Nordstrom: Courting the Multi-Channel Shopper

We've heard so much about brick-and-mortar retailers needing to find ways to integrate online and store shopping. Retailers refer to the great promise associated with cultivating the "multi-channel" shopper. However, few retailers have come up with breakthroughs in how to do so. Nordstrom seems to have taken a bold step. The New York Times reports on their efforts:

"The change works this way: Say that a shopper was looking at a blue Marc Jacobs handbag at Nordstrom.com. She could see where it was available at nearby stores, and reserve it for pickup the same day. More significant, if the Web warehouse was out of that bag, it did not matter. Inventory from Nordstrom’s 115 regular stores is also included. Maybe there was just one handbag left in the entire company, sitting forlornly in the back of the Roosevelt Field store — it would be displayed online and store employees would ship it to the Web customer. What Nordstrom did on its Web site — displaying stock from both the Web warehouse and its stores all at once, was unusual. And that, said Jamie Nordstrom, president of Nordstrom Direct, drove 'some pretty meaningful results.'"

Most retailers do not show detailed store inventory information to the online shopper. By doing so, Nordstrom hopes to avoid lost sales, and also invite online shoppers who are browsing via the web to come to the local store to try on an item if they feel that it is necessary before purchasing. They will ship from the stores if needed, essentially converting their stores into warehouses in support of online sales as well. The results have been promising. Same store sales have been strong lately, while other retailers have lagged. Moreover, inventory turns have risen. Of course, this strategy requires great accuracy in a firm's inventory management system. The premium pricing strategy of Nordstorm probably helps make this economically feasible, because there are clearly added costs. It will be interesting to see if other retailers follow, particularly higher end retailers who compete against Nordstrom.