Economic Analysis Project
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Nordstrom, Inc. is a fashion specialty retailer, which has been operating for more than 100 years. The company started its history from a small downtown shoe store. However, nowadays this retailer enjoys a healthy financial position — $1.3 billion in cash on the books, 11 straight quarters of comp-store sales increases, double the industry average of sales per square foot and the No. 20 position in Apparel's Top 50 (Seers, 2012). Therefore, it is very important to analyze its current market environment and ways of potential future growth.
According to the official website of Nordstrom Inc., it operates in two segments: Retail and Credit. The Retail segment includes 117 full-line stores, 119 Nordstrom Rack locations, two Jeffrey boutiques, one clearance store and Nordstrom.com that serve customers in 44 countries and 31 states. The Company’s Credit segment includes its wholly owned federal savings bank, Nordstrom fsb, through which it provides a private label credit card, two Nordstrom VISA credit cards and a debit card (“Company history”, n.d.)
One of Nordstrom’s main competitors in the multiline retail industry is Macy’s (M). Other competitors in the consumer discretionary sector include Saks (SKS), Stage Stores (SSI), and Dillard’s (DDS) (Narrative Science, 2012).
According to the official website of Nordstrom Inc., they stock many good designer brands. This makes them a premium department store. They also stock beauty and bath products, cosmetics, fragrances and some home wares. The company offers such brands as Stuart Weitzman, Calvin Klein, BCBG, Betsey Johnson, Burberry, Chinese Laundry, Cole Haan, Kate Spade, Jessica Simpson and many others. Moreover, Nordstrom offers plus sized items and petite size ones.
Despite big variety of qualitative goods, the pricing is moderate in this company. However, the prices for some designer goods are quite expensive. For example, price for shoes can range from less than $25 to over $ 1000. In addition, when they have some of their annual sales like the anniversary sale, many brands are sold at a good discount (“Company history”, n.d.).
The revenue of Nordstrom Inc. increased in 2012 in comparison with 2011(Natural Science, 2012). This fact demonstrates rising demand for the goods of the company. As a result, retailer expands its supply. For example, they opened one new store in Canada last year. Besides, the company plans to open 3 more stores in Canada and 111 Rack stores by 2016. Moreover, Nordstrom is going to develop e-commerce (Speer, 2012).
The production costs of Nordstrom include rent, administrative, selling and general expenses. Moreover, the company spends certain amount of budget on advertizing, vendor allowances, shipping and handling, loyalty program and stock-based compensation. However, the production costs may change. For example, the price for cotton increased last year. Therefore, total production costs became higher (“Retail Clothing Business Plan”, n.d).
Nordstrom has quite effective distribution system, that is represented by seven distribution centers in the different parts of the country. Therefore, strategically located nationwide, these centers serve as hubs from which goods are sent directly to the stores — and to the customers (“Distribution center”, n.d).
Nordstrom Inc. is a fashion specialty retailer, so its products are very dependable on the fashion. As a result, the company has to follow all the changes in this area, which occur at least few times a year. For instance, they design new collections of shoes, clothes etc.
Entry into and exit from the market is relatively easy, but there are few aspects that should be considered. Firstly, you need to avoid competitors with the same kind of stores in your area. Secondly, it is important to have experienced employees. Thirdly, your store should provide outstanding customer service and qualitative goods. Finally, your products should have some competitive advantage and it takes time to build a retailer store. However, the exit from the market is much easier than the entry and it do not require any big efforts (“Retailing clothing business plan”, n.d.).
Nordstrom, Inc is a powerful company with a long history but it has opportunities for the potential future growth. Firstly, it has demand for opening new stores not only in the USA, but also in Canada. Secondly, the company needs to develop e-commerce, which becomes more popular every year. Thirdly, it can change customer base by adding new technologies in its business. For example, the company can create some iPad apps. Finally, partnerships are able to enhance the in-store and online experiences too. For instance, Nordstrom, Inc. purchased Hautelook last year. This company offers using flash-sales in business. Most recently, Nordstrom has partnered with British fast-fashion retailer TopShop. The chain, which appeals to younger customers, will likely attract a new customer base to the department store (Speer, 2012). Therefore, the company shows stable growth and there are not any signs of its exit from the market.
In conclusion, Nordstrom Inc, is a fashion retailer, which supplies its customers with clothes, shoes, accessories etc. The goods and pricing policy meet the demands of different groups of customers. The company is proud of its excellent custom service too. Besides, the retailer suggests cheap shipping and shopping online. Seven distribution centers in different parts of the USA also make service qualitative. However, Nordstrom has several competitors: Macy’s, Saaks, Stage Sores and Dillard’s. Nevertheless, the company has possibilities for the future growth. Firstly, it can develop e-commerce and new technologies. Secondly, the company needs to expand its location. For instance, Nordstrom opened a store in Canada last year and it plans to have three more stores there by 2016. Besides, there is high demand for Rack stores.
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