As Nordstrom continues to work through the Covid-19 fallout, the chain announced it will close 16 stores as part of an overall plan to increase flexibility and agility in serving customers and position the business for the long-term. The goal is to enables customers to shop seamlessly across multiple touch points in its Nordstrom and Nordstrom Rack stores and online. (More than half of Nordstrom’s store sales involve an online journey and a third of online sales involve a store experience.)
“We’ve been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations. The impact of COVID-19 is only accelerating the importance of these capabilities in serving customers,” states Erik Nordstrom, CEO. “More than ever, we need to work with flexibility and speed. Our market strategy helps with both, bringing inventory closer to where customers live and work, allowing us to use our stores as fulfillment centers to get products to customers faster, and connecting digital and physical experiences with services like curbside pickup and returns.”
Nordstrom is also restructuring its regions, support roles and corporate organization for greater speed and flexibility. This restructuring is expected to result in expense savings of approximately $150 million, or 30 percent of the company’s previously announced plans for net cash reductions of more than $500 million in operating expenses, capital expenditures and working capital. These actions, combined with its initial savings plan of $200 to $250 million, represent a reduction in non-occupancy related overhead expenses of approximately 20 percent.
With stores being temporarily closed since Mar. 17, Nordstrom plans to reopen stores in a phased, market-by-market approach where allowed by local authorities and with the health and safety of employees, customers and communities as a priority. Given this phased approach, the company is shifting its Anniversary Sale event from July into August.
As it re-opens stores, Nordstrom is making the following updates to help keep customers and employees safe and healthy:
- Conducting health screenings for employees
- Providing face coverings for employees and customers
- Taking steps to allow for social distancing of six feet or more, including limiting the number of customers and employees in the store
- Increasing cleaning and sanitization
- Modifying the fitting room experience
- Continuing to offer contactless curbside services at full-line stores
- Altering hours of operation
- Pausing or adapting high-touch services and customer events
- Keeping tried on or returned merchandise off the salesfloor for a period of time
Throughout the crisis, Nordstrom continues serving customers through its scaled ecommerce business, representing one-third of 2019 sales, including an off-price online business that exceeds $1 billion. While stores are temporarily closed, the company is generating solid online traffic and conversion and clearing excess inventory through increased marketing and promotional efforts.
The Company’s store fulfillment capabilities are an important way to leverage inventory and bring greater selection to customers in its markets. Beginning in mid-April, Nordstrom added these capabilities at Nordstrom Rack stores, which enabled store fulfillment throughout Nordstrom’s entire fleet of stores. More than half of Nordstrom.com orders are currently fulfilled from full-line stores, and 25 percent of Nordstromrack.com and HauteLook.com orders are now fulfilled by Nordstrom Rack stores. Nordstrom recently launched its dedicated ecommerce site to serve customers in Canada, with all online sales fulfilled from the six full-line stores there.
