Nordstrom long-term growth strategy focuses on smaller-format stores, Rack and digital
Nordstrom expects its revenue to grow more than 25% in 2021, with digital claiming approximately 50% of total sales.
The upscale department store retailer released its fiscal 2021 outlook and new “Closer to You” long-term growth strategy at its annual investors day. The strategy calls for investments to build Nordstrom’s off-price Rack and digital businesses, along with small-format stores.
Nordstrom said it is expanding the range of price points offered at Nordstrom Rack and better connecting physical and digital inventory to increase selection, all while improving profitability. The company expects Rack to make up about half of its sales in the near future, compared with about a third at the end of its most recently reported fiscal year. It expects Nordstrom Rack to contribute approximately $2 billion in incremental sales over the long-term.
The strategy also calls for extending Nordstrom’s market strategy, from the 10 urban areas where it currently operates to its 20 top markets that represent approximately 75% of sales. The strategy involves leveraging the physical assets of Nordstrom’s full-line department stores, Nordstrom Rack and smaller-format Nordstrom Local stores to increase customer services and conveniences, and speed deliveries.
On the digital side, Nordstrom is growing its assortment from 300,000 items to potentially 1.5 million during the next three to five years, reported CNBC. The retailer expects its digital business to represent approximately 50% of total sales going forward.
Nordstrom said it is leveraging its technology platform to create a unified view of the customer as well as the company's product and inventory. The effort will enable Nordstrom to provide personalization at scale and enhance the overall customer experience.
Nordstrom is leveraging its digital platform to expand the “aperture of who it serves, as well as where and how it serves them,” with a particular focus on increasing the breadth of customers at Nordstrom Rack.
"We have a unique business model with two powerful brands, highly integrated digital and physical assets, incredible brand partners and employees who are truly unmatched when it comes to their commitment to the customer," said Erik Nordstrom, CEO of Nordstrom. “Looking ahead, we are building on the strengths of our market strategy to fully unlock the potential of the digital-first platform we have built to better serve customers, gain market share and drive profitable growth."