What: The discount retailer is leaning heavily on omnichannel capabilities to reach more customers and introduce them to the Nordstrom experience.

Why it is important: The off-pricer significantly boosted its digital capabilities when its website transitioned to the nordstrom.com platform, increasing its processing power from five orders a second to at least 500 a second. This will be crucial to accomplishing its stated goal of boosting its incremental revenues to USD 2 billion.

This past year, the Rack introduced a next-day buy online, pick up in store service for transactions on its own website and on nordstrom.com. And consumers are taking full advantage of it, according to Rack president Geevy Thomas. “During our Anniversary Sale — which the Rack is not a part of — 40% of our next-day BOPIS orders for Nordstrom were picked up in a Rack store.”

The retailer also created a shared inventory that allows brick-and-mortar stores to fulfil online orders and it introduced a ship-to-store option. Additionally, the Rack has long accepted returns for any Nordstrom purchase. “But now you can get your Rack returns processed at Nordstrom, so we’re really making it seamless for customers,” he added.

Digital also can help the retailer make deeper in-roads with Gen Z and Millennial customers. Indeed, the Rack continues to serve as an access point for new customers, who often graduate to the full-line store. That’s one reason the company continues to position the two banners in close physical proximity.

Compared to others in the off-price channel, Nordstrom Rack has one of the smallest store counts, but it has a unique advantage in how it can work with brands. Competitors don’t have a full-price business. The majority of Nordstrom’s buyers buy for both the full-price channel and the off-price channel. So when they’re talking to a designer in the showroom, they’re talking about how to maximize this product in full price and how to get another bite at the apple in off-price.

Rack facts:

• 80% of the brands at Nordstrom are carried in Rack stores.
• USD 350 million+ in returns from Nordstrom were processed in Rack stores.
• 2.2 million+ Nordstrom Rack apps have been downloaded since 2019.
• 80% of Nordstrom managers started as Rack managers.

Nordstrom Rack Rides the Digital Wave