COULD I GET SOME HELP WITH THESE QUESTIONS PLEASE Chapter 14 Case Study: Nordstr
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Question
COULD I GET SOME HELP WITH THESE QUESTIONS PLEASE
Chapter 14 Case Study:
Nordstrom How to Succeed by Selling Just One Shoe
Upscale retailer Nordstrom has been famous for superior customer service for over 100 years. Robert Spector, coauthor of The Nordstrom Way, says his favorite story is of a woman with one leg who jokingly bet a Nordstrom salesperson that he wouldn’t sell her just one shoe. He was more than happy to split up the pair, though, to her surprise, and Nordstrom gained a lifelong customer in the process. “Who knows how many times she’s told that story?” Spector asks. “Do you think that that’s worth the price of a shoe? I do.” This kind of word-of-mouth publicity means that Nordstrom spends much less on traditional advertising than its competitors do. And the stories told by satisfied customers are much more persuasive than an ad in the Sunday paper. Patrick McCarthy, who was the first salesperson to generate $1 million, cites an example of a customer who was traveling and accidentally left his plane tickets in the store. An employee who found them paid for a cab to the airport with her own money so that the customer wouldn’t miss his plane. This, McCarthy says, is an example of “heroic service,” and at Nordstrom they expect nothing less. Industry observer Lior Arussy calls Nordstrom’s business strategy “greed through love.” They have perfected the art of focusing on the right customers and giving them undivided attention. A salesperson will often continue the relationship with a customer for years. They may exchange business cards, set future shopping dates, and call customers when new merchandise comes in. “It’s a heart experience,” says McCarthy, who kept handwritten notes on all 12,000 of his personal customers over the years. “Most companies are head experiences—bean counters are running them. When the heart is running them, it becomes exciting.” Nordstrom is also known for its generous exchange policy. In a familiar story that has been forwarded around the Internet for years, a man claims he was allowed to return snow tires, even though the store never sold auto parts. It may be an urban myth, but it reinforces the company’s reputation for putting customers first. Even though the company loses some money on returns, the staff believes it’s worth it to keep customers coming back. In the first quarter of 2013, Nordstrom had 245 stores. Eric Nordstrom, the company’s president, visits each potential location himself before signing off on it. He says his gut instinct about a location is almost as important as the demographics and statistics they analyze. “Plenty of places look good on paper and we say no.” Even though Nordstrom values the traditions that come with its long history, Erik Nordstrom says that they’re not afraid to evolve with the times. “We see the way people shop changing very dramatically,” he says. The company analyzed barriers between its sales channels and realized that it was limiting sales opportunities. Customers who purchased Nordstrom merchandise online couldn’t return it in the retail stores, for example, and customers who shopped in the stores couldn’t always find the same products online. The company now aims for a seamless shopping experience across all sales channels, whether mail order, online, or in store. The company has also benefited from a new computerized inventory system that gives buyers and salespeople the necessary data to make smarter decisions about what is needed in the stores—and what isn’t. Choosing the right handbags to stock, for example, in the right styles, quantities, and colors, enabled them to sell more items at full price, which in turn improved the bottom line. Eric Nordstrom says that they want a customer’s experience to be “aspirational and upscale, so people feel they are treating themselves.” Therefore, he says, the company refuses to hop on the price-promoting bandwagon. “We don’t rely on promotions, be it one-day sales, coupons, or ‘friends of friends’ sales. We think our regular pricing has to have integrity.” In 2006, when many retailers were struggling, Nordstrom thrived, posting $8.6 billion in sales, a 10.8 percent increase from the year before. Nordstrom has also beaten expectations as it has recovered from the recent downturn with the rest of the retail sector, posting $11.76 billion in 2012, a 12.1 percent increase over 2011. Eric Nordstrom says, “Retailing is not for everybody. It’s a competitive, high-energy business. Every day, you’ve got to open your doors and sell something.” Even if it’s just one shoe.
Questions
1. What type of retailer is Nordstrom? Describe the characteristics it shares with other retailers of this type.
2. How would you describe Nordstrom’s level of service on the continuum from full service to self service? Why? Give an example of a store that would be on the opposite end of the continuum, and explain their differences.
3. Which of the six components of Nordstrom’s retailing mix do you think have been the most important to the company’s success? Why?
4. What are the primary challenges Nordstrom faces in the current retail climate? How has the competition changed in recent years, along with consumer expectations?
