Operations clear that the way to get more sales

Operations management Spring 2018, Assignment 1By Danielle Ann Jewett, and Paal Johnsen1.Nordstrom was founded in 1901, by Swedish immigrant John W. Nordstrom and Carl F. Wallin. in Seattle as a shoe store. Today the company is a large high-end American specialty retailer, leading within their segments. The company sells clothing, accessories, and shoes for men, women, and children. They are headquartered in Seattle and listed on the New York Stock Exchange (JWN), with a market cap of $8.40 Billion. They have paid out dividends to their shareholder of $0.37 every quarter for the past couple of years, according to nasdaq.com. As of January 28, 2017, Nordstrom has 349 stores in the US and Canada. Under the Nordstrom name, we can also find Trunk Club, which is a personalized clothing service, which is serving customers at their online store TrunkClub.com. In 2016 their sales reached a new all-time high of $14.5 billion, which was a 2.9% increase from the prior year. Their full-year net earnings were $354 million, and they had an EBIT of $800 million, which was about 5,6% of net sales. According to Nordstrom’s Business Segments Description, they have five segments. These consists of:Retail Stores, Credit Operations, Catalog/Internet, and Corporate and Other according to their website. Since 1901 Nordstrom has been highly committed to providing their customers with the best possible service—and to improving it every day, according to nordstrom.com.2. Nordstrom’s vision statement is as follows:’Our goals are simple: to serve our customers better, to always be relevant in their lives and to form lifelong relationships.  And while serving our customer face-to-face is the foundation and hallmark of how we’ve historically served them, today customers seek our service in new ways. Speed, convenience, innovation, and personalization have become cornerstones of the customer experience. Guided by these new needs, we continue to invest in the cross-channel experience, combining the accessibility of a pure online experience with the high-touch inclusivity of our stores.’ Nordstrom’s mission statement is as follows: ‘In our store or online, wherever new opportunities arise- Nordstrom works relentlessly to give customers the most compelling shopping experience possible. The one constant? John W. Nordstrom’s founding philosophy: offer the customer the best possible service, selection, quality, and value.’A strategic advantage Nordstrom has is customer service. For about three years Nordstrom has won best customer service in Forbes Magazine. They are known to the public as the retailer that takes all returns. The reason why customer service is so good is that Nordstrom sales employees work one hundred percent on commission. During training Nordstrom makes it clear that the way to get more sales is through wearing the Nordstrom smile and giving customers the Nordstrom experience. Customer care is one of the company’s top priorities. It has proven to have a significant role in how customers perceive the brand and creating a positive view of the company.Another important thing that helps create a brand like Nordstrom is the people who work there. The company is dedicated to hiring nurturers. People who smile, who have the ability to take care of customers and their wants, as well as identifying customer needs. Nordstrom takes pride in the people who work for them. Their business model promotes from within, giving all of the employees under the Nordstrom umbrella equal opportunity to reach their individual professional goals. Nordstrom makes this possible by offering management coaching sessions to any employee interested. After about a month of classes Nordstrom deems you worthy of assistant department management position within the company, and in some cases can even go as far as to place an employee in a desired position. This all promotes Nordstrom employees to uphold the ‘Nordstrom experience,’ because they know that the company takes as much care of them as they do their customers. The visual presentation is very important. That is why Nordstrom has a very visually pleasing presentation of their products, this is something that helps the bottom line. Being the leading luxury retailer, Nordstrom has a renowned visual team in the luxury market. Nordstrom has obtained this position in the market by creating healthy competition between their stores. They have semi-annual visual awards that are giving to the employees in the visual department. Depending on the level of the award, the visual employee can receive any reward from a gift card to a Nordstrom establishment to a salary bonus. Nordstrom knows that e-commerce is rapidly taking over traditional shopping methods. People are starting to use online shopping as their preferred shopping method, meaning that retail industry has the follow the trend. Nordstrom already generated more than a quarter of its revenue from its online store. By