Identify the type of retailer that Nordstrom’s is classified as. Describe the characteristics it shares with other retailers of this type.
Nordstrom is a department store chain selling shoes, clothing, accessories, handbags, jewelry, cosmetics, fragrances, and home furnishings (Surhone, Timpledon, & Marsekan, 2010). Retailers are classified by forms such as ownership, independence, part of a chain, or a franchisee outlet. Nordstrom is a chain store owned and operated by a single organization. The home office of the chain is in charge of administrative tasks and procurement of merchandise sold in the stores (Lamb, Hair, & McDaniel, 2011). Department store of this type is generally characterized by moderately high to the high, broad assortment of products, moderate to high prices, and moderate to high gross margin (p 434). However, the company claims in its Annual report for 2010 that theirs is a specialty retail store which is generally characterized by a high level of service, narrow product assortment, moderate to high price, and high gross margin. The latter may be more appropriate as their assortment of products is limited to shoes, clothing, accessories, handbags, jewelry, cosmetics, fragrances, and home furnishings. But for this feature of a narrow assortment of products, there are no many differences in other characteristics. It may be relevant to state that the Annual Report states that out of their 207 stores located in 28 states as of March 18, 2011, 115 are full-line stores, 89 are off-price Nordstrom Rack stores, 2 boutiques, and 1 last-chance clearance stores. Hence classification of their business as either Department Stores or Specialty retail stores may not be entirely correct as per the textbook characteristics of a particular type of retail stores. However, as per the company’s annual report, Nordstrom can be classified as specialty retail stores since more than 50 % of their outlets are full-line stores (NordstromInc, 2010).
Describe Nordstrom’s level of service on the continuum from full service to self-service. Give an example of a store that would be on the opposite end of the continuum and explain their differences.
Full-service stores are the ones that carry specialty goods where our customers expect to be “waited-on”. As these types of stores render more service, they incur more operational costs. As such, the costs are passed on to customers resulting in higher prices to customers. On the other hand, self-service signifies customers’ locating, comparing, and selecting goods on their own when they visit to purchase. (Armstrong & Gary, 2007). Nordstrom started as an upscale retailer and the history of the company suggests that the founder of the company aimed at the highest possible service for a hundred percent customer satisfaction as he did not hesitate to sell a single shoe instead of a pair of shoes when customer revealed she had only one leg. In another instance, Patrick McCarthy, the first salesperson to achieve $1 million in sales, went all the way to the airport by hiring a taxi at his cost to handover plane tickets to the customer who had left behind them at the store. The above two instances are the extreme cases of full service which strictly speaking amounts to waiting upon the customer and help him select his goods and be with him until the customer leaves the stores.
Nordstrom’s Rack stores started in 1975 are meant for self-service so that the retailer can sell at 50 % to 60 % less than original prices at the full-line stores. The rack stores’ merchandise comes from their Nordstrom stores or Nordstrom.com without any compromise in quality, value, selection, and service (NordstromRackFacts, n.d.). The Company’s continuum from full service to self-service must be with the view to serve customers according to their aspirations. As for the continuum from self-service to full service, not all customers prefer to locate, select, and compare themselves. Self-checkout using the barcode themselves is yet another hassle. Customers do not want to be caught shop-lifting unwittingly. They consider it safe to buy from full-service where they get assistance and expect to wait above at an extra cost. Ignoring this particular segment of customers amounts to lost sales, lost opportunity to build brand image and customer loyalty. A factory outlet may be an example of a store at the opposite end of the level of service continuum by resorting to the self-service method. “Target” which is a mass retailer, offers self-service to show their customers that what they need is on the shelves and that there is an efficient self-checkout process (AnonymousAuthor, n.d.).
Analyze the six components of Nordstrom’s retailing mix to determine which have been the most important to the company’s success. Provide a detailed rationale.
Nordstrom’s retail mix consists of variables such as location, merchandise, communication, price, services, physical attributes, and personnel. Only upon the proper application of all these components in a retailing mix, can a company be successful. Location: Nordstrom has 115 full-line stores, 86 rack stores, 2 boutiques, and 1 final clearance store spread across 28 locations in the country. They do have upscale restaurants and have a retail-bank in Arizona. Apart from their physical locations, they have a catalog division, an on-line business to facilitate purchases by customers by mail, telephone, or online. Merchandise: Next in the mix is merchandise to suit the customers’ individual needs. Thus, Nordstrom offers higher-end brand clothing, shoes, accessories, handbags, jewelry, cosmetics, fragrances, and home furnishings. The product mix has been so designed that the customer who buys shoes is likely to be looking for the rest of the range or some of it to buy as they are inter-related. Communication: As communication is an essential part of the marketing strategy, Nordstrom uses it to inform the customer about their products and services. The company has toll-free numbers and a “contact us” section on its website. Pricing strategy: Company sells products at premium prices without any inhibition of losing sales since they want to highlight the value of the products to their customers and that the prices are commensurate with the services that come along with full-service stores. (Spector & McCarthy, 2005).
Discuss the primary challenges Nordstrom faces in the current retail climate.
The company faces the challenges of foreign competition, an ever-changing market, and maintenance of a competitive image concerning the price. In the wake downturn in the economy, the company needs to structure its pricing more competitively and also have to open more Rack Stores for off-price products.
Discuss how the competition has changed in recent years, along with consumer expectations.
Retailing has evolved from store purchasing to convenient shopping using the methods of catalog sales and online sales. The customers expect service throughout the lifetime i.e before, during, and after the sale.
References
anonymous author. (n.d.). Web.
Armstrong, & Gary, A. (2007). Marketing: An Introduction (7 ed.). New Delhi, India: Pearson Education, Inc.
Lamb, C. W., Hair, J. F., & McDaniel, C. (2011). Essentials of Marketing. Mason, OH: Cengage Learning.
NordstromInc. (2010). Annual Report 2010. Washington: Nordstrom, Inc.
NordstromRackFacts. (n.d.). Nordstrom Rack Facts. Web.
Spector, R., & McCarthy, P. (2005). The Nordstrom way to customer service excellence: a handbook for implementing great service in your organization. New Jersey: John Wiley & Sons.
Surhone, L. M., Timpledon, M. T., & Marsekan, S. F. (2010). Nordstrom. VDM Verlag: Dr Mueller e.K.