Nordstrom Cuts Direct Mail Program, Loses Sales
On Tuesday, Nordstrom cut its forecast for full-year sales and profit after reporting weaker-than-expected first-quarter results that were hurt, in part, by stopping its use of direct mail to promote its new loyalty program. According to Yahoo Finance, co-president Erik Nordstrom said on a post-earnings conference call that the company stopped sending rewards "notes" to its loyalty customers by mail in an attempt to get the program online and reach customers faster. That shift caused a reduction in foot traffic at all of its stores, Nordstom said, as many customers rely on receiving those rewards by mail. "We're making the changes we believe are necessary to drive our top line as we continue our aggressive focus on expenses," Erik Nordstrom said. The company also said trends from the fourth quarter continued into the first quarter and that it had to ramp up promotions in order to clear excess inventory from its winter collection.
Total Retail's Take: It's rare that an executive says that cutting direct mail from a company's advertising budget can have such a negative impact on sales, but that's essentially what Erik Nordstrom said. We're not sure if Nordstrom will reinstate its direct mail program, but to me, it sounds like direct mail is having a "moment." Just this month, for example, Total Retail published several articles about how brands that use direct mail in a meaningful way can really connect with customers. In one article, Tommy DeLuca, vice president of sales at PebblePost, a digital-to-direct mail marketing platform, cited a PebblePost study that found that 76 percent of shoppers discuss relevant mail from a brand or retailer they’ve purchased from in the past. The same study found that 61 percent of recipients consider direct mail influential in driving purchase decisions. Furthermore, I just received in the mail RH's 2,500-page catalog, or "Source Book," as the company calls it. Is direct mail seeing a resurgence?