shopping online consumers have more choices and are able to save time. The website’s twenty four hour chat function also generates a positive customer experience.3Nordstrom is in an industry that requires adaptation to new trends and technologies that happen over the years. The company has been leading its market in this since it first launched its first online store in 1998, meaning that they were one of the first big retailers to enter the e-commerce market. The e-commerce market is a rapidly growing market. This is good news for Nordstrom, but bad for its traditional retail competitors. Numerous surveys, as well as the expectations, showed that consumers spent more money online than in physical stores in 2017, according to BusinessInsider. A survey performed by Deloitte showed that “Survey respondents plan to spend 51 percent of their budget online, compared with 42 percent in-store”. Not only that, it also shows that online shopping is becoming more normal for all ages. This is great news for Nordstrom which has a competitive advantage with their online store, as well as generating more than forty percent of the company’s overall revenue. Nordstrom’s retail competitors such as Macy’s. Macy’s has been forced to close locations and cut jobs because of lower sales, customers have started to shop more online. The trend is clear, and they need to adopt a business model that resembles that of Nordstrom. One of Nordstrom’s main advantages is that its business model puts weight on generating sales online, as well as designing a great customer experience. What is great about the company is that they are known by customers to have excellent customer service. Interestingly Many of Nordstrom’s competitors have started to lean towards a much stronger emphasis on personalized service, as they have seen the results that Nordstrom’s has consistently achieved. This is a key component to stay competitive, as the market is leaning more towards this in the future.4. Nordstroms main competitive advantage is offering luxury goods with exceptional customer service. Nordstrom focuses on four channels: Two in brick and mortar, and two in online stores. ‘Nordstrom’ is the full-line brick and mortar store. In the full-line stores they rarely sell merchandise at a discount, giving them a competitive advantage of selling goods at full price. Nordstrom also has an online store that carry the same items as the full-line stores. Nordstrom also offers an off price store called Nordstrom Rack. This has brick and mortar stores as well as an online store. This allows for Nordstrom to have access to the discount segment of the market. Ultimately, Nordstrom has an overall competitive advantage in the retail market because they are as successful in luxury as they are in discount shopping. How people shop is changing dramatically. Nordstrom follows how customers want to shop. Sales have been migrating from brick and mortar to online sale. 2017 is the first year that Nordstrom’s brick and mortar sales were better than they had planned and their online sales did not reach predictions. Before 2017 Nordstrom was having a twenty percent increase in online purchases every year. Online sales count for around forty percent of company sales where full-line counts for the majority. A huge advantage that Nordstrom offers their customers is buy online and pick up in store. This gives Nordstrom an opportunity of upselling when customers come into the store to pick up a purchase. Buy online pick up in store operates by first pulling from the desired store’s inventory, then shipping items from other locations to the desired store. Products can be tried on in store or they can be walked out to the customer’s cars. Nordstrom is able to stay on top of their inventory by having weakly stock refills to every department. Nordstrom holds another competitive advantage by the way they have developed their app. They have made it possible to search in a certain location’s inventory, as well as notifying the store when a customer is close as to help customer service representatives in readying customer’s items. Nordstrom has shown to be the number one leading brick and mortar and online retailer store in the United States. There are many other amenities offered at certain Nordstrom locations. Every Nordstrom has a cafe as well as an espresso bar. The espresso bar is a grab and go establishment where as the Nordstrom has cafe a sit down restaurant style. There are certain locations that have spas and bridal stores. Every location also offers a personal stylist service where customers are able to have their own person to shop for them. All of these services come with the ‘Nordstrom experience,’ which is where the customer is showered in genuine customer service. For this reason Nordstrom offers free shipping to customers within Canada and the United States. This makes it easy for customers to receive and return items at their convenience. Nordstrom also offers a credit card and a