Nordstrom Business Decisions lately

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  1. Not sure where this goes. Was looking for a Business/Stocks forum but didn't really see it. Maybe the mods can move this for me.

    Just wondering about some of Nordy's business decisions lately. The Kardashian line makes me feel like I'm shopping at Target.
    They no longer affiliate with Rapid Rewards, where I earn free flights shopping through there, and they're down to 2% back from 6-8% on the popular rebate site.
    Their stocks are pretty good still, took a hit from a high last year.
    Well, I was just wondering about some of their recent decisions. They seem to be doing pretty good, i.e., main stores are stable and the Rack is expanding nationwide. So I guess they are doing OK. I don't shop there AS much, but still grab a few things from time to time that other stores don't carry.
     
  2. I think the general trend these days is that people are no longer looking to spend on regular price and regular stores and while some people were always discount shoppers, I think the expansion of these rack stores drives the point home on a larger scale. The perception of a greater deal when you're shopping at a rack, or outlet stores, or what have you is a "feel good" steal and you may feel as if a sale at those places is a sale on top of a sale.

    Personally I find it hard to shop at Nordstrom, ours doesn't have very high end bags and shoes, (no Louboutins or Chanel and they don't see those on their site either so no hunting during semiannual sales for me) and the sales on the shoes are the exact same styles and prices as their rack year round. Also, I have found a vince camuto shoe there for $70 bucks that I found at Dillards on their 40% off of already 65% off sale at the price of $23 bucks. So if you are the ultimate deal hunter, their sales to you might be the price you're will the pay on the reg and their reg prices are meh.

    The Kardashian thing gives cause for me to give Nordies the side eye though. hahaha. "Celebrity" endorsed lines most of the time give off the feel of sell sell sell (lets tag a name on this so people will flock brainlessly) and less eye for individual fashion and style

    Besides Nordies, look at Kate Spade and MK. Outlets, Marshalls, etc. At some point, these companies which have factory manufactured goods will render their original stores weak as people will flock to the discount places and outlets that have 40% off with additional 20% off deals all the time. Quality may not be the same in factory items.... but for those who are buying partly for the shiny glossy name and the signature style of the wallet, bag, item, this may not be a deal killer.
     
  3. btw I LOVE Target, and am probably literally supporting the one by me by spending on stuff i absolutely don't need. and it would have been awesome to still have that Rapid Rewards stuff because I just got into that!!
     
  4. Here's a good article that answers some questions!

    http://www.bloomberg.com/gadfly/articles/2016-03-09/nordstrom-s-profits-zapped-by-online-sales?cmpid=yhoo.headline

    Mar 9, 2016 8:44 AM HST


    The Internet Ate Nordstrom's Profits
    By Shelly Banjo


    Nordstrom has been having a rough go of it lately. The luxury retailer's shares have fallen 30 percent in the past year. After its fourth-quarter earnings missed analyst estimates last month, the company said it didn't expect a pretty year ahead, surprising investors who were expecting to see the company book more profits.

    On Wednesday, CFO Mike Koppel explained what's hurting the bottom line. And what he had to say, shrouded in a bit of economic theory, actually holds some pretty big implications for the entire retail industry as retailers shift from running fleets of brick-and-mortar stores to also selling their goods online.

    He explained that the "old model" -- big physical stores located mostly in malls -- came with high fixed costs, but high leverage. In other words, you had to pour a lot of money into literal bricks and mortar to build stores and train staff, but once your sales reached a sort of break-even point, all the rest was gravy. In essence, the money from a banner sales year could flow straight down to the bottom line once those initial costs were paid for. And that became pretty easy to anticipate and plan against. Enter the Internet, where the promise of high profits came from the theory that a retailer could sell stuff without having to pay for the overhead expenses of operating locations and hiring lots of labor. Not exactly, said Koppel. Indeed, online sales came with low fixed costs, but the price tag was high variable costs. Meaning that the more Nordstrom sells online, the more it has to shell out to pick, pack, and deliver those goods. And right now, "business has been flattening in malls and growing in e-commerce, and so the two strong trends are impacting operating margins," Koppel told analysts Wednesday at the UBS Consumer Conference.

