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Nordstrom has added a new tool to its well-regarded customer service efforts: a seamless connection between the company's online and offline inventory. According to The New York Times:

"The change works this way: Say that a shopper was looking at a blue Marc Jacobs handbag at Nordstrom.com. She could see where it was available at nearby stores, and reserve it for pickup the same day."

It may seem like a no-brainer to allow customers to purchase any item sold by a single retailer. But the unusual thing about this story is that many traditional retailers aren't already doing it. 

According to The Times:

"What Nordstrom did on its Web site — displaying stock from both the Web warehouse and its stores all at once, was unusual. And that, said Jamie Nordstrom, president of Nordstrom Direct, drove 'some pretty meaningful results.'

"In fact, Nordstrom, based in Seattle, has been the department store with one of the best improvements in same-store sales over the last year, when its overall sales reached $8.26 billion. While it may not seem revolutionary, a melding of Web site and store is surprisingly rare in the retailing world."

Since making this change almost a year ago, Nordstrom's same-store sales have outperformed the department store average, with an average of 8% same-store sales increase according to Thompson Reuters. In the 11 months before the shift, there was an average decrease of 11.9%.

Combining its online and offline warehouses has certainly increased Nordstrom's sales rates. Beyond that, it means more items are sold at full price. An online shopper may want a certain bag while browsing online in California, while in Michigan the same bag could waste away on the shelf until it eventually goes on sale. By giving all Nordstrom customers access to the item, chances are it will sell faster — and for more money.

This approach may seem like grabbing low-hanging fruit, but for many traditional retailers, it's easier said than done. Retailers like the Gap and J.Crew work hard to make sure customers can return items purchased online in a store, or order out-of-stock items online with no shipping when they're on site. Yet in the strange ways e-commerce has developed, many retailers have separate warehouses for online and offline items. Connecting inventory digitally can be an expensive, complicated process.

In the long run, it's probably worth it. Mr. Nordstrom tells The Times that on average, multichannel shoppers spend four times as much as a one-source shopper.

And once a customer comes into a store to look at a pre-purchased or viewed item, s/he is more likely to look at — and purchase — other things as well. And there are a few more incentives for retailers hesitant to fully connect online and offline. According to The Times:

"In September 2009, the company wove in individual stores’ inventory to the Web site, so that essentially all of the stores were also acting as warehouses for online.

Results were immediate. The percentage of customers who bought merchandise after searching for an item on the site doubled on the first day, and has stayed there."

Meghan Keane

Published 25 August, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Comments (1)

Brett Relander

Brett Relander, Founder & President at Tactical Marketing Labs

This is exactly the move all major retailers should be taking. Not only is it more attractive to consumers, but it allows for a operational cost reduction and streamlining of the sales process. Convenience is the name of the game for consumers and Nordstrom's has figured out that it's great for business as well. Brett Relander http://TacticalMarketingLabs.com @BrettRelander

about 6 years ago

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