At Nordstrom, innovation is never out of style. The upscale fashion apparel chain founded in 1901 wins plaudits for using cutting-edge 21st century technology to offer shoppers convenience—and to stay competitive as retail migrates online.
Selected by U.S. News as one of America's Most Connected Companies for its use of technology to expand shopping options, Nordstrom has been aggressive about snapping up promising Internet ventures to diversify its business and experiment with new retail platforms. Its social media strategy extends well beyond Facebook, Twitter, and YouTube to an array of buzz-generating fashion and photo-sharing sites. Recognizing that its customers always want to stay connected, the company introduced complimentary Wi-Fi in its high-end department stores in 2010.
To improve customer engagement at its 227 department and discount stores in 31 states, Nordstrom joins a growing list of retailers that are turning to Apple. Late last year, it distributed 6,000 modified iTouch devices to sales staff that can ring up purchases on the spot, a process called "mobile checkout," and track inventory. Sales personnel also use iPads to assist customers with the selection of everything from wedding wardrobes to cosmetics to business suits.
"They are constantly pushing the envelope," says Patty Edwards, principal and chief investment officer for Trutina Financial and a leading retail expert. She praised the chain for offering a robust online shopping experience and extending mobile checkout to its Nordstrom Rack discount stores. Leslie Hand, research director for IDC Retail Insights, characterizes Nordstrom as "fully committed" to seamless engagement with customers, whether in store or via the Web.
The Seattle-based chain was quick to recognize that customers want more choices and flexibility online. Four years ago, it offered shoppers the option to retrieve their online purchases at its stores. With customers gravitating to the Web, Nordstrom shifted most of its inventory online years ago in an effort to avoid missed sales opportunities.
The company's tech strategy already is proving beneficial to its bottom line. In 2011, Nordstrom's Internet sales grew by 30 percent, according to data provided by the retailer. During a November 10 earnings call, Nordstrom President Blake Nordstrom said the retailer plans to increase spending on e-commerce from $100 million in 2011 to $140 million this year—its highest such expenditure ever.
"A lot of this technology is changing [customer] expectations around speed, around convenience, and we are working really hard to keep up with that," says Jamie Nordstrom, president of Nordstrom Direct, the company's online division. "The retailers that deliver on those customers' expectations are the ones that are going to get their business," says Nordstrom, whose great-grandfather founded the clothier more than a century ago.
To stay current about the latest innovations, the big-box chain regularly consults with technologists and venture capitalists "as a normal course of business," Nordstrom says, "because we want to know what's coming around the corner." It also keeps a lookout for new retail ventures that are "really engaging with customers," he says.
In April, Nordstrom teamed with Silicon Valley venture capital firms to invest $16.4 million in Bonobos, a fast-growing online menswear site. Last year, it acquired HauteLook, a membership-based site that specializes in "flash sales" lasting a few days that offer deep discounts on designer brands. Also in 2011, Nordstrom invested in Sole Society, a "shoe club" that markets footwear, and a year earlier it invested in Peek, an e-tailer that sells clothes for kids up to age 10.