Nordstrom: How to Succeed by Selling One
Questions and Answers for Nordstrom Case Study
Identification of the kind of a retailer that is Nordstrom and characteristics it shares with similar retailers
“Specialty store” may be the best term to describe Nordstrom. The reason why this term fits Nordstrom is that the store has a narrow assortment, offers a high-value service, the stores’ prices are somewhere between moderate and high; and the gross markups for the store are relatively high. A close observation of what analysts and observers think of Nordstrom reveals that this store strategy is one of “greed through love”. This means that the store is always willing to go to whatever extent to please and provide customers with what they want, but this comes at a cost. From observers like Lior Arussy, value comes at a cost, so it is no surprise when Nordstrom’s prices are sad to between moderate and high.
Nordstrom may be unrivaled in its quality of customer service; however, this does not imply that it does not share a number of similarities with other retail stores. Some of the stores that may have close comparison with Nordstrom include, but are not limited to, Neiman Marcus, Taylor’s, Lord, and Saks Fifth Avenue (McCarthy, 2005). A major similarity with all these stores is that it is pricier to shop for home décor and households here than in any other kinds of stores. However, the better part is that all these stores offer unique, durable and high quality merchandise.
Level of Nordstrom’s service on a continuum from self to full service
As a sales person, Patrick McCarthy was able to maintain handwritten notes of about 12000 customers who kept coming back to Nordstrom store. That was then, but currently things have gone full swing. In the present day, the numbers of loyal customers that visit any of the departmental stores that belong to this retailer have gone up more than ten folds. Moreover, the retailer has an online store. After taking these factors into consideration, the company had to switch from full service to self service.
A store that could be different from Nordstrom as far as the issue of service continuum is concerned is Saks Fifth Avenue. The latter concentrates on a small number of customers whom it can afford, or has afforded to maintain personal information. This store acts like casinos that only require a few patrons in order to make a profit, but not thousands who may cost a company more that what it receives from them.
Nordstrom Marketing mix
Durability, uniqueness, quality, service, price, and product are the six components of the marketing mix that Nordstrom, as a company, applies to achieve its objective. This company chooses its products wisely before offering them for sale. As opposed to other stores, like Wal-Mart, which do not value the aspect of durability, this store realizes that this aspect is an important factor keeps customers coming back.
Generally, customers prefer products that are unique. No one would prefer, for example, to adorn jewels that every Tom. Dick and Harry adorn. The bottom line here is that, Nordstrom capitalizes on the fact that people prefer uniqueness, as opposed to commonality (Spector, 2000). Business analysts suggest that Nordstrom targets customers who may be willing to spend a minimum of $200 every time they do their shopping. This is contrary to stores like Kmart and Wal-Mart that target customers who may find it hard to spend more than $10 at a go. In order to attract high income customers, who are in most cases extravagant in their spending, Nordstrom provides high quality products that are in line with the demands of targeted customers.
For more than 100 years, Nordstrom has offered unmatched customer service. This, all along, has formed an important part of the store’s marketing mix. The fifth component of Nordstrom’s marketing mix is price. With price, one thing must be noted, that this store deals mainly not with necessities but with products that one can comfortably categorize as luxuries. A term that can clearly describe the kind of products that the store deals with is “Veblen” goods. Surprisingly, the demand curves for this kind of products are abnormal. As the price increases so does the demand, contrary with what happens with normal goods. Precisely, this means that if the goods were sold at a low price, the demand would decline. Nordstrom understands this business mystery and capitalizes on it by charging high or moderately high prices for its merchandise (Epstein, 2006).
Product serves as the sixth component of Nordstrom’s marketing mix. This company perfectly selects products that are in line with the likes of its customers. The company recognizes that demography is an important aspect that affects its business. Female customers form a significant proportion of the total number of customers who shop at Nordstrom. After weighing options, the company offers in bulk female merchandise while merchandise for others is only provided on a small scale (McCarthy and Robert, 2005).
Challenges facing Nordstrom in the current retail climate
Competition is a major challenge facing Nordstrom and other related retail stores. Bigger stores like Wal-Mart have moved away from being specialty companies to jerks of all trades. At Wal-Mart, a customer is guaranteed to get almost everything under roof. For convenience, customers prefer buying everything, or almost everything they need from one location. This saves time in addition to other things.
Secondly, economic conditions are deteriorating with each passing day, and this means that consumers disposable income has continued to decline. Rational consumers prefer discounted stores, as opposed to specialty stores that charge exorbitant fees. Prices have in the recent past become a major factor that determines where customers do their shopping. Issues of quality, durability and service, which are primary at Nordstrom, have become only secondary factors that may be overlooked.
How competition has changed and consumers expectations
Sometimes back, quality, value and service were guiding principles of all competitors. Today, there are other issues that take centre stage. Prices and promotions, to a great extent determine who wins a customer and who loses one. Similarly, customers also expect that their favorite stores reciprocate by offering what they need at a discounted price. This factor has played a great role in ensuring that Wal-Mart, Kmart, Target and others stay afloat even at times when the world faces financial crisis. Aggressive promotions and advertisements have also changed the way competitors play their cards. Nordstrom, as a player in the retail industry, understands this pretty well. In the past, the store would rely on word of mouth spread by satisfied customers, but today the store advertises in magazines.