    Nordstrom's capital spending peaked in 2015 and will taper off soon, he said. But the company has faced additional cost pressures as its lower-margin, off-price Nordstrom Rack business grows. After it launched a separate website for Nordstrom Rack, it quickly saw customers shift some purchases online. Nordstrom has also been more promotional than usual as it tries to compete with competitors including Amazon.com, which Koppel estimates is already running a $10 billion apparel business.

    Nordstrom isn't alone -- retailers such as Michael Kors have said that e-commerce isn't as profitable as business at physical stores. And Koppel made a plea Wednesday to "anyone out there" who has figured it out, because "we have a lot of work to do." But he also made clear the company isn't backing away from e-commerce. And as the business model changes, so will the company. Nordstrom now expects online sales to make up 30 percent of its business by 2020, up from 8 percent in 2010. The good news is that customers who shop both online and in stores spend three to four times as much at Nordstrom than those who shop just one channel.


    This column does not necessarily reflect the opinion of Bloomberg LP and its owners.To contact the author of this story:
    Shelly Banjo in New York at sbanjo@bloomberg.net
    To contact the editor responsible for this story:
    Mark Gongloff at mgongloff1@bloomberg.net
     
  5. My friend was shocked a few years back when I told her Coach outlet stuff was all MADE for the outlet. Literally less than 10 items in the outlet might come from the original store. Talbots outlet, probably nameless others, all make cheaper lines specifically for their outlets.

    :lol:
     
  6. Shocking! I thought eTail/e-comm was more profitable than this, although the transition phase may be explaining some of this (?).

    And MK stating just flat out the e-comm isn't as profitable: Shocked, shocked, shocked.
     
  7. I heard once that with online sales, about half is returned.
     
  8. It's funny but to me, Nordstrom doesn't stand out like Saks, Neiman Marcus, or even Barney's as a "luxury" store. Maybe because there are a lot of brands you can't find at Nordstrom that you can find at Saks/NM, and also, it's hard to find those luxury brands on their website too.

    Also, Nordstrom Racks seem to be far more pervasive these days as well, we have one in Boston proper, but no Nordstrom. And the Rack store (for me) is mostly miss, rather than hit. Sometimes we'll get some luxury goods or great steals, but it's mostly just workout clothes and items you'd find cheaper at a TJ Maxx or Marshall's...
     
  9. This is such an interesting thread as my mom and I talk about this often. In the 80s, Nordstrom (at least in the area where I grew up) was a status symbol known for more affluent shoppers and higher end brands. About 15 years ago, I pivoted away from nordstoms in favor of neimans, Saks or boutiques. The quality of brands at nordstroms feels closer to Target than I would like to think and I am okay with I change of strategy if their prices were comparable, but they are not. I can't tell you the last time I bought from Nordstrom.
     
  10. Very interesting thread! Thanks for starting it. I noticed recently too, that Nordstrom is no longer part of some of my favorite shopping portals. I used to earn airline miles but no more. This makes me wonder if a modification to their return policy could be coming? It is what sets them apart but it has to cost them.
     
  11. This makes sense as you can't try it on. I will often order two sizes of something online and return the one that doesn't work, or return both!
     
  12. Nordstrom recently switched banks and quietly did away with the 6 months no interest that was automatically used whenever you purchased a few luxury brands at a certain $. I noticed it in Jan when I went to buy a Chanel bag. Nordstrom didn't so much as mention it-poof it was gone. They tell me it's because they switched banks.

    I've written a few complaints as I like Nordstrom and now they aren't competitive at all with the other dept stores who all offer payment/no interest. My Sa's think Nordstrom is focusing on the Rack stores.
     
  13. That seems to make sense as with all of these clear the rack sales and constant new shipment. And with another way to sell old season items/ purge their inventory at the stores, just drop it off at the rack stores.
     

  14. +1
     
  15. I never feel like I'm getting a bargain at full line Nordstrom. The only thing it's great for is the return policy, but other than that I would rather take my chances at Dillards (as someone mentioned before, you can get bargains for the same exact item). One thing I do like about Nordstrom however is that they do make good quality house branded items, e.g. men's shirts or women's accessories.
     
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