NORDSTROM
“Never judge a book by its cover; open it up. If you treat a kid who is buying a $19.95 belt the same as a businessman buying a $1,995 Oxford suit, you will be successful. That kid might become a customer for life.” Project Brief
The purpose of this project was to obtain an in depth knowledge of a retailer of choice with the goal of creating a 6 month buying plan for said retailer. Kelly Murphy and Annika Dupree collaborated over a time period of 10 weeks in order to research an internal and external analysis of Nordstrom and interpreted that information to form a corporate buying plan, as well as plans for two individual Nordstrom stores, and an assortment plan for women’s shoes.
~Robert Spector The Nordstrom Way to Customer Service Excellence
Contents Early Beginnings Brand Identity Size and Scope Product Category Customer Profiles Competitors SWOT Buying Plan Assortment Plan Risk Statement
04 07 10 13 15 19 27 31 37 51
04 Early Beginnings
In 1887, a 16 year old John W Nordstrom arrived
in the US from Sweden in pursuit of the American dream. This dream became a reality in 1901, when he joined forces with Carl Wallin and the dynamic duo opened Wallin and Nordstrom in Seattle, Washington. Initially a shoe shoe, Wallin and Nordstrom rapidly expanded and soon encompassed everything from shoes to apparel for men, women, and children. The company was passed down from generation to generation of Nordstrom sons and was eventually renamed Nordstrom Inc. Today, Nordstrom continues to prosper as a major department store and is famous for its excellent customer service.
05
04
06
07
Core Mission “At Nordstrom, our goal is to provide outstanding service everyday, one customer at a time.�
Brand Identity 08
Nordstrom centers their core
mission based on the philosophy of founder John W. Nordstrom with his belief that the customer should be offered the best possible service, selection, quality and value. They fulfill this mission in all aspects of their customer service from returns to daily encounters with customers.
09
10 Size and Scope
In terms of the retail segment, Nordstrom Inc operates Nordstrom, Nordstrom Rack, Hautelook, Jeffrey Boutique, and Truck Club Men’s Outfitters. In the credit segment, Nordstrom operates a federal savings bank, Nordstrom FSB, a private label credit card, two co-branded Nordstrom Visa credit cards, and a debit card for Nordstrom purchases.
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78,000 employees 349 store in 40 states and Canada 122 full line stores 216 Nordstrom Racks 2 Jeffrey Boutiques 2 clearance stores $14,498,000 annual sales in 2016 Biggest market: California
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13
Revenue Breakdown by Product Category 32% Women’s Apparel 23% Shoes 17% Men’s Apparel 11% Women’s Accessories 11% Cosmetics 3% Kid’s Apparel 3% Other
Product Category 14
15
Overview Upper Middle Class College Educated Fashion conscious Willing to pay more for good customer service Wants a personalized shopping experience Appreciates a sales associate who knows them and what they like
Customer Profiles 16
Karen Robinson Karen Robinson married her college sweetheart from the University of Arizona and shortly after the lovebirds welcomed triplets, two boys and a girl. Though Karen was aspiring to become a journalist, she sacrificed her career to stay at home and raise the triplets. Karen loves her children, but often finds she needs a break and heads out to Nordstroms to spoil herself on shoes and handbags. Aftering dropping her two boys off at soccer practice, Karen brings her daughter along for a shopping spree and tomato soup at Nordstrom Cafe.
-Age: 42 -Status: happily married with triplets -Occupation: suburban soccer mom -Upper middle class
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Brooke Davis Brooke Davis knew from a young age that she had a fallback in life, her trustfund, however, Brooke believed in the power of hard work and thus set her goals toward becoming a doctor. She was accepted into the University of California on a full ride scholarship and after graduating in the top of her class, was accepted into the residency program at Massachusetts General Hospital in Boston. When Brooke isn’t wearing scrubs she spoils herself in her favorite designer clothing from Nordstrom’s. In her little free time, Brooke likes to peruse Nordstrom and reward herself for her hard work with a new outfit.