Resources Bill Briggs, “The Web Represents Nearly 28% of 2012 Sales Growth for Nordstrom,” Internet Retailer, February 28, 2013, http://www.internetretailer.com/2013/02/28/web-represents-nearly-28-nordstroms-sales-gr owth (Accessed August 13, 2013). “Stores,” Nordstrom, http://phx.corporate-ir.net/phoenix.zhtml?c=93295&p=irol-realestate (Accessed August 13, 2013). Monica Soto Ouchi, “Sharper Focus Helps Nordstrom,” Seattle Times, February 27, 2007, http://seattletimes.nwsource.com/html/businesstechnology/2003590861_nordstrom27.html (Accessed August 13, 2013). “Sticking with the Family Formula,” Women’s Wear Daily, May 22, 2006, www.wwd.com/retail-news/sticking-with-the-family-formula-534920?full=true (Accessed August 13, 2013). Dave DeWitte, “Nordstrom Leader Says Retail Business Is Changing,” TMC News, October 12, 2006, http://www.tmcnet.com/usubmit/2006/10/13/1981611.htm (Accessed August 13, 2013). Monica Soto Ouchi, “Nordstrom Sees a Fashion-Forward Future,” Seattle Times, May 23, 2007, http://www.accessmylibrary.com/article-1G1-163846831/nordstrom-sees-fashion-forward. html (Accessed August 13, 2013). Alexandra DeFelice, “A Century of Customer Love,” CRM Magazine, June 1, 2005, www.destinationcrm.com/Articles/editorial/Magazine-Features/A-century-of-customer-Lo ve-42958.aspx (Accessed August 13, 2013). Joan E. Solsman, “Nordstrom Net up Despite Sales Drop at Outlets,” Wall Street Journal, November 15, 2010, http://online.wsj.com/article/SB10001424052748703326204575616971039595804.html (Accessed August 13, 2013). “Nordstrom Rack to Open First Kansas City Area Store,” Yahoo, January 11, 2011, http://finance.yahoo.com/news/Nordstrom-rack-to-open-First-prnews-2843967071.htm
Explanation / Answer
Solution:-
1.What type of retailer is Nordstrom? Describe the characteristics it shares with other retailers of this type.
Nordstrom is a department store & he have a direct relationship with the customer. Like Each individual store is a buying center that is separate from all the other stores which are all buying centers too. Each store has its own buyer that decides on what merchandise they will keep in stock as well as what specials and promotions the store will use to attract and retain customers. Central management creates broad policies to keep a uniformity among the stores, while the general manager sets up specific store policies. The president, Erik Nordstrom personally goes out to each potential site to sign off on the building plans because he has to approve the final decision on where a new store is to be placed. This is a form of selective distribution and it allows Nordstrom’s to focus on quality and customer service.
2.How would you describe Nordstrom’s level of service on the continuum from full service to self-service? Why? Give an example of a store that would be on the opposite end of the continuum, and explain their differences.
Customer service was a key for Nordstrom with the kind of hard word & dedication that can be seen. It seeks to offer the best shopping experience either online, by mail, or through the store itself. They aim to treat the customer with responsibility and respect. Nordstrom offers alterations from their employees toward the customers. For instance, it provided the option of buying one single shoe instead of a pair. In this way it gained a customer for a lifetime. Additionally, they aim to offer the same product mix online and on the store, and they offer return, or exchange, policies, confirming the company’s reputation of placing customers first. They aim for a word-of-mouth advertising, adding the loyalty characteristic, which guarantees that the customers will keep returning to the store. On the other hand, Ross Stores, an off-price retailer, offers no customer service. Because off-price retailers sell at a 25% or more below the traditional department store prices, there is no return policy. There will not be specialized service, or any adaptation to customer wants. There is large variety of goods; yet, the customer will buy what is available and something on what they can get a good deal on.
3.Which of the six components of Nordstrom’s retailing mix do you think have been the most important to the company’s success? Why?
According to my knowledge & belief, the personnel and presentation have been the most import P’s to the company’s success. Personnel because the company has a strong focus on customer service and selling. They want to make sure that the customer leaves the store with a purchase. Secondly presentation goes hand in hand with personnel because not only does Nordstrom’s want the customer to make a purchase they also want the customer to feel comfortable as they are shopping. Once the product is sold the salespeople are then encouraged to continue to maintain a relationship with this customer to make sure all the needs are met and to inform the customer of and store promotions and news.
4.What are the primary challenges Nordstrom faces in the current retail climate? How has the competition changed in recent years, along with consumer expectations?
The stores that offer good value are competitive faces for Nordstrom. Department stores like Walmart who offer a full service of products from tires to electronics to food. Walmart is trying to become a shopper’s one stop shop for all their needs. Nordstrom has to remind the customer that their store has a greater value when it comes to the sheer quality of clothes. Customer expectations have changed in a way that not only as a great price sought after but so is a great product. A buyer wants to feel like they got a great price for their item but at the same time great quality was put into their product.