Why Nordstrom Is OK With eCommerce Stealing Some Profits

If there’s been one overriding law when it comes to defining in-store versus online sales, it’s that retailers that focus on eCommerce can pad their profits with all the overhead costs they don’t have to pay when opening a brick-and-mortar store. However, Nordstrom is ready to thumb its nose in the general direction of that universal theory.

Nordstrom CFO Mike Koppel took to the stage on Wednesday (March 9) at the UBS Consumer Conference, and Bloomberg reported on some comments he made that eCommerce giants might find shocking. Koppel explained that while Nordstrom’s physical stores were bleeding sales online like just about every other brick-and-mortar retailer, he’d be just fine with some sales not moving online at all.

Koppel took aim at the operating premise that eCommerce retailers who skip out on labor and physical overhead costs are still paying in different ways down the road. He mentioned the high variable costs of running an online business — shipping packages quickly and collecting and sorting orders in store are two of the most time- and resource-consuming ones — but the real danger might be that retailers are just now seeing those costs rise exponentially. While they might have been manageable during the rise of online consumer culture, Nordstrom and Koppel would now almost rather customers who aren’t going to buy in store take their business elsewhere instead of dragging profit margins further down with online orders.

“Business has been flattening in malls and growing in eCommerce, and so the two strong trends are impacting operating margins,” Koppel remarked to the UBS crowd, via Bloomberg.

Even though retailers like Nordstrom are finding themselves caught between rocks and hard places, it’s not as if they have the financial luxury to suspend online sales and let what pure profit they do bring in scatter to the market winds. In fact, Internet Retailer quoted Koppel as asking for “anyone out there” with a semblance of a solution to this unstoppable issue to share it with the rest of the industry — and fast.