-Age: 30 -Status: married to her work -Occupation: Completing her residency at Massachusetts General Hospital in Boston
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19
As a whole, department stores have seen a huge decline in sales in 2017, while sales at non-store retailers have been gradually rising. Many department stores have reacted to this decline with an increase in markdowns and scaling back their stores. Nordstrom challenges competitors by refusing to settle with markdowns or scaling back and instead continues to offer the best customer service along with a wider variety of product than their competitors offer.
Competitors
20
Stores
Net Sales 2016
21
$14.5 billion
334
$27 billion
53*
$4.9 billion
46
$11.6 billion
160
22
Women
Shoe Totals
11,287
4,313
4,239
2,910
Brands
425
105
109
119
Sale
1,307
334
115
764
3,606
1,445
1,820
888
Brands
170
67
82
81
Sale
429
31
38
248
2,293
166
824
521
Brands
87
13
35
38
Sale
144
0
13
106
Men
Children
23
24
Pumps
$$
Pricing
25
Overall Women’s Shoes
$$$
$$
$$$
$44.47 $1,850
$19
$3,495
$55.30 $1,850
$18
$2,125
$60
$2,850
$45
$3,850
$80
$2,545
$26
$4,495
26
27 SWOT
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S Customer service Keeping up with technology Fitting rooms of the future Text-to-buy convenience Strong portfolio of brands and private labels Keeps up with popular trends and designers via pop-up shops inside Nordstrom stores
29
W Higher operating costs Potential weakness Nordstrom is opening more storefronts while other department stores are closing theirs Scaling back on promotions
O Increase private labels Further experimentation with AR/VR Improved delivery methods
T Current retail environment is promotion heavy Decline in mall foot traffic Competitive environment Other luxury retailers selling similar products, Nordstrom has to distinguish themselves from the rest Nordstrom has smaller marketing resources Online retailers posing threat to all brick-and-mortar stores
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31 Buying Plan 32
Corporate Plan 2017 Sales Results S/S Planned 2018 Sales Results S/S Percent Change Turn Average Stock
33
$7,249,000,000 $7,466,470,000 3.5% 4.55 $2,160,122,341
S/S 2017
$3,479,520,000
S/S 2018
$3,378,613,920
% Change
-2.9%
Online Sales
$1,519,235,300
Stores Plan
$3,190,881,790
Markdowns
$303,331,541
Markdowns as Percent to Sales
28%
New Stores
2
Shoes
$777,081,202
Women’s Shoes
$466,248,721
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6 Month Buying Plan Women’s Shoes Total Receipts Stock to Sales Beginning on Hand (Retail) End on Hand Markdown Rate Markdowns Turn
35
March
April
May
June
July
Total
Sales Distribution 12%
14%
20%
21%
15%
18%
100%
Sales
$55,949,847
$65,274,821
$93,249,744
$97,912,231
$69,937,308
$83,924,770
466,248,721
BOH
$190,229,478
$221,934,391
$317,049,130
$332,901,586
$237,786,847
$285,344,217 $264,207,609
EOH
$221,934,391
$317,049,130
$332,901,586
$237,786,847
$285,344,217
$264,207,609 $276,537,297
MD%/Month
7%
12%
14%
16%
23%
28%
