Nordstrom will spend $1.2B this year on their most aggressive eCommerce plan yet. This is a 60% increase in capital funding, up from $750M last year.
Nordstrom’s five-step plan for 2015
1. Cut down on eCommerce delivery times
Nordstrom will utilize its third and newest distribution center to reduce delivery time by up to three days. The Pennsylvania location offers two-day delivery, a strategy implemented to triumph over the industry’s increasingly competitive delivery times (especially Amazon’s). The nearly half of Nordstrom customers who live within two-day ground delivery of the facility will receive faster deliveries from eCommerce orders.
2. Build out online assortment
Nordstrom will continue to ramp-up online assortment by building breadth within product categories on Nordstom.com & Rack.com. Over the past 4 years, Nordstrom has tripled their online product offering to remain in line with both direct competition, such as Amazon, and indirect competition, such as Target.
3. Use stores to make online returns
Nordstrom will increase the use of brick & mortar stores to make online returns. A leader in omnichannel retailing, Nordstrom recognized the increase in in-store foot traffic (1M more trips to a Rack store in 2014) from enabling HauteLook (a Nordstrom owned flash site) shoppers to return online purchases in-store.
4. Ramp-up awards program
Nordstrom will ramp-up their existing rewards program, which currently enrolls 4.3M people who account for 40% of last year’s sales. Nordstrom will focus on expanding offers to customers, and recognizes that good technology is key to providing insights into customer behavior for personalizing these offers.
5. Improve in-store technology
Nordstrom will test out smart fitting rooms in a select group of stores, and has already upgraded its POS systems, mobile site, and checkout process. Additionally, the retailer has given sales associates texting tools to remain competitive with Neiman Marcus’s high-touch luxury shopping initiative that was implemented a few years ago: Neiman gave iPhones to sales associates so they could send customers photos of new products and follow up after purchases were made, creating a very personalized experience.
LOOKING AHEAD: Over the next few years, Nordstrom plans to spend $4.3B on eCommerce and new stores to stay on top of changing customer behavior and eliminate competition.
What does this mean for the eCommerce and brick & mortar luxury marketplaces?
Traditional brick & mortar luxury retailers are going digital. According to Bain & Company’s Global Luxury Goods Worldwide Market Study, eCommerce is the fastest-growing channel for luxury retailers (28% growth from 2013 to 2014). Ramping up eCommerce assortments, increasing delivery speed, using eCommerce customers to fuel in-store purchases, using data-driven technology to advance and personalize rewards programs, and improving in-store technology to mimic online shopping behavior are all determinants of an increasingly tech driven marketplace, characterized by unique and personal experiences.
How are luxury marketers responding?
The industry’s most advanced luxury marketers are taking data-driven measures to invest in retaining their existing customer base (the group that generated 40% of Nordstrom’s sales last year). Targeting, rewarding, and automating personalized messages (i.e. product recommendations, refills, thank you’s) to your 1st time, repeat, and best customer segments will increase your acquisition ROI, meanwhile turning 1st time purchasers into evangelists, who power increased sales.
How can you use data-driven technology to drive brand loyalty and increased revenue for your organization? Your complimentary walkthrough of Windsor Circle’s Retention Automation Platform is just a click away.
For more: See the Fortune article