, Nordstrom owned the luxury European boutique until 2007. Then continued and bought Jefferey and Hatewear, which were based in New York and Atlanta. Nordstrom also acquired the popular British brands Topshop and Topman, which are still available in their stores today. At this point, Nordstrom was the only American retailer to supply British Brands. Nordstrom went on to acquire Trunk Club in 2014, which is a personalized trunk curated for a certain person. This service is still a very popular way of shopping. A company called Treasure & Bond was also occupied by Nordstrom from 2011 to 2013, this company is known for donating large amounts of money to children. Then Nordstrom launched this brand as a private label in 2014 and is still active today. 2014 was a time of growth for Nordstrom, they also continued to grow internationally and opened their first store in Canada, then Puerto Rico in 2015.
Nordstrom today is owned by co-presidents Steve and Erik Nordstrom, this company is continuously growing. Now Nordstrom has a wide variety of fashion with deep assortments in each category. Nordstrom also ranges from Luxury clothing all the way to affordable fashion. Starting at a small shoe store in Washington, Nordstrom has seen incredible growth throughout its time of operation and is continuing to grow. The e-commerce of Nordstrom today also provides shoppers with convenient store pick up or shipping.
Retail Strategy
Nordstrom’s Target market is just about anyone. They have sections in their stores and on their website for all ages and genders. They have many different styles of each type of clothing so that anyone could feel comfortable shopping here. The format of the store and website has a lot to do with helping satisfy the target market's needs. They have the store divided up by gender and age with the inclusion of gender-neutral areas. This makes it extremely easy for each and every person to find exactly what they are looking for. Their largest markets are in Atlanta, Austin, Denver, Detroit, Houston, Miami, Minneapolis, Portland, San Diego, and West Palm Beach. A large focus is on people, products, and places creating convenience and connection for all customers, (Nordstrom, 2018). These areas help cater to people with more money as they carry a lot of Nordstrom’s higher-end products. Again, the target market was hit perfectly because people visiting the smaller locations probably wouldn’t look for things of that nature. They have three main interests when it comes to implementing their retail strategy, the people, products, and place. In regards to the people, Nordstrom has very high standards for their customer service. They try to give each individual customer a personalized experience when they are shopping online, or in stores. Their goal is for the customers to leave feeling like they have made new friends. A lot of regulars that go into Nordstrom often do actually form relationships with employees. This helps customers to continue coming back because they know what kind of service they will be receiving each time. As for their products, they have just about any type of clothing to wear. Their goal is to provide customers with a huge selection of items. They have categories such as shoes, jewelry, bags, and of course clothing. They want people to be able to form an entire look with what they have in their stores. This is why they also have the category of cosmetics. As for the locations of Nordstrom, they have 136 full-price stores and 247 of their sales stores called Nordstrom rack. Every store has in-store check outs, in-store and online returns, delivery, and in-store pickup. They are extremely accommodating to each customer and they tend to put their needs a high priority to meet within the company.
Sustainability
Nordstrom has recognized for a while now that they need to do as much as they can to help the environment and make their items as sustainable as possible. Pete Nordstrom said himself, “It is our hope that together with our customers, we can work toward a more sustainable future for us and generations to come”. They decided to put their focus on three main areas of trouble, climate change, environmental impacts of products and services, and circularity. They have also set goals within each category to hopefully complete by 2025. Their goals for helping their impact on climate change are to reduce scope 1, 2, and 3 emissions and to contribute $250,000 in corporate grants to help slow and prevent climate change. With the company making as much money as they do, they have realized that they need to put it to good use which is exactly what they are doing. For the environmental impacts of their products and services, they have implemented strong goals as well. They want to reduce their single-use bags by 50% and they have already begun selling reusable ones in stores. They are also trying to make 15% of their clothing qualify as sustainable style. They have thought of everything from the beginning to the end which is why they have also thought of the after-effects once the products are already sold. Their goals within circularity include taking back 100 tons of beauty packaging for recycling, donating 250 tons of clothing, and contributing $1,000,000 to support industry innovation for textile recycling. This is another great example of how Nordstrom realizes that they need to use their money for good. It is also a great representation of the company that they recognize this industry is so hard on our planet. They are accepting responsibility and doing everything in their power to help out.
SWOT Matrix
Strengths
Weaknesses
Internal Views
They are working as a team to place goals for their company that is already moving a long way.
They started working towards helping the environment slightly later so they won’t have a huge impact until years from now.
Opportunities
Threats
External Views
They have a lot of customers in support of their efforts to be as sustainable as possible.
They are still a part of the textile industry which I don’t think will ever be good for the environment, so they will still contribute to these issues.
SWOT Explanation
For the strengths section, we explained how the way their team is taking action is bringing them more support from their customers. A lot of people are aware that the textile industry is one of the worst ones on our planet, so shopping somewhere sustainable is important. More people are drifting away from fast fashion because of this, which is why Nordstrom taking this action is not only helping the environment but helping their brand to be more successful as well. For their weaknesses, we explained how they didn’t start taking charge until the planet was already struggling. It is better late than never, but it is also harder to reverse the damage done than to prevent it in the first place. In the threats box, we explained how the textile industry will never be a good thing for our planet, so in the end, there is only so much they can do. Overall, we think they are doing a great job of taking action and showing other brands that it is important to take responsibility.
