Nordstrom’s: Subtract, Then Maintain and Add Features
Well – what can Nordstrom do to combat this flight and return to higher profitability? On the F3Q08 Earning Conference Call, Blake Nordstrom, President of Nordstrom, said, “Even affluent customers, typically more resistant to economic malaise, are shopping less and are making more deliberate purchases.” Macro factors are hurting Nordstrom’s core value proposition and business model. Nordstrom can directly combat the shift to buying based on value along with seeking lower price points on various purchases. They should implement the specialized Blue Ocean Strategy which was outlined in my previous two articles of “Blue Ocean Strategy in a Recession Series.” Examine what current Nordstrom shoppers perceive as less important in their shopping experience. Then, reduce or eliminate that factor. The object is to lower costs across a set of items with low utility features. To maintain or even raise perceived value to customers, Nordstrom must select elements of its high quality services practice which customers especially like or can’t do without and maintain the resource investment in them. They can even use the newly available resources from the “selective resource reduction” to add to valued features and benefits. This practice of subtraction, then addition, will encourage the perception of Nordstrom as a place with a value orientation, while maintaining the loyalty of its “regular” or core customers.