debit card. These are used to keep customers loyal by rewarding them when they shop. The debit card can only be used inside the store. There are two credit card options. The Nordstrom credit card, which can be used for in house purchases only, and the Nordstrom visa. The in house cards can only be used in Nordstrom establishments, being Nordstrom full-line or off price stores..The Nordstrom visa can be used in any establishment that accepts visa. On the in house purchases Nordstrom card holders earn two points per dollar they spend and customers receive a 20 dollar rebate every 200 points. The Nordstrom visa holders earn one point per dollar they spend outside of Nordstrom. Customers are rewarded in Nordstrom notes which can be used for purchase at any Nordstrom establishment. All of the behind the scenes departments at Nordstrom help with the ‘Nordstrom experience.’ Each sector of the company has their own mission statement for how they will live up to Nordstrom standards. In interviewing the NorthWest Regional maintenance and facilities manager this mission statement was obtained:’ To provide our customers and employees with a safe, comfortable, clean and well maintained environment in which to conduct business at the highest standard of excellence.To insure that our facilities are cared for and maintained in a way that they provide in the long-term the highest return on our investment to company and shareholders.’For each sector of the company to have laid out goals to work towards helps Nordstrom reach their overall company goal and helps them to lead the market in retail sales. 5. Nordstrom does present one weakness in future operations systems. This would be in the logistics sector of the company, and specifically how this sector handles distribution and shipping. Nordstrom brick and mortar stores ship from in store inventory, which can be inefficient. When an order is made from a particular store, this order bounces around to the next closest store that has a majority of the items in the order in stock. These orders are called DTCs (direct to customer) in Nordstrom company jargon. DTCs pop up on the registers in the appropriate department in the full-line stores.They circulate each store for twenty four hours and if left unfulfilled, they then move onto the next location. Due to Nordstrom’s free shipping policy, this process can be troubling to the company’s customer service reputation. The free shipping that Nordstrom offers, is three to six day shipping. If customers choose this option, it can take longer than predicted days to arrive to the customer due to this DTC process. The unfortunate truth to this future failing process is loss of stock items in back rooms in the brick and mortar locations. This can happen more easily than expected, since inventory items are usually transported through four locations upon arriving at the given Nordstrom location, before being displayed on the merchandise floor. This transportation is rarely done by the sales employees who receive commision on the inventory items. This can cause careless acts of leaving merchandise in the wrong location or disorganized back rooms that make it difficult for sales employees to find certain items. Being the leading retailer in their market Nordstrom has a plan to better this weakness. Their solution is warehouses. Nordstrom already has multiple warehouses in play today. These are used to fulfill online orders as well as being the final destination for DTCs from full-line stores. A warehouse fulfillment structure is more efficient than fulfillment through full-line stores because items are easily trackable when entering and exiting the warehouses. This is because upon merchandise arrival at a particular warehouse location, there is only one destination within the warehouse. This location is usually a bin with similar items, so that order fulfillment is at its highest efficiency in the warehouse. The warehouse model weeds out the inventory problems of lost items in the brick and mortar full-line stores and it ultimately gives Nordstrom customers a better customer service experience, since they usually receive their purchases by the third day of free shipping. This helps Nordstrom with allocating return customers, because these customers are able to rely on shipments without any charges, which is not always the case with competing retailers. 6.Works CitedAlex Agnew Nordstrom “Vission And Mission.” N. p., 2018. Web. 27 Jan. 2018.nordstromcompanyanalysis.weebly.com/vission-and-mission.htmlLaurent, Paul. Personal interview. 27 January 2018. “Nordstrom Marketing Strategy | Nordstrom Success | Sailthru.” Sailthru. N. p., 2017. Web. 29 Jan. 2018.usnews.com/news/business/articles/2017-11-09/macys-beats-3q-profit-forecasts, 2018)”Who Are Nordstrom’s (JWN) Main Competitors?.” Investopedia. N. p., 2015. Web. 28 Jan. 2018.investopedia.com/ask/answers/052215/who-are-nordstroms-jwn-main-competitors.asp

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