A Q&A With Erik Nordstrom at Shoptalk
In an opening keynote session at Shoptalk in Las Vegas yesterday, Erik Nordstrom, co-president of Nordstrom, was interviewed by Courtney Reagan, a retail reporter for CNBC. The discussion touched on a variety of topics, from the future of department stores to omnichannel innovation to redefining the brick-and-mortar shopping experience. Erik Nordstrom also commented on the recent passing of his brother, Blake Nordstrom, and the impact it has had on the company. Here are some highlights from the interview:
On the Passing of His Brother, Blake, and What it Means for Nordstrom's Leadership
"We worked as a team on everything," said Erik Nordstrom, adding that Blake along with their brother Peter all served as co-presidents. "There was a synergy among us to be the best team we could be. It's different, but mainly because we miss him. He was my big brother, and he’s always been an inspiration. Blake personified our company’s values. He can live on, and his legacy be apparent in the company’s values."
"We learned that many of our customers pulled back on shopping for themselves. We can and should have a much better gift-giving options for our customers." Nordstrom noted the company saw a drop in store traffic in December, which had been pretty consistent throughout the year. "For the last several years, we’ve seen an acceleration in shift from in-store to online, especially during our July anniversary sale and the holiday season."
Innovative Store Experiences
Nordstrom's full-line, flagship store in New York City represents the biggest investment in the history of the company. "Our stores are long-term investments. There are swings in the external environment that we can’t control." Nordstrom noted that the company signed the lease for the New York City store during the recession, which has been a benefit. He's excited to bring our best representation of the brand to New York City, which he compared to the Super Bowl of retail.
In addition to the New York City flagship, Nordstrom has introduced inventory-free Local stores. The Local stores, all three of which are located in the Los Angeles market, are part of a bigger strategy for the company. "What assets can we bring to bear in a local market to better serve customers? [They] Don’t have to be physical assets." The smaller-footprint stores offer convenient services — e.g., in-store product returns of online purchases; in-store pickup of online orders; tailoring — that are a big mover for Nordstrom's business, Erik Nordstrom said.
"Returns come back to us faster," Nordstrom said. "Part of selling online is knowing that returns are going to be an issue. Buy online, pick up in-store is commerce much more on the customer’s terms. And then alterations is third — this is a different way for us to look at it. It's not a service behind the scenes; alterations can get buried in a bigger store. The more you engage your customer, it leads to increased spend and loyalty."
When asked by Reagan if the service-oriented Local stores are scalable for Nordstrom, Erik Nordstrom said he believes they are. "It’s not about store strategy; it’s the market and how can we serve it better. Do what the customer wants. That pays off in the long run, even for Local customers."
Nordstrom's Growing Omnichannel Business
Erik Nordstrom noted that 30 percent of the company's sales now come online, but that hasn't really changed the company's mind-set. It still revolves around satisfying the customer, regardless of channel. "Increasingly, it has become impossible to separate [a customer's] digital journey from physical journey."
To illustrate the omnichannel nature of Nordstrom's customers, Erik Nordstrom revealed some interesting statistics. "Thirty-five percent of our online purchases start with a store visit. Nearly half of our customers use a phone in-store. And more than half of our in-store customers have researched the website before buying in-store.
Not in the Acquisition Market for D-to-C Brands
When asked by Reagan if Nordstrom was potentially interested in buying some of the direct-to-consumer brands it has partnered with in recent years, Erik Nordstrom was hesitant to commit. "Our focus is being the best brand partner we can be," Nordstrom said, noting that the company was an early investor in Bonobos. "Many of our best customers shop with us in both channels, and discover new brands in their journey. We want to be a full-price business where coveted brands seek us out as a brand partner."
The Future of Department Stores
When asked by Reagan about the future prospects for Nordstrom and the department store category as a whole, Erik Nordstrom was quick to point out that he doesn't believe the company is the the spokesperson for all department stores. In fact, he doesn't even consider the company to be a department store. "We don’t consider ourselves to be a department store; we think of ourselves as a fashion specialty retailer." And to ensure future success, Nordstrom said the retailer must become quicker adapting to changing consumer behaviors.
"We’ve been too slow, and we need to be more agile. There's a general direction of more digital influence in customers’ lives. We need to move faster to address that."