100%
MDs
$6,201,107
$10,630,470
$12,402,215
$14,173,961
$20,375,069
$24,804,431
$88,587,257
$171,020,030
$121,504,416
$16,971,453
$137,869,746
$87,592,593
$628,814,108
February
$466,248,721 $628,814,108 3.4 $264,207,609 $276,537,297 19% $88,587,257 1.76
Retail of Receipts $93,855,867
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37
Assortment Plan 38
Women’s Shoe Categories
39
Sandal Vendors
Total Receipts
$628,814,109
100%
Steve Madden
14%
$13,205,096
Heels
$113,186,540
18%
Top Shop
12%
$11,318,654
Sandals
$94,322,116
15%
Jeffrey Campbell
10%
$9,432,212
Vince Camuto
8%
$7,545,769
Sam Edelman
8%
$7,545,769
Dolce Vita
7%
$6,602,548
Birkenstock
5%
$4,716,606
Comfort
$88,033,975
14%
Boots
$69,169,552
11%
Booties
$44,016,988
7%
Flats
$44,016,988
7%
Naot
4%
$3,772,885
Sneakers/Athletic Wear
$44,016,988
7%
Frye
4%
$3,772,885
Wedges
$31,440,705
5%
BP
4%
$3,772,885
Pumps
$25,152,564
4%
Bedstu
3%
$2,829,663
Mules & Slides
$25,152,564
4%
Free People
3%
$2,829,663
Oxfords & Loafers
$12,576,282
2%
Joie
2%
$1,886,442
Ankle Wrap
$12,576,282
2%
Jimmy Choo
2%
$1,886,442
Stuart Weitzman
2%
$1,886,442
Espadrilles
$9,432,212
1.5%
Badgley Mischka
2%
$1,886,442
Wedding
$9,432,212
1.5%
Tory Burch
2%
$1,886,442
Slippers
$6,288,141
1%
Shellys London
2%
$1,886,442
All Other (55 Brands)
6%
$4,716,106
40
1 Detailed Assortment
Top Three Sandal Vendors
Doors
Colors
Units Per Style
Ticket
Total Retail
Ruby Strappy Slide
125
3
55
$70
$756,000
Takeaway
80
3
55
$60
$1,237,500
Bianca Lace Up
125
3
55
$70
$1,443,750
Cache
125
4
55
$75
$2,062,500
Cece
125
3
55
$80
$1,650,000
Dakota
125
2
55
$80
$1,100,000
Kasen
125
4
55
$80
$2,200,000
Gila
80
3
45
$90
$972,000
Rachel
80
3
45
$90
$972,000
Carolyn Lace Up
60
2
40
$80
$384,000
Anne Embroidered
60
2
40
$70
$336,000
Jace Embroidered
20
1
40
$110
$88,000
$14,404,875
41
42
2
Doors
Colors
Units Per Style
Ticket
Total Retail
Favorite Flat Gladiator
125
5
55
$110
$2,268,750
Frayed Ringed Toe Loop
125
3
55
$80
$1,100,000
Hawaii Criss Cross
125
2
55
$35
$1,203,125
Thong
125
2
55
$70
$962,500
Hope Laceup
125
2
55
$40
$550,000
Kite
125
2
55
$100
$1,375,000
Platform
80
3
45
$75
$810,000
Wraparound Platform
80
2
45
$95
$684,000
Studded Slide
80
3
45
$68
$734,000
Studded Three Strap
80
2
45
$85
$306,000
Daisy
60
2
40
$48
$230,400
National
60
2
40
$100
$480,000
Vienna
60
2
40
$90
$432,000
Fenella
20
3
40
$60
$144,000
43
$11,280,175
3 Doors
Colors
Units Per Style
Ticket
Total Retail
Espadrille Slide
125
3
55
$100
$2,062,500
Malia
125
5
55
$50
$1,718,750
Sarasi
125
3
55
$110
$2,268,750
Despina
125
3
55
$125
$2,578,125
Cordia
80
1
45
$155
$558,000
Amina
20
1
40
$175
$140,000
$9,326,125
44
Scottsdale Storefront
Scottsdale Store Sales
$223,799
Scottsdale Store Receipts$301,831
45
Steve Madden Ruby Strappy Slide Cece Bianca Laceup Kasen Cache Dakota Top Shop Favorite Gladiator Fray Ringed Toe Loop Hawaii Criss Cross Thong Hope Kite Jeffrey Campbell Sarasi Espadrille Sandal Despina Malia Bed Stu Artemis Soto Free People Harper Torrence Sam Edelman Gemma Gigi
Color
