Loyalty & Rewards

Nordstrom's eCommerce Expansion Pays Off

While retailers struggle to find the balance between in-store and eCommerce investments, Nordstrom may have found the perfect mix.

Nordstrom posted a positive first quarter as its total company sales were up 9.8 percent to $3.1 billion from 2014's Q1 of $2.8 billion. Comparable sales increased 4.4 percent, when comparing the same period. While Nordstrom saw its brick-and-mortar presence grow internationally with two full-line store openings in Ottawa, Ontario, and San Juan, Puerto Rico, it also saw domestic expansion with 10 more Nordstrom Rack store openings in the quarter. Nordstrom said it plans to add five full-line stores during 2015, which includes two in Canada, along with 27 Nordstrom Rack stores.

But the real success was Nordstrom's eCommerce growth. When combining the growth on NordstromRack.com and HauteLook.com, the company saw a 50 percent sales growth in the quarter. Much of that growth was attributed to the launch of NordstromRack.com in the middle of 2014. Sales on Nordstrom.com also saw strong growth as that figure increased 20 percent, which was attributed to expansion of online merchandise selection.

Looking toward Nordstrom Rack, which was been a strong point for the company, net sales in Q1 increased by 12 percent to $90 million, year over year. This boost came from the 10 additional Rack stores that opened. But without the addition of those new stores, Nordstrom Rack sales were nearly flat in terms of growth. Nordstrom also pointed to its loyalty program as a high point for the quarter.

"The Nordstrom Rewards loyalty program continued to contribute to overall results, with members shopping three times more frequently and spending four times more on average than non-members," the company wrote in its earnings release. "The Company opened over 285,000 new accounts in the first quarter. With 4.4 million active members, sales from members increased 11 percent in the first quarter and represented 38 percent of sales."

Recently, Nordstrom increased its omnichannel efforts and joined the retailers that have begun testing a curbside pickup option for those who prefer to shop online, but then pick up at the store — all without stepping foot in the store. While Nordstrom has offered the buy online, pick up in store option since 2008, its new option includes curbside pickup. This option allows customers the ability to simply call or text a participating store when they want to pick up their order. A store associate will be on hand to deliver the package to the customer upon arrival.

Nordstrom announced in February that it is seeking to increase its annual revenue — currently around $13 billion — to $20 billion by 2020. Central to this effort will be the integration of eCommerce with the chain’s luxury department stores and its Rack outlet stores. And from the looks of its first quarter earnings, that strategy is paying off.

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