Monday, December 7, 2015

Case Study: Go Big or Go Home, Nordstrom Experiments with Big Data

Retailers that leverage big data will design products that are more embraced by consumers, better anticipate and respond to market shifts, and engage consumers with predictable results. In the simplest terms, big data offers a means to understand shoppers via myriad digital touch points-from their online purchases to their presence on social networks (Forbes, 2014).

Today, a fourth generation of the Nordstrom family, along with an executive team, helms the company in partnership with a talented team of innovators and fashion leaders. From one tiny shoe store in 1901, founded more than century ago by John W. Nordstrom and Carl F. Wallin, headquartered in Seattle, Washington. Nordstrom has grown into an upscale fashion specialty chain with global reach. It offers an unparalleled selection of shoes, clothing and accessories, and an extensive range of services to make shopping fun and convenient. In 2014, the company achieved an all-time record for total net sales at $13.1 billion.
Nordstrom currently operates a total of 323 stores located in 39 states and Canada, with 121 full-line stores in the United States and Canada, 194 Nordstrom Racks, two Jeffrey boutiques and one clearance store. Nordstrom serves customers online through, and private sale site HauteLook that was purchased in 2011. The company also owns Trunk Club, a personalized clothing service that takes care of customers online at and its five clubhouses. Looking ahead, the company plans to open three new full-line stores in 2016, and will be relocating one full-line store. The company plans to open its first Manhattan store in 2018, while expecting to reach a total of 300 Rack stores by 2020.
(Nordstrom, 2015).

Nordstrom Innovation Lab consists of a team of techies, designers, entrepreneurs, statisticians, researchers, and artists and they currently have several experiments in place that tests and create new concepts each week.
Nordstrom’s objective is to create the finest customer engagement both online and in the traditional store space. As such they have implemented a cross-channel inventory project to effectively allow customers to see in real-time where a product is available and when they can expect to receive it. Nordstrom has been able to integrate online inventory as well as in-store inventory and this gives shoppers an unprecedented experience and the opportunity to leisurely shop how, where and when they want. Providing these real-time services has proven to be successful as thanks to all the data used same-store sales increased for Nordstrom.

Also, Nordstrom rolled out mobile kiosk devices and has provided tablets to make its POS (or point-of-sale) devices completely mobile. These POS devices allow sales staff to help customers check out from anywhere in the store, thus improving the shopping experience. Plus, POS devices help the staff to look for a product across the company’s inventory.

Two years ago Nordstrom started investing heavily in big data technologies, from $1 billion investment in e-commerce planned over the next five years. Their goal is to figure out what products to promote to which customers when and via what channel. Nordstrom wants to provide a customized personal experience and with the vast amounts of data they collect they can achieve this goal.
Apart from the data from their website or the Point-of-Sales data, they generate lots of data from their 3.6 million likes on Facebook (2015), 4.5 million followers on Pinterest and 645.000 followers on Twitter. In addition they generate vast amounts of data from their Fashion Rewards Program as customers that want to enjoy the large amounts of benefits provided in this program will have to use a Nordstrom credit card that tracks shopper spending and reward points.

Nordstrom’s digital capabilities make complete sense and what makes them important is that they are tightly integrated with all the parts of the business that ultimately serve the customer. This is not a matter of having the best apps, analytics, or social media tools. Instead, it’s a matter of tending to the details of building integrated digital capabilities, one at a time, making the right data accessible, and simplifying processes.
Possible Problem
Most retailers will struggle to do this because they haven’t architected their product or customer data for easy access by new digital capabilities. Without those core capabilities, integration with and among new digital capabilities is virtually impossible (, 2015)
It is very important to understand the customer’s need to find time to shop.  Nordstrom gets this. Consumers, especially young working people, are less and less interested in store visits that require a drive in a car and a major allocation of time.  In contrast, the Internet – open 24 hours seven days a week – allows for a leisurely shopping experience at a personally convenient time (Forbes, 2014).
Over the years, the Nordstrom family has been good at reading consumers’ minds. Nordstrom’s multichannel strategy and best-in-class customer service have made the company famous.

Proposed Solution-How can you use the data collected
Nordstrom is using the data they collect to attract Millennials—consumers between the ages of 16 and 34. They are well informed about the products that they buy and are one of the key drivers of the company’s online business. Nordstrom is catering to Millennials by bringing in famous brands like Topshop and by investing heavily in digital channels. E-commerce is Nordstrom’s fastest-growing channel. The company expects Nordstrom Rack and online business to generate over 50% of revenues going forward.
Millennials (born between 1980 and 2000) represent a trillion-dollar demographic and are poised to transform retail expectations. They are a generation 79 million strong, and by 2030 the number of Millennials in the U.S. will outstrip non-Millennials. They are platform-agnostic and expect a seamless shopping experience in every channel, including the desktop, mobile and in-store.

As of today, once you enter Nordstrom’s website you will see you have many options from signing into your account/opening a new account, taking a look at recommendations for favorite brands/bestsellers and new items, to what most love Trending Now. You also have your standard stores/events, wish list, and shopping bag tabs. And because the holiday is upon us Need A Gift Now? Buy Online And Pick Up In Store stands out to me because of the rush that happens every year! For some at least!

Currently the retailer does a great job at retargeting consumers! Since I am a Nordstrom shopper I browse and buy off the site often and love to look at trending items. I took a look at a pair of boots, a holiday skirt and jacket earlier today, logged into Facebook this evening and similar items came up for me to click on! As a marketer, I get the reason retarget to bring the sale in and as a consumer I don’t mind because I may just buy all three tomorrow especially because of the reminder.
Retargeting converts window-shoppers into buyers. Generally 2% of shoppers convert on the first visit to an online store. Retargeting brings back the other 98%. Retargeting works by keeping track of people who visit your site and displaying your retargeting ads to them as they visit other sites online (AdRoll, 2015).

Nordstrom can use Google Adwords to target audiences by using the keywords: apparel, shoes, handbags, cosmetics and then go into depth by using Kate Spade, Dior, Coach and Marc Jacobs for example. Once consumers use these words and store nearest you will show up as a place to purchase. By using conversion-tracking tools by Google, Nordstrom can see if Adwords are working effectively.

E-commerce Tracking
Transaction data is a vital piece of information when analyzing online business performance. Besides measuring conversion rates, revenue is more tangible to many business owners. Having the e-commerce data in your web analytics application makes it easier to perform analysis.

Nordstrom noted that while five years ago using personal data to advise customers about what they might like seemed "creepy," customers have shown that they want a personalized experience. Possessing knowledge about a customer will play an increasingly large role in building loyalty with her, Nordstrom believes, citing the way in which iTunes and Netflix create loyalty by providing very relevant recommendations.
By utilizing Pinterest, consumers can purchase directly from saved boards and Nordstrom can measure if this way of promoting products can help drive results.
Bottom line, Nordstrom should continue to use a team and Big Data to find actionable insights leading Nordstrom to enhance their customer’s experience.