While Nordstrom appeared to elude the department store blues prior to 2016, the luxury fashion retailer isn’t out of the woods yet. As part of an initiative to cut $60 million from its 2016 budget, Nordstrom expects to eliminate between 350 and 400 jobs in Q2.
The Nordstrom job cuts will primarily take place in the company’s Seattle headquarters as well as in its regional assistance teams. The decision appears to be the result of a poor Q4 that saw Nordstrom’s comparable sales dip 3%. On top of the slight sales decline, inventory increased 12%, a further indication that the retailer is having more trouble than usual moving items off its shelves.
Beyond the staff reduction, Nordstrom is shifting its operating model to focus more on e-Commerce and digital initiatives. While the shift is a necessary change for Nordstrom given the evolution of omnichannel retailing, Andy Wong, a Partner at retail design consultancy Kurt Salmon Digital, indicated that Nordstrom and its department store counterparts must focus not only on experimenting with new technologies, but fully implementing them within store environments.
“When I think about the Nordstrom stores and what that experience has been, it’s always been a high-end experience,” Wong said in an interview with Retail TouchPoints. “It’s always been an experience that we look to as a successful competitor in the space, but at the same time — almost like Gap — it still hasn’t changed that much. They’ve had interesting stories where they’ve created some innovation labs, but we haven’t seen any of that innovation trickle down to the mainline stores. They’ve mostly been exciting experiments, versus Bloomingdale’s, which has impacted change by deploying hundreds of smart fitting rooms.” (Kurt Salmon Digital has consulted with retail brands such as Bloomingdale’s, Dick’s Sporting Goods and Lowe’s on in-store experiences.)
Regardless of the renewed focus on digital, Nordstrom appears to remain confident in its stores, as the $60 million cuts don’t appear to affect any brick-and-mortar locations or employees. This makes it all the more important for the retailer to effectively integrate its e-Commerce and digital aspects with the store experience, all while providing an individual brand experience.
“A lot of our work revolves around positioning these retail brands to figure out what their customer experience within the store should be,” Wong stated. “How is it better, how is it competitive and what is the product? Brands need to tell the story of what that brand is, and identify to consumers what that service experience is. Otherwise, any retailer can carry that brand.”