Rule #1: Use best judgment in all situations. There will be no additional rules.
Nordstrom announced its second quarter results recently with an increase of 3.3 per cent in sales for comparable stores. Interestingly full line store sales declined 1.2 per cent.
So where is the gap? Internet and catalogue sales rose by a staggering 22 per cent.
Most other large retailers do not divulge this information, but a similar pattern is highly likely.
Nordstrom recently acquired the Trunk Club, a men’s clothing service where stylists hand pick items and send them to the customer. This part of Nordstrom’s internet strategy is expected to grow sales 150 per cent this year. The spinoff is a multi-channel bonanza. The customer’s relationship with Nordstrom is significantly strengthened.
Another direction emerging is that the past focus of internet shoppers on bargain hunting is being augmented by customers shopping for fashion on the internet on a previously unheard of scale.
Walter Loeb, the renowned author of the Loeb Retail Letter comments that the future of full line stores and shopping centres are under threat. We have read many comments on this and it has become almost politically incorrect to pass such remarks – rather, brush this talk under the carpet and soldier onwards and hopefully upwards and forwards. After all, we all know that online sales will never exceed (choose a number) per cent of total sales.
As Loeb puts it: “It is very important to understand the customer’s need to find time to shop. Nordstrom gets this. Consumers, especially young working people, are less and less interested in store visits that require a drive in a car and a major allocation of time. In contrast, the internet – open 24 hours seven days a week – allows for a leisurely shopping experience at a personally convenient time”.
Nothing really new here either except an endorsement of what we think we already know.
Clearly many retailers and shopping centres are aware of these trends and are acting. How seriously they are taking this matter is debatable. It is not yet clear whether others who are dependent on the industry are as aware of the consequences.
A company in the US called Wakefern is using cloud-based predictive analytics to deliver dynamic promotions to customers. According to IBM’s Karen Lowe, Wakefern can respond to changes in realtime demand to build and execute promotions while maintaining the proper product mix in stores.
This is a wake up call to providers of traditional software to retailers. Are they really across this rapidly changing industry?
Tech savvy customers can only increase. Tech non-savvy customers can only decrease. Is top management really listening to the younger members of the team?
Do they really get what is happening under our noses?
Stuart Bennie is a retail consultant at Impact Retailing and can be contacted at stuart@impactretailing.com.au or 0414 631 702.