Recommendations
We are extremely impressed with the way Nordstrom is running their corporation. They have taken many steps financially and sustainability-wise to better their business and everyone involved. They are extremely financially stable and are budgeting their money very well. As for sustainability, there is always more that could be done. My recommendations for them would be to donate more money if possible to the organizations they are supporting to better the environment. One of their goals mentioned was that they want to get rid of their single-use shopping bags. We think this is a very smart choice, but why wait? Another suggestion would be to get rid of them now and allow customers to bring their own reusable bags to store their new items in. There would be some customers forgetting a bag, which is why they should continue selling reusable ones at the counter. As discussed in the SWOT analysis, Nordstrom will always have a negative impact on the environment due to the fact that the textile industry is a leading cause of climate change. They are doing an amazing job at trying to decrease their carbon footprint as much as possible though. The effects my suggestions would have would help just a little bit more in the process. Donating more money to their organizations would potentially give them the resources they need to meet their goals. The textile recycling organization and the organization responding to climate change will need extreme resources for action to take place. Because Nordstrom is doing so well financially, they should have extra spending money to make their goals come along quicker. As for the bags, that is something that can be done a lot quicker than 2025. I would also recommend that they take action on that in the next few months rather than waiting. That would reduce a lot of waste coming from their business. I believe that these changes would help their business to be more successful because of their customers and supporters. Seeing Nordstrom working to improve themselves and the business is what keeps people going back to support them.
Financial Performance
As the first graph measures Nordstroms Net sales, the years 2019 and 2021 were prominent years for Nordstrom‘s sales. They surplus past years in sales and they are producing efficiently. The year 2020 is lower in the number of sales. However, this is to be expected due to COVID-19. In the year 2019, Nordstroms averaged approximately $17,000 in sales; in 2020 they averaged approximately $10,000 in sales, and in 2021 they averaged approximately $14,000 in sales. Overall the first graph shows Nordstroms best year for sales was 2019. In 2021 the sales have already grown a multitude since 2020. Moving forward, if Nordstroms continues to do what the company is doing now its sales should continue to increase.
The inventory for the entire corporation is shown in the second graph. As the graph shows there has been a steady decrease in the amount of inventory that Nordstroms holds. In 2019, the graph shows Nordstroms to be having around 1980 units of inventory, in 2020 the graph shows around 1920 units of inventory, and in 2021 Nordstroms is shown to have around 1860 units of inventory. This decrease is prominent over all three years shown on the graph. Having less inventory is good for the company because it increases the chances of stockouts which is a positive for the company. As the graph explains, the current methods Nordstrom is using to decrease the amount of inventory is working quite well for them.
The first graph shown provides a visual representation of the number of persons that Nordstrom as a company employed. In the year 2019 Nordstrom as a company had around 71,000 employees. In 2020, Nordstrom as a company held around 68,000 employees. And in 2021, Nordstrom held around only 62,000 employees. The number of employees over these three years has had a steady decrease. Some of the fewer numbers may come from COVID-19 because e-commerce is becoming much more popular among retailers and consumers. Overall, I think Nordstrom decreasing the number of employees is beneficial due to it being more cost-effective and it makes the shopper experience more efficient.
The second graph measures the amount of merchandise inventory that Nordstrom holds as a company. In 1019, Nordstroms has around 2000 units of merchandise inventory. In 2020, the company was holding a little under 2000 at around 1900. Then in 2021, the numbers drastically climbed up to almost 3000 units of merchandise inventory. The merchandise inventory was probably lower in 2020 due to COVID-19.
The third graph is measuring inventory turnover within Nordstroms over the years 2019-2021. In 2019 and in 2020 Nordstrom had five total turnovers throughout the year. In 2021, there was one less and there were only four inventory turnovers. Overall, Nordstrom has a very well-established strategy and the turnovers tend to work out well for their business model.
Furthermore, the last graph pictured represents the asset turnover. In 2019, Nordstrom averaged right under 2. In 2020, the company averaged just over 1.75 with asset turnovers. And in 2021, averaging Igor at about 1.9. The company’s asset turnovers seem to be very successful for them, due to the successful business model of Nordstroms. The asset turnovers are beneficial to Nordstrom because that means that sales are high.
References
Nordstrom.com. (n.d.). Retrieved May 6, 2022, from https://www.nordstrom.com/browse/about
Nordstrom reports fourth quarter and fiscal 2019 earnings. (n.d.). Retrieved May 6, 2022, from https://press.Nordstrom.com/news-released/news-related-details /nordstrom -reports-fourth-quarter-and-fiscal-2019-earnings.
Nordstrom reports fourth quarter and fiscal 2020 earnings. (n.d.). Retrieved May 6, 2022, from https://press.Nordstrom.com/news-released/news-related-details /nordstrom -reports-fourth-quarter-and-fiscal-2020-earnings.
Nordstrom reports fourth quarter and fiscal 2021 earnings. (n.d.). Retrieved May 6, 2022, from https://press.Nordstrom.com/news-released/news-related-details /nordstrom -reports-fourth-quarter-and-fiscal-2021-earnings.