Nordstrom was incorporated in the state of Washington in 1946 as the successor to a retail shoe business that started in 1901. It is one of the nation’s leading fashion specialty retailers, with 171 U.S. stores located in 28 states as of March 20, 2009. The west coast and east coast are the area in which it has the largest presence. Nordstrom is comprised of four segments: Retail Stores, Direct, Credit, and Other.
2008 was a challenging year for Nordstrome and the company made some good progress despite stiff competition and negative market forces but the companies progress was able to progress in both the store sales and online. In 2007, the top-line sales of the company had softened causing inventories to outpace the company’s sales. Facing this challenge, the company resolved to take some steps to get the inventories and the expenses aligned with the project sales. This involved realigning inventories and reducing both the expenses and the capital expenditures which enabled the company to make a quick recovery from the crisis. However the overall results were not satisfactory although the company’s management expressed a brighter future ahead. The company announced that it will vigorously uphold for key objectives which are;
- To strive to improve the customer service experience.
- To continue to evolve the merchandise offering to meet the needs of its customers
- To deepen personal relationships with its customer through the multi-channel shopping Nordstrom Fashion Rewards program.
- Manage the business effectively through an unpredictable environment and emerge stronger.
The company’s most important strategy is customer service. This is because deepening customer relationships is a simple notion that can be hard to master and there is literally no finish-line-it can always strive to improve. For the company to be effective, it is important that its customers are served properly. The relationship its salespeople have with each customer is basically the heart of its customer service. One of the goals is also to give its salespeople the tools and freedom to develop those relationships. One such vehicle is the Personal Book, a dynamic tool at the register that allows sales-people to build and strengthen customer relationships. Among its many features, Personal Book enables salespeople to focus on customer preferences, so they can be more proactive in serving each customer and driving their business.
Secondly, the company’s merchants continue to adjust inventory levels with a keen eye to brands and price points the customers want. This is because the company knows that customers still desire quality and newness in fashion, it is more deliberate with their purchases and Nordstrome places a higher priority on value. Its longstanding tradition of ensuring that there is integrity in its pricing, everyday of the year is especially relevant today. It takes pride of its buyer’s efforts to seek out the best values in the marketplace and to continue to pursue new trends and hot items.
As part of its marketing strategy, the company has targeted the credit card service and devised a strategy because credit card operations drive sales in the stores, allow its stores to avoid third-party transaction fees and generate additional revenues by extending credit. Our credit card revenue is subject to changes in interest rates which fluctuate based on market conditions. The market conditions influencing interest rates are based on economic factors that are beyond the company’s control but are not limited to recession, inflation, deflation, consumer, tax rates and policy, unemployment trends and other factors that influence consumer confidence. The ability to extend credit to its customers and to collect payments from them depends on many factors including compliance with applicable laws and regulations and many of which may change from time to time. Changes in credit card use, payment patterns and default rates have resulted from a variety of economic, legal, social and other factors that we cannot be controlled or predicted with certainty. To extend credit and collect payments have negatively affected its results and may continue in the future.
The other point is to improve the management of the company in tough times and as a result, the company plans to reduce major store remodels from six per year to two and has postponed several new store openings. Maintenance capital has however not been reduced because it is important for the company to maintain its look, the feel and the experience of its stores. The main forecast for the year the following year were that its actions related to inventory, expenses, working capital and capital expenditures will allow the company to generate positive free cash flow.
The company does not own or operate any manufacturing facilities and depend on independent third-parties to manufacture its merchandise. operational difficulties are thus sometimes with its vendors, in such factors as the availability of production capacity, errors in meeting merchandise specifications, insufficient quality control, failures to meet production deadlines or increases in manufacturing costs as a result, it depends on the orderly operation of the receiving and distribution process, which depends, in turn, on adherence to shipping schedules and effective management of its six distribution centers and its Direct fulfillment center. However, the management believes that it’s receiving and distribution process is efficient.
In conclusion, its strategies seem to have paid off because of the increase in the online sales section and but needs to improve on efficiency in meeting client demands to improve its sales.