Service with a smile is a part of Nordstrom's corporate culture.
One of the nation's largest upscale apparel and shoe retailers,
Nordstrom sells clothes, shoes, and accessories through more than
115 Nordstrom department stores and more than 215 off-price outlet
stores (Nordstrom Rack) in nearly 40 states and online. It also
operates a pair of Jeffrey luxury boutiques, a "Last Chance"
clearance store, online private sale site HauteLook, and
personalized clothing service Trunk Club. With its easy-return
policy and touches such as thank-you notes from employees,
Nordstrom has earned a reputation for top-notch customer service.
Nordstrom family members, who own about 25% of the retailer's
stock, closely supervise the chain.
The family-run company operates two business segments: retail
and credit. The Retail segment accounts for the vast majority (98%)
of Nordstrom's revenue and includes sales from its full-line and
Nordstrom Rack stores as well as from its Nordstrom.com,
nordstromrack.com, Hautelook.com, Trunk Club.com, Jeffrey, and its
Nordstrom's Credit segment (2% of sales) owns a federal savings
bank, Nordstrom fsb, through which it offers a private-label credit
card, two co-branded Nordstrom VISA cards, and a debit card for
Nordstrom purchases. The cards also include a loyalty program that
rewards shoppers depending on their spending levels.
Nordstrom's full-line stores generate 50% of its net sales,
while its Nordstrom Rack stores contributed roughly 25%. Its
fast-growing Nordstrom.com channel generated 15% of net sales,
while its Nordstromrack.com and Hautelook channels combined made up
By product, the company generates over 30% of its net sales from
women's apparel, while shoe sales make up nearly 25%. The rest of
its net sales came from men's apparel (15%), women's accessories
(10%), cosmetics (10%), kid's apparel , and other items (5%
Nordstrom has some 345 full-line and Nordstrom Rack stores in 40
US states, as well as three Nordstrom full-line stores in Canada.
California is the retailer's largest market with over 80 full-line
and Rack stores. Other major markets for the chain include Florida,
Texas, and Washington.
Nordstrom shrugged off industry-wide malaise to record 2%
revenue growth in fiscal 2017. Sales of $14.8 billion were a result
of innovative approaches to customer service and store openings.
The company re-imagined the role of the department store in the
internet age, driving foot traffic through a program of exclusive
pop-up stores and new retail concepts. While comparable store sales
still fell (by less than 1%), the figure compares favorably to its
peers such as JCPenney and Macy's. Off-price sales through
Nordstrom Rack increased 11% due to 21 store openings. Sales at the
company's credit card business softened slightly.
Net income fell 41% to $354 million due to higher cost of sales
and SGA expenses. Nordstrom ramped up marketing spend and invested
in technology and supply chain to open up new digital
Cash from operating activities fell 33% to $1.6 billion due to a
particularly high fiscal 2016 after it sold its credit card
receivables. When excluded, cash increased due to improvements in
Department stores across the US are having a hard time of it
having found themselves somewhat outdated as consumers gravitate
increasingly towards the internet and small, brand-specific stores.
Revenue at stalwarts such as JCPenney and Macy's are eroding, but
116-year-old Nordstrom is proving more adaptable than most.
New ideas such as short-term pop-up shops and link-ups with
emerging designers promote a discovery dynamic and give millennials
-- the most department store resistant consumer group -- social
media currency and thus reason to visit stores.
It has also found new ways to leverage online, such as allowing
customers to pre-select clothing and book a changing room to try
them on in. Customers can also pay by text.
Nordstrom also continually expands and refreshes its store base.
In 2016 it opened 27 new stores (and closed one), of which 21 were
Nordstrom Rack discount stores. Indeed, the company is pumping up
Nordstrom Rack at a fast pace to entice the less affluent
In October 2015, the company sold off a substantial majority of
its US Visa and private label credit card portfolio to TD Bank
Group, and entered into an agreement for the bank to be the
exclusive issuer of Nordstrom's consumer credit cards.