Nordstrom’s eight-year run of its Trunk Club subscription business comes to an end as the luxury retailer says it is taking its customer styling efforts in a different direction, with a greater focus on fashion advice in-store and online.
In announcing plans to “go under” the brand it acquired for $350 million in 2014, the Seattle-based retailer said the move was a reflection of customer demand.
“Customers spend seven times more and report greater satisfaction when connecting with a stylist, either in-store or online,” CEO Erik Nordstrom told the company Result Q1 Called Tuesday (May 24) to find in-store styling was still the top choice, but demand for digital advice was growing rapidly.
Nordstrom said the retailer’s styling program is a powerful driver of engagement, bringing both convenience and deeper customer loyalty to the brand, and said the strategic shift was simply a matter of reallocating resources to the services that customers most value appreciate most.
“I want to be clear; This move reflects our belief and commitment to styling, and we’re committed to growing and investing in those services,” said Nordstrom, noting a range of services ranging from simple online outfit inspiration to personal relationships with a high contact stylist are offered.
An integrated transformation
The Trunk Club news comes with other measures being taken to better integrate the operations of the 120-year-old brand, which today operates 100 flag stores and 247 Nordstrom Rack locations across the US and Canada.
“Buy online, collect in store remains our most profitable customer journey and one of our highest-satisfaction customer experiences,” said the 56-year-old CEO, who started working for him Grandfather’s company 1978. “Our go-to-market strategy helps us connect with customers through better service and better access to products, regardless of how they shop,” he added, citing the unprecedented level of omnichannel convenience that customers now have across the store fleet and enjoy digital services.
With order pickup accounting for 10% of Nordstrom.com’s revenue in Q1, the retailer planned to expand the service to over 60 rack locations the next day in Q2 to capitalize on this burgeoning and growing trend within its affluent customer base.
“Customers who use in-store pickup have higher engagement and spend three and a half times more than customers who don’t use the service,” Nordstrom said.
The rebound
As much as investors hailed Tuesday’s surprise results with a double-digit rise in Nordstrom’s shares, this rebound came on the heels of a volatile two-year slump that has nearly halved the stock over the past 12 months.
Even so, Nordstrom’s reported double-digit sales growth across both brands and raised full-year guidance contrasted with the struggles many retail peers have disclosed in recent weeks, as shoppers returned to stores earlier than forecast for a busy summer filled with special occasions and outings.
“We were pleased to see customers shopping for events and refreshing their closets this quarter,” said Peter Nordstrom, Nordstrom’s president and chief brand officer, on the earnings call, noting that menswear was the strongest category of the quarter retailer and that digital sales remained flat was a result of the shift.
In addition to increasing its use of “pack and hold inventory” tactics to ensure retailer shelves are stocked, the company says it is also deepening its use of data science and digital tools, such as B. virtual styleboards for stylists.
While the macroeconomic headwinds are a concern for Nordstrom, affecting its work and order fulfillment efforts, the retailer said they haven’t leaked down to the customer level yet.
“At this point, we have not seen inflationary cost pressures negatively impacting customer spend, which we believe is due to the higher income profile and resilience of our customer base,” said CFO Anne Bramman, noting an increase in customer numbers and customer spending Spending per customer in Q1 compared to the previous year.
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