Nordstrom sees 20 per cent increase in e-commerce
While most department store retailer are posting negative year-on-year sales growth, Nordstrom in the US is a notable exception.
The company posted a 1.8 per cent year-on-year increase in comparable sales at its full-line stores and a 20 per cent increase in e-commerce sales, beating its previously issued company guidance.
Neil Saunders, managing director of GlobalData Retail, said the results are a reminder that getting the strategy right can make a difference, even in challenging conditions.
“[The] company has, for a long time, invested in its retail proposition and has taken sound strategic decisions like the diversification into off-price and the development of an omnichannel plan,” he said.
“These steps are paying dividends and are ensuring that Nordstrom remains relevant even as the retail sector continues to change rapidly.”
Despite the strong headline numbers, it is true that not all parts of the business are delivering growth. Same-store bricks-and-mortar sales declined 4.4 per cent during the quarter, and 1 per cent at Nordstrom Rack.
According to Saunders, the incredibly strong growth of the online business – both in the full- and off-price divisions – more than made up for this.
“It is certainly the case that online is cannibalizing store sales to some degree, but the most important point is that across all of its channels, Nordstrom is doing a good job of retaining customers and their spend,” he said.
However, Blake W Nordstrom, the company’s co-president, said it doesn’t measure success by offline and online sales, but rather by full-line and off-price brands.
“The combination of our physical and digital assets represents a competitive advantage. Our local market assets, our stores, salespeople, product and services, are the core of our brand and play an important role in engaging with our customers,” he said in a statement.
“Nearly 80 per cent of customers who shop with us across multiple channels began in our stores.”
But Saunders warns that while Nordstrom has outperformed the overall department store market, it remains in a very challenging retail sector, as is evidenced by the continued forecast of flat full-year comparable sales growth.
“In our view, this underscores the fact that future performance will be variable – with the next quarter being especially difficult as the company comes up against tough prior year comparatives,” he said.
“Constant growth may not be the order of the day, but it remains clear to us that Nordstrom is on a much better trajectory than most other players in the department store segment.”