Nordstrom Overview- Founded in 1901,

Nordstrom

Overview- Founded in 1901, Nordstrom is an upscale department store chain with its headquarters in Seattle, Washington. 2009. 2009 revenues approached $9 billion dollars -- an incredible feat for a company that was initially a shoe retailer and now handles a full line of department store items, home furnishings, and an outlet niche. After a series of generational managers, Nordstrom went public with its stock in 1999. The typical model for the company was to slowly build new stores rather than acquiring other retailers. The one time this model was broken was in 1975 when it expanded into Alaska by purchasing Northern Commercial; otherwise, Nordstrom has spared no expense in opening some of the country's most exclusive retail outlets, culminating with the Westfield San Francisco Centre that included four restaurants and an English Style Pub (Bond, 2010; Spector and McCarthy, 1996).

Currently, Nordstrom operates 112 department stores, 68 Nordstrom Rack clearance stores, three other boutiques, and a retail bank in Scottsdale, Arizona. One of the characteristics of the company was the infamous Employee Handbook -- a card containing 75 words, but with only one rule: "Nordstrom Rules: Rule #1: Use best judgement in all situations. There will be no additional rules" (Spector, 2000)

Since Nordstrom competes in the U.S., give an example of each of the marketing environment forces (Political, Legal, and Regulatory; Technological; Social; and Competitive and Economic Forces).

Nordstrom is a niche market of its own; it does not compete for the same consumer dollar that retailers like JC Penney, Sears, and most assuredly not the Wal-Mart or Target consumer. Shoppers gravitate to Nordstrom for two reasons: quality and status, not to mention their expectation of exceptional service. Since the company has operated successfully in the United States for over a century, and did not endure the same kinds of market share loss and massive layoffs of some of the other aged retailers, their model and ability to work within the system remains advantageous. Within this structure there are seven major templates:

Political -- The political environment changes for American retailers about every decade. Because Nordstrom seeks to provide a healthy work environment and fair compensation package, they are generally outside the issues of political reform.

Legal -- Similarly, billion dollar corporations do have legal issues, but Nordstrom is famous for its attempts to find partners who join with them in standards of high quality and customer service, thus limiting legal liability.

Regulatory -- Nordstrom has been sensitive to the regulatory changes in the stock market and financial portfolio issues. The company has taken major steps to ensure stakeholder profits even during a down economy.

Technological -- Nordstrom uses the most advanced real-time inventory system management software possible. The company must balance the technological requirements with its human side of customer service.

Social -- Nordstrom caters to a special kind of customer; one who wants high quality, more exclusive items that are environmentally sound, but of the quality that will last. In recent decades the social climate of America resulted in a greater percentage of questionable returns (gowns or shoes worn once or twice and then returned), but the company has managed to endure this paradigm shift.

Competitive -- The competitive market for the consumer's dollar has grown dramatically. In most major cities there are 2-3 upscale retailers, of which Nordstrom is one. Nordstrom seems to maintain its competitive edge with its Customer Service mentality and reputation as well as attention to detail and quality.

Economic -- Nordstrom is sensitive to the economy. The recent recession showed its Rack and web-based sales up about 15%, but its retail profits down 21% at the brick and mortar stores. Still, during harder economic times there remains a customer base that will still pay for quality and longevity (Fortune 500-2010 - Rank 270, 2010; Miller, 2008; Perner, 2008).

Discuss the positive or negative impact of the forces of marketing the department store.

Using Michael Porter's Five Forces Model, we find that Nordstrom is poised quite aggressively in all five segments. It is certainly more than their tenacity that causes continual growth, and their ability to spend millions of dollars on new stores during a down-economy (Porter's Five Forces and SWOT, 2001)