The retail sector has perhaps suffered the most over the years, as it constantly struggles to adjust to what is current, pertinent, and efficient in delivering customers the products and services they want. A focus on how things look as opposed to what they do for the customer is a very shortsighted view of the relationship between retailer and consumer. Nordstrom (JWN), one of the very few companies in continuous operation since 1901 and with the original family owner still involved in the business, is perhaps the first retailer to understand this, as evident in its decision to open Nordstrom Local, its first store that won’t sell clothes.
In retail, the container is often mistaken for the content (pun intended), and the only way out of this dilemma for every retailer is to think like a software business. This means accepting that the environment is in constant flux and focusing on the company’s mission. The former should lead retailers to a thorough evaluation of tools available to them so as to minimize capital expenditures and avoid investment in any technological or other type of platform exclusively. The latter redirects all company efforts to the emotion their mission has promised the customer.
Nordstrom Local, the latest of the upscale retailer’s initiatives as it experiments with new delivery formats, promises an in-store bar with wine, beer, coffee, and juices; eight fitting rooms; alterations; convenient merchandise pick-ups and returns; manicures; and expert image consulting advice from its knowledgeable personal stylists. Instead of a point of sale, the Local aspires to become a physical manifestation of the Nordstrom brand, creating indulgent customer experiences that can be completed with purchases through any of the retailer’s other channels. That’s how Nordstrom interprets fabulousness today, and that’s what it will deliver via the Local, set to open in Los Angeles on October 3.
This new retail format can create more personalized visits with less friction—shorter waits, fewer returns, and lower levels of frustration on returns and pick-ups overall. In other words, it is designed to eliminate multiple customer pain points while also providing the retailer with information on tastes, lifestyles, and specific behavior—all of which can lead to improvement of merchandise assortment in its other stores, as well as overall customer experience with the Nordstrom brand. The Local store can close the loop on data collected on Nordstrom’s website and mobile apps (quantitative) as well as actual face-to-face contact via its styling experts (qualitative) while making sure that catering to specific needs is achieved through expert advice. Nordstrom Local will be contributing to customer loyalty while the retailer will be strengthening a key performance metric, the customer’s “intent to return.” Additional information (quantitative and qualitative) always results in smarter inventory and processes. It also fosters additional innovation in modes of engagement and delivery.
Nordstrom’s mission is to “provide a fabulous customer experience by empowering customers and the employees who serve them.” The large, Seattle-based retailer has had its fair share of trouble, including substantial labor disputes in the 1990s. It was at that pivotal point that its leadership updated the company’s mission and chose to focus on a culture of collegiality, respect, and personal growth, ushering in an era of employee satisfaction and consequently, substantial growth of its customer base all through the early 2000s.
With its mission and now its new concept store, Nordstrom is asking us this: “Who wants to feel fabulous?” Traditional retailing has been based on simpler questions. The following questions are good examples of older types of retailing. They may also mistakenly represent a business as a whole when in fact they give only partial answers:
“Who needs clothing?” determines the geographic location of a clothing store.
“Who wants clothing?” determines market positioning, customer age etc.
“What type of clothing do you want?” links the business to ways of life that may become obsolete, as is the case with formal corporate attire. As casual Fridays led to more relaxed office environments, casual dress is now adjusting to a moderate form of athleisure. One has not entirely replaced the other, but the shift is happening.
When retailers follow one of these product or service questions too closely, they risk failing. When they focus on a specific emotion to deliver, they catalyze their own evolution. Think of Amazon (AMZN) that delivers instant gratification, or Apple (AAPL) that delivers temptation.
Retailers chasing the next technological platform or alternate retail format need to be reminded that the shift on how value creation is delivered is real and deeply rooted in human emotions. Each business needs a clear mission statement that both supports it now and guides it into the future. Emotions are the essence of human nature, and the only indicator of what a business should do next.
In other words, if Nordstrom can keep its promise to deliver fabulousness, it will be around for many years. Let’s stop thinking about the container (is it a department store, an e-commerce site, an omni-channel retailer?) and let’s focus on the content. That’s what the retail sector is about.
Thomaï Serdari is an adjunct associate professor of marketing at NYU Stern School of Business.
