Brick and mortar retail is a tough business to be in these days. With the ever-growing popularity of online stores like Amazon and eBay, most department stores are struggling to keep up. Why would a customer pay full-blown retail for a shirt they could probably find for pennies-on-the-dollar online? The answer lies in Nordstrom’s multi-channel method of distribution, and Macy’s should take note.
Department store giants like Macy’s, Kohls, and J.C. Penny are looking at a not-so-bright future, with the potential for as many as 1,000 of their stores to turn unprofitable within the next five years. With that grim outlook, stores have to take action to appeal to the new generation of online shoppers, and try to get customers in the store.
Macy’s believes their unique approach to merchandising is their key to success. Macy’s was founded on a unique merchandising strategy. They started in a San Francisco store basement, creating a mecca of fashion trends and home inspiration. The basement mecca’s foundation was set in discounted items where customers could get the hottest new products at bargain prices. Macy’s plans to further implement this foundation of discounted merchandise in their stores today. Macy’s utilizes an omnichannel approach to fill orders, receiving orders online or in store, and fulfilling them from warehouses. But the question is, are they doing enough online to keep the new generation of shoppers interested?
Ask almost anyone under the age of 18 if they have chosen to go to Macy’s in the last six months. The answer will most likely be no, unless they were coerced by mom with the promise of getting some clothes in return. There is a stigma against discount-based department stores for the younger generation; they find them off-putting. On the other hand, ask that same underage shopper if they would shop at Nordstrom (if they could afford it), and the answer would most certainly be yes. So what is Nordstrom doing that Macy’s isn’t?
Nordstrom has always prided themselves on their multichannel distribution center. A Nordstrom associate is always accommodating when trying to find a size or style for a customer, even going to the lengths of contacting another store to order it, and ship it for free to the customer. They make returns easy (sometimes, too easy) and ensure that the shopping experience is entirely enjoyable. This is not a new method of customer service for Nordstrom. They were doing this type of customer service before it was “cool” to try to go the extra mile to help customers. Nordstrom’s multichannel distribution center allows orders to be fulfilled from distribution centers as well as stores, ensuring the customer will receive their order as quickly as possible.
A full price online store with free shipping, high resolution pictures, and detailed descriptions helps boost Nordstrom’s sales as well. If a customer is dissatisfied with the product, they return it to the store, and more often than not, the return becomes an exchange. Customers are not afraid to go into Nordstrom to return an online purchase because they know they will get great service.
While Nordstrom is considered “high-end” retail, discount stores are another aspect of their empire that helps to further their growth. The Rack (Nordstrom’s discount store) not only acts as a dumping ground for last season’s merchandise; it is a beacon for trendy bargain hunters. The Rack has seen tremendous success in 2013, opening 22 stores, with another 25 stores on the way. Separating The Rack from Nordstrom keeps Nordstrom stores on-trend, clean, and high-end; but also allows Nordstrom to profit from last-season’s trends.
So, what is the key take-away for Macy’s? Despite their best efforts to merchandise, it is important to maintain an up-to-date online presence that is easy for new generations to navigate. Also, think about offering free shipping to customers. And, of course, don’t forget customer service! Just think…WWND: what would Nordstrom do?