Units
Ticket
Total Retail
3 3 3 4 4 2
65 60 53 50 48 48
$70 $80 $70 $80 $75 $80
$13,650 $14,400 $11,130 $16,000 $14,400 $7,680
5 2 3 2 3 2
66 60 55 50 48 48
$110 $80 $35 $70 $40 $100
$21,780 $9,600 $9,625 $7,000 $5,760 $9,600
3 4 3 3
65 59 48 45
$110 $100 $125 $50
$21,450 $17,700 $18,000 $9,000
3 4
45 36
$125 $125
$16,875 $18,000
3 4
43 36
$128 $78
$16,512 $11,232
5 5
43 36
$100 $60
$21,500 $10,800
Total Retail Sum $301,694
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New York Flagship
47
Flagship Store Sales
$2,461,786
Flagship Store Receipts
$3,320,128
48
49
Steve Madden Gila Ruby Strappy Slide Cece Cache Dakota Carolyn Rachel Bianca Laceup Anne Embroidered Jace Embroidered Kasen Takeaway Top Shop Favorite Gladiator Vienna National Hope Laceup Daisy Fray Ringed Toe Loop Platform Kite Studded Three Strap Fenella Thong Studded Slide Hawaii Criss Cross Wrap Around Platform
Color
Units
Ticket
Total Retail
3 3 3 4 2 2 3 3 2 1 4 3
475 450 440 410 400 380 350 316 250 179 135 130
$90 $70 $80 $75 $80 $80 $90 $70 $70 $110 $80 $60
$128,250 $94,500 $105,600 $123,000 $64,000 $60,800 $94,500 $66,360 $35,000 $19,690 $43,200 $23,400
3 2 2 2 2 2 3 2 2 3 2 3 5 2
515 500 480 450 425 400 390 355 325 290 250 150 130 115
$110 $90 $100 $40 $48 $80 $75 $100 $85 $60 $70 $68 $35 $95
$169,950 $86,400 $96,000 $36,000 $40,800 $64,000 $87,750 $71,000 $55,250 $52,200 $35,000 $30,600 $22,750 $21,850
Jeffrey Campbell Despina Sarasi Amina Malia Espadrille Cordilla Bed Stu Artemis Soto Sam Edelman Tai Gemma Gigi Tory Burch Miller Blossom Estella Jimmy Choo Nickel Veto Badgley Mischka Crystal Embellished
Color
Units
Ticket
Total Retail
3 3 1 5 3 1
515 480 400 300 200 150
$125 $110 $175 $50 $100 $155
$193,125 $158,400 $70,000 $75,000 $60,000 $23,250
4 3
235 175
$125 $125
$88,125 $87,500
3 5 5
325 275 250
$90 $100 $60
$87,750 $137,500 $75,000
5 1 1
250 220 175
$195 $200 $295
$243,750 $44,000 $51,625
1 2
85 79
$575 $850
$48,875 $134,300
1
80
$175
$14,000
Total Retail Sum $3,320,050
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51 Risk Statement
Due to the decline in foot traffic in department stores for 2017, we feel Nordstrom is in a state of risk rather than opportunity. Nordstrom prides itself on quality, variety, and the best possible customer service and therefore does not offer many markdowns. The 2017 consumer is price conscious and is often not willing to spend top dollar for full price and prefers to go to stores with more markdowns. We feel Nordstrom Inc should focus on its Nordstrom Rack storefronts, however take caution as many of its compeittors are now entering the off price retail market. As for the Nordstrom retail segment, we believe Nordstrom should continue to be strategic in opening Nordstrom storefronts.
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NORDSTROM Kelly Murphy Annika Dupree
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Nordstrom Six Month Buying Plan Women’s Shoes
FASM 245 Retail Buying Simulation Professor Michael Cohen Spring 2017