This paper examines the environmental forces shaping Nordstrom's marketing strategy, including competitive pressures from discount retailers, shifting consumer behavior, and economic challenges facing traditional department stores. It evaluates how technological innovation — particularly social media and digital customer service — can strengthen Nordstrom's brand positioning and help it recapture market share from competitors. The paper also proposes a market entry strategy for Mexico, recommending a flagship store in Mexico City, an awareness-driven promotional campaign, and newspaper advertising as the primary channel for reaching affluent and middle-class urban consumers. Together, these strategies aim to modernize Nordstrom's communications while leveraging its established reputation for customer service excellence.
Nordstrom faces a number of forces in its environment. The company's competitive environment is intense, as it competes in the department store segment of mass-market retail. This segment is mature and facing decline. It has always been competitive, which in part drove Nordstrom to its focus on customer service as a means of differentiation (Spector & McCarthy, 1996).
The company is also facing a difficult social market. Consumers are becoming more oriented toward discount retailers and warehouse clubs, which has reduced growth prospects for traditional department stores such as Nordstrom. The economic environment has further compounded this problem, as Nordstrom utilizes a differentiated strategy (Spector & McCarthy, 2005). Evidence suggests that consumers are gravitating toward low-cost stores, and those firms have suffered smaller revenue drops as a result of the current economic climate than has Nordstrom.
The legal and regulatory environment has remained relatively unchanged in recent years with respect to the department store industry.
The technological environment affects Nordstrom in two key ways. First, Nordstrom can better utilize the Internet — including social media — to promote its stores. Second, the technological environment is also changing at the back end, where supply chain logistics are in flux and can offer Nordstrom ways to lower prices without compromising the quality of its goods.
These changes can have a significant impact on marketing at Nordstrom, because they afford the company an opportunity to extend its marketing reach. Department stores can be somewhat "off the radar" of consumers today, particularly during difficult economic times. This results in an erosion of Nordstrom's customer base. One way to tackle this problem is through the use of social media — to coordinate marketing communications with existing and potential customers, to alert customers to sales and promotions, and to allow the company to reinforce its customer service message.
In addition, technological changes can allow Nordstrom to extend its service offering into the digital realm. Firms such as Verizon already employ digital customer service officers to respond to consumer complaints in near-instantaneous fashion. Nordstrom can utilize this technology to reinforce its customer service message and to reiterate its competitive advantage over discount stores and competing department stores.
The changes in the social and economic environment represent a significant challenge for Nordstrom. The traditional department store industry is perceived by some as anachronistic, and while the view of Nordstrom itself remains positive, the company's value proposition is becoming an increasingly difficult sell during poor economic times.
"Two-pronged domestic strategy to recapture lost customers"
"Flagship store and promotional plan for Mexico City"
"Newspaper advertising as primary channel for launch"
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