In this edition of the Glossy+ Research Briefing, we share Nordstrom’s year-end sales, as seen in the companies’ Q4 2023 earnings reports and how its e-commerce experience compares to other big retailers according to our sibling publication Modern Retail’s most recent index report.
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Nordstrom works to regenerate in-store and online sales through expanded customer experiences
Breaking news: Nordstrom reported their fourth quarter earnings on Tuesday, revealing an increase in holiday sales this past quarter compared to the previous quarter — and 2% higher revenue than the same quarter last year. But a fragile economy, price-conscious consumers and problems like the shuttering of Canada stores and online sales, have caused the company to project a conservative outlook for 2024.
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To weather the country’s current economic crisis, Nordstrom leaders view its off-price business to be a strength for the company, especially among a growing number of budget-conscious shoppers. Net sales at Nordstrom Rack rose 14.6% during the fourth quarter compared to the previous quarter (including a 5.8% boost from having an extra week in the year). During the 2023 fiscal year Nordstrom Rack opened 19 new stores; it plans to open 22 more by the end of 2024. According to CEO Erik Nordstrom, Nordstrom Rack is an important part of their new customer acquisition strategy as a quarter of repeat Rack customers migrate to luxury parent brand Nordstrom within four years.
For the coming year, the company plans on driving sales growth. Erik Nordstrom said on the earnings call that store traffic “continues to be on the soft side” and online sales dropped 1.7% compared to the same quarter last year. However, total order value at checkout has increased both online and in-store.
This year, Nordstrom plans to open an online marketplace for third-party vendors on the Nordstrom website. Nordstrom can drive more traffic to their website without the risk of holding onto inventory that doesn’t sell. Finally, beauty and personalized shopping experiences were cited as important areas of business both online and in-stores.
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Research dive: Data from Glossy’s sibling public Modern Retail shows Nordstrom’s e-commerce experience relative to other retailers in Modern Retail’s Index (MRI). The retailers are scored based on point-in-time data and their performance compared to other retailers including other big box stores like Walmart and Macy’s.
Nordstrom ranked sixth overall, scoring high for its virtual product experience, customer benefits and app features available. Like its competitors, Nordstrom is focused on modernizing its capabilities through AI to improve workflows, customer service, product suggestions and trend forecasting for upcoming season quicker. “We are also focused on what we call our fashion map [which] essentially takes a natural language-based approach with deep learning to interpret images and information from social networks,” said Nordstrom’s CTO Edmond Mesrobian in an interview with VentureBeat. ”This allows us to get to know customers through a natural language conversation, as opposed to keyword searches that are very taxonomy driven and hardcoded. We are continuing to work on achieving AI discovery to get closer to our customers in a personalized way.“
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