From the stockroom to the boardroom, Blake Nordstrom has spent nearly his entire life devoted to the success of his family’s 115-year-old, Seattle-based business.
On March 11, the first-time visitor to Aggieland presented the 2015 keynote at the M.B. Zale Visionary Merchant Lecture Series, honoring innovation and the advancement of retail in the name of the M.B. and Edna Zale Foundation and hosted by the Center for Retailing Studies (CRS).
Venkatesh Shankar, the CRS’ research director, led a question-and-answer session in which Nordstrom detailed the company’s keys to success, promise and outlook for growth, and career advice for a full house in Mays Business School’s Ray Auditorium.
Since 1901, the Fortune 500 Company has set its sights on being a forward-thinking retail business and has received numerous awards and recognition for its contributions to the industry. However, it wasn’t until the 1950s that Nordstrom, Inc. expanded beyond shoe sales and began the fast track toward its current position as a leader in fashionable apparel.
In 2014, Nordstrom named Texas A&M University a core partner school for recruitment in stores, headquarters roles and increasingly tech-savvy hires.
Nordstrom said he was attracted to visit Texas A&M by its sense of community, reputation and “the key ingredient for our business [of] people – talent.”
When he spoke, Nordstrom quickly dove into sharing the company’s business strategy by emphasizing the importance of paying attention to customers. “We live in an age where we have immediate access to things, especially at our fingertips, concerning fashion, product, price and availability,” he said.
Nordstrom provided an illustration of a four-legged chair to explain the company’s composition, which has created a launch pad for success and growth. He identified:
- 1. Full-line Nordstrom stores: Posting $7.7 billion in sales, Nordstrom’s brick-and-mortar sites make up 60 percent of the business. Although there is a large investment nationwide, the company has experienced multiple challenges from housing their stores in mall-based environments.
- eCommerce and online sales: This is the fastest-growing area of business for the company.
- Nordstrom Rack stores: Attracting the younger, aspirational generation, the Rack is an expanding channel for Nordstrom. The off-price model targets an entirely new demographic and method to gaining new customers and paving way for new merchandising in full-line stores.
- On-line off-price: As Nordstrom said, it’s all about acquisition “in the name of speed.” By acquiring flash sale site HauteLook in 2011, the company can compete with Amazon, offering dynamic price strategy online, increasing momentum and sales, something that cannot be done quickly in-store.
The “multi-channel” chair, combined with Nordstrom’s exceptional and unique approach to customer service, creates a seamless environment for the company that cannot be replicated. When companies follow the inverted pyramid and place the customer on top and senior executives on the bottom, “When we think about what [they] value the most, it gives us the most clarity of how we should focus our time, energy and money where the business is going,” Nordstrom said.
Death of the mall
As Nordstrom mentioned, malls pose a unique challenge but also provide opportunity for looking outside the confinements of being in-store. With the increase in ecommerce, retailers, including Nordstrom, are sensitive to a third-year decline in foot traffic in malls across America. The company has had to identify, expand and take more risks, because “if you don’t take [them], you just add age to yourself as a retailer.”
Although Amazon was identified as one of the top competitors for the company, Nordstrom was quick to commend the online giant as a leader in expedited decision making and “laser focus on the customer,” even when it means taking a financial loss. Especially in Seattle, the two compete for jobs, talent and square feet. Amazon also has infinitely more fulfillment centers than Nordstrom, coming in at around 50 versus Nordstrom’s two, with an additional three on the way.
Nordstrom uses the saying “from service to sales,” because customer-based service influences every aspect that makes the company run successfully, including board members and stakeholders.
The company is working on a number of ways to cater to different audiences and customize service. According to Nordstrom, “If someone wants to spend an hour [in our stores], great, we should be able to do that. But, if they want to get in and get out in five minutes, that’s good service too.”
He also emphasized the importance of his 60,000 team members, saying he hopes each person comes to work highly motivated and knowing they are making a tremendous impact as the face of the company.
This is also true of how the family operates the business. “We have a team approach,” he said, “Everyone leaves our meetings on the same page and because we all work together, our outcome is richer.” In fact, Nordstrom would rather be invisible as to not detract from the company’s mission of people, not person, first.
Maintaining a company culture of treating everyone with value and importance remains at the forefront of Nordstrom, Inc.
Words of wisdom
As a father of two, Nordstrom understands the stresses of transitioning from higher education to the job market. With anywhere from five to eight career changes in a lifetime, he said, it’s important to shift your focus early on to your “experiences [and] how you are in control of the few things you actually own, which are your character, reputation and integrity.” Instead, he advised, ask yourself how those traits can help you open doors.
He also mentioned the importance of having a “truth teller” or mentor with whom you can be open and honest, even in your failures. Often, the biggest learning moments occur during the worst situations and it’s essential for you to be able to put it all into perspective. Having someone else to talk things through can help you do that.
During the final portion of the lecture, Nordstrom touched upon the company’s expansion into Canada and plans for future growth across the United States.
Nordstrom has set some high goals in the next several years, including a goal of $20 billion in sales by 2020 and a new store in New York, opening in late 2018. The 300,000-square-foot store will span seven floors and employ more than 2,000 team members. It will be located in the second-highest building in the city and will overlook Central Park and Columbus Circle.
Nordstrom added, “We don’t really need more stores, but instead need to expand and improve on what we are currently doing.”
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