What: Pete, Erik, Jamie and patriarch Bruce turned to WWD to reflect on Nordstrom’s past and discuss its future.

Why it is important: Nordstrom management team discusses the renewed relationship with partners and brands, the business model evolution, the customer’s expectations and journey, the necessary integrated approach to both online and physical retail and how good service is often invisible.

Pete Nordstrom: the brand builder

The retail veteran marveled at how little the strategy had to change during his first decades on the job. Under the leadership of his father, Bruce Nordstrom, and the third generation of family leaders, the company grew quickly, enjoying a period of brick-and-mortar expansion. More recently, everything got harder, digital changed the game entirely, and Pete — together with his brother Erik and cousin Jamie — has kept Nordstrom at the forefront of the online revolution.

Amid a period of great change and challenge, the tight-knit Nordstrom team forged ahead with a number of attention-grabbing moves, such as the company’s minority investment in Topshop. It’s just one example of how Pete and his team have re-examined the idea of partnership and also reflects Nordstrom’s efforts to appeal to younger shoppers.

Nordstrom’s strategy is to be less transactional in the relationship with partners and understand more about their goals. Relationships are key to brand management. Brands become more selective and Nordstrom has to be top of mind and clear about its value proposition.

About business models: “There are a lot of different ways — everything from drop ship to wholesale to revenue share to a hybrid concession model to a full concession, where the brand owns the inventory, the space, it’s their people managing it. We become more like a landlord. But there are versions of that. All of those discussions are easier to have because they’re relevant to our current issues. I feel like all the walls have gone down.”

The most important lessons learned during the pandemic are the ones relating to communication, as there’s not a lot of serendipity happening through a Zoom call, so you’ve got to be very intentional about how you communicate with people.

Erik Nordstrom on the stuff Nordstrom is made of

The retailer has always been customer-centric and sees its Nordstrom and Nordstrom Rack brands and digital expertise as opportunities for deepening engagement.

Now as chief executive officer, Erik’s guiding the family-run company through pivotal phase filled with opportunities cantered on Nordstrom’s new “Closer to You” long-term growth agenda: it calls for a massive expansion of the digital assortment from 300,000 items to potentially 1.5 million within three to five years; injecting lower price offerings into the Nordstrom Rack off-price matrix, and finessing the three-year-old market strategy, which revolves around linking Nordstrom full-line department stores, Rack off-price stores, Nordstrom Local locations and a variety of services.

Asked if it was important to have Nordstrom Locals in other major markets, Nordstrom replied that enabling Rack “gave us a lot more coverage, more quickly.…They still think there is a place for Locals as they’ve been very successful. There is still opportunity to add some more in the L.A. and New York markets, as well as in Seattle, the company’s third-largest volume market.

To dramatically ramp up the digital offering, to that 1.5 million item goal, “We think it’s going to take a different model with different products, different brands,” said Erik. “The traditional wholesale retail model won’t get us there. Drop ship has been the example we’ve had in the past. It’s a way of bringing more product choice and [complete] brand expression. We need to add flexibility.

Nordstrom said the company’s e-commerce operation is “moving to more of a hybrid commerce model,” though it wouldn’t be accurate to consider it a marketplace model. It’s generally believed that retailers make more money by selling an item in a store rather than online. But at Nordstrom, “It’s parity, profit-wise. Erik also said that sellers online don’t get commission, whereas store sales associates do, and that Nordstrom fulfills many of its online orders from stores, which makes deliveries faster and less expensive.

Some vendors and industry analysts have the perception that Nordstrom is investing in Rack, digital and technology at the expense of its full-line stores. “That is just not the case. Look at the investment in our Nordstrom stores, both in our remodels, in things like our pop-in shops, but you also have to look at our New York flagship store. It’s the biggest investment we have ever made. Having such a flagship reflects our belief in physical retail. We really feel great about the store. It’s a modern, world-class store.” It opened in October 2019, and cost well over the initial $500 million budgeted.

Jamie Nordstrom on service, synergies and the ‘Single View’

The cousin of Erik and Pete Nordstrom speaks to "the never-ending cycle" of listening to customers and delivering on their demands.

“There was a period of time for a lot of retailers like us when we were managing the dot-com and store businesses separately, with different teams and organizations. Across the company, in technology, accounting, finance, the supply chain, HR, we needed to transform our thinking,” said Jamie. “The real win would come from having a really integrated approach both online and in stores, for the merchandise, the messaging and all service touch points for our customers, be it buy online, pick up in stores, styling, alterations or returns.”

“It’s about getting our teams really focused on Nordstrom customers as opposed to the store customer or the internet customer,” said Jamie. “It’s one customer. Nobody exclusively shops in stores or online. More than 50% of customers who shop in store will have started their shopping journey online with us, and similarly a significant number of customers who buy from us online started their journey by seeing a product in-store.”

“Buy online, pick up in stores is one of the fastest growing parts of the company’s business,” said Jamie. “Having a big selection of merchandise ready for next-day pickup at local stores, using all the inventory available in that market, be it from local stores or from online, requires a lot of people to make that work.”

“Good service is not the absence of bad service,” Jamie continued. “Good service is often invisible. You don’t notice it. When we execute well the customer says, ‘that is just great.’ They don’t exactly know why we have been able to make it great. They don’t know all the tech and the people behind the scenes that deliver on this.”

In a broad sense, service is also about exposing customers to products other than those they may have come to the store or the website for. In the last 18 months or so, Nordstrom, as Jamie said, has been “unleashing the sales team through new tools and social media to engage with customers.” On the stylist chat, customers can ask a style question or get personalized outfit recommendations. More than 50% of Nordstrom’s salespeople are now utilizing these remote styling tools, a 10-point increase compared to the quarter before.

Nordstrom’s clienteling tools provide associates with stored information to keep track of what customers are asking for and buying. Through many surveys, “We have heard over and over again that shoppers want a salesperson who knows them, who can anticipate their needs.”

Bruce Nordstrom Untold Stories from the Patriarch

Erik Nordstrom on the Stuff Nordstrom Inc. Is Made Of 

Jamie Nordstrom on Service, Synergies and the ‘Single View’ 

Nordstrom through the years

Pete Nordstrom Nordstrom’s Brand Builder