Wednesday, February 14, 2018

Nordstrom Unlocks Its Changing Rooms

Source: NY Times
Luxury retailer Nordstrom continues to innovate in hopes of surviving and thriving in the embattled department store business. The Wall Street Journal reports today on many of the experiments that the firm is conducting. For example, Nordstrom chose to stop locking its fitting rooms recently. The WSJ reports on the change:


In November, the company unlocked the fitting rooms in its department stores. Many retailers keep them locked to discourage shoplifting, but the practice annoys customers. Although theft has increased slightly since Nordstrom made the change, executives say, the retailer is sticking with the new policy.  “Analysts don’t like it,” Jamie Nordstrom said. “But I’m thinking about the next 50 years, not the next quarter.”

I've always found these types of moves interesting.  Typically, managers conduct cost-benefit analysis when they make key decisions.  However, in certain cases, the costs can be quantified rather easily, but the benefits are not as well-defined.  Many managers would not go through with this decision because the cost-benefit analysis does not justify it.  Here, the costs of increased theft can be measured precisely.   The benefits from increased customer satisfaction may be much more difficult to evaluate and quantify.  Still, Nordstrom knows that its loyal customers do not appreciate the locks on the changing room doors.  Will this small change enhance customer loyalty?  Will people be more likely to try on multiple outfits now?  Might it increase the size of the average transaction per store visit?  Some of these things can be measured with time and some creativity.  In certain cases, though, managers simply have to side with the customer, recognizing that it may not pay immediate dividends.  In the long run, Nordstrom won't win against online competition through better assortment or lower prices.  They have to create a superior in-store experience.  This small step appears to be moving in the right direction on that front.  

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