Nordstrom’s Focus on Click-and-Collect is Driving Digital Growth

Need to Know

• Digital comprised 35% of Nordstrom’s sales for Q4 2019, up from 33%.
• Nordstrom’s most profitable transaction is Order Pickup, which doubles customer spend over time and grew 100% in Q4 2019.
• In markets where Nordstrom Local launched, Order Pickup grew a whopping 160%, and 75% of shoppers who pick up an online order in-store end up buying something else during that trip.
• Nordstrom customers spend between 4 to 11 times more than average on digital sales than on physical.
• 51% of Nordstrom’s customers are between 18-34, and more than 40% earn a six-figure income, positioning the department store well for e-commerce sales.
• Erik Nordstrom is now the sole CEO after the sudden passing of his brother and co-CEO Blake Nordstrom in 2019.

Analysis

Last year was difficult for many retailers who were seen shuttering stores (a record 9,300 closures throughout 2019) across the continent. While Nordstrom was hit, it’s persevering due to its market strategy that focuses on boosting e-commerce sales.

Nordstrom’s made several smart moves to position itself as a luxury department store for millennial shoppers with six-figure incomes. By adding valuable in-store entertainment and offers like food, beverages, beauty salons, botox treatments, fashion collaborations and more, in their biggest ten markets, Nordstrom keeps its high-spending customers in their stores longer. 

In fact, shoppers at these “Nordstrom Local” stores spend 2.5x more than the average shopper, and sales in these markets account for 60% of Nordstrom’s total sales.

Another thing Nordstrom customers love? Convenience, speed, sales, and online shopping. The retailer’s Buy Online, Pick Up In-Store offering is Nordstrom’s most profitable transaction and grew 100% in Q4 2019. Not only that, but it doubles customer spend over time considering 75% of customers buy something else when they go to pick up their orders.

Newly-named sole CEO Erik Nordstrom said, “Our established and growing digital business now makes up one-third of sales. Roughly 30% of our customers are shopping across more than one of these touchpoints. And as a result of this engagement, we know these customers spend four to 11 times more on average.”

By leveraging in-store inventory to increase pick-up speed and the ease of online shopping, Nordstrom is seeing a positive growth trajectory for its e-commerce business, which must be the envy of other retailers. 

Part brick-and-mortar strategy, part e-commerce rollout, the omnichannel focus that Nordstrom has commenced on is a necessary revitalization that comes after the Nordstrom family failed to take the company private in 2018. Unfortunately, while sales in Q4 of $4.44 billion improved from a year ago, profits still fell. The retailer is hoping a new focus on local stores and its digital presence will continue to right the ship.

“We will continue to invest in digital capabilities to improve both the customer experience and operational efficiencies, with more than half of our plan allocated to technology and supply chain.”