October 09, 2008

Marketing Tactics Cannot Save Nordstrom Comps

Many marketing pundits talk about branding and social media and word of mouth and multichannel marketing and online marketing and catalog marketing as if they were a magical elixir.

Now take a peek at Nordstrom's comp store sales results from September.
  • Nordstrom Rack (lower-price channel) = +2.6%.
  • Nordstrom Full-Line Store Sales (full-price channel) = -14%.
That's a price-sensitive customer responding to the end of easy money.

Nordstrom does all the things the pundits tell them they should ... they've worked hard to align merch and creative across channels. They have a credit program with a loyalty component. They offer high price channels and lower priced channels. They mail advertising-based catalogs. They have an e-commerce website with reasonable integration with stores. They have a presence on Facebook and MySpace. They offer better customer service than almost anybody. They offer free shipping promotions from time to time, and offer a reasonable $5 flat fee for shipping. They drive hundreds of thousands of visitors from blogs due to buzz-worthy merchandise. They have in-store events that drive traffic. They minimize sales events so that the three sales events they do have drive traffic and profit. They do outbound telemarketing, not CRM/computerized junk, but actual calls from actual store employees. They have an integrated database with data from all channels. They hired a plethora of highly qualified MBAs to drive marketing strategy fused with customer research and database insights. They have an experienced management team that tries to drive volume with honesty and integrity. They have more word-of-mouth marketing than almost anybody could ever hope for. They execute a solid paid-search program. They do portal advertising. They have an affiliate marketing program. They execute versioned e-mail marketing campaigns where customers can choose the e-mail marketing versions they receive. They do magazine advertising. They do radio and newspaper advertising during sales.

But all of those things mean almost nothing, when the customer is faced with challenges. The marketing tactics sure didn't enhance shareholder value, did they? The price of a share of JWN stock dropped by at least sixty percent in the past nineteen months --- wouldn't want to count on that for retirement --- my investment in Nordstrom, encouraged by management during my tenure, is now underwater.

Marketing pundits, here's your opportunity to fight back. Would Nordstrom comp store sales have dropped by 20% or 30% without all the tactics you've told retailers they must execute? Or are the strategies utterly feckless in the face of changing consumer sentiment?

And if the strategies are this impotent when faced with changing consumer sentiment, did they ever have any real worth in the first place?

Discuss!

4 comments:

  1. Matt Mantey1:48 PM

    Kevin - Great post! Here's the thing, just doing stuff in a bunch of channels doesn't mean you're doing them well.

    You mention search. The last click before a purchase and inordinate attribution probably for the sale, but that's another post. Got to do that really well, right. Stinks! I searched "new dress loafers" - no natural listing at all, a single paid listing for Nordstrom (#8) advertising "Dress Sandals" - not connected. Lost sale! Searched "mens dress shoes" - no listing natural or paid. What? Another lost sale! Just searched "women's shoes" (has to be one of the top selling products for them) - not listed in natural or paid search. Another lost sale!!

    Went over to Facebook and searched "Nordstrom" - they were 6th on the list behind a bunch of individuals. What??? So I go there and am met with "Nordstrom, Inc. has no recent activity" in their Mini-Feed. Just putting a page on Facebook, Twitter, Flickr, YouTube, etc doesn't mean that you are actually engaging that audience. Spend some time and post some things there. That's what it's about. By posting stuff daily, weekly, monthly, your 6,500 friends will see that pop up in their feed. If they find it interesting, they will pass it on. If you don't post anything, you have no chance of getting anything out to anybody.

    I swung by Twitter to see what people were saying about Nordstrom.

    http://search.twitter.com/search?q=nordstrom

    Turns out it's really positive. What about trying to activate this community that is already talking about the brand? Where are Nordstrom's superior customer service folks on Twitter?

    All of the above - sites and networks take care, feeding and connection to other channels.

    I'm sure I could continue down the list of channels you mention to find little things that are missing. A bunch of little things could easily add up to 14%.

    I've had a similar conversation with a few big brands (not retail specifically) lately, because online in particular takes a lot of dedicated time and work.

    Nobody's missing really big things. Just a bunch of little things.

    ReplyDelete
  2. You think those little things would account for $70,000,000 in sales, the amount of sales lost in September compared with last year?

    ReplyDelete
  3. Matt Mantey2:06 PM

    Just the keywords I listed count for app. 1,200 searches a day in Google. That's 36,000 searches in September. Take all of their product categories, not to mention brands and extrap to Yahoo, MSN, and others and you're missing some significant search opportunities. $70MM is a bunch to make up, but just showing up online isn't enough.

    If these little things could do $10MM it would certainly pay for them and provide the value you're looking for.

    ReplyDelete
  4. Agreed, thank you!

    ReplyDelete

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