Nordstrom’s Digital Sales and Enhanced Customer Experience Drive Growth in Q3

While digital sales continued to perform well at Nordstrom, enhancements to the overall customer experience paid off as well, according to CEO Erik Nordstrom.

“In the third quarter, our efforts to enhance the customer experience continued to resonate, enabling growth in net and comparable sales, margin expansion, and an increase in our customer base,” Nordstrom said during the company’s third-quarter earnings call Tuesday (Nov. 26).

“Both Nordstrom and Nordstrom Rack delivered 4% comparable sales growth. We’re particularly encouraged that our online business sustained its momentum, with digital sales growth of over 6%. Customers responded to newness in our selection of the brands that matter most to them, driving positive total company net sales growth for the fourth consecutive quarter.”

The third quarter showed improved spend across all income cohorts, Nordstrom said, adding “customer health metrics look good. Customer trips and average order per trip improved across both banners.”

CFO Cathy Smith praised the customer metrics for the third quarter.

“Our efforts to improve the customer experience are taking hold, as evidenced by the strength of our top line,” she explained. “In the third quarter, we again grew our customer count, reported an increase in customer trips, and expanded our margins.”

Digital sales grew 6.4% in the third quarter, representing the sixth consecutive quarter of sequential improvement, and 34% of total sales during the quarter. Nordstrom’s net sales increased 4.6%, to $3.34 billion, while total company comparable sales rose 4%.

The growth of Nordstrom’s digital business is a testament to the retailer’s focus on enhancing its customer experience. Nordstrom has also made key investments in its digital platforms, such as enhancing its website and app to improve the customer experience. Erik Nordstrom emphasized the importance of aligning business strategies with customer preferences.

“As an omnichannel retailer, we have to be prepared to serve customers when, where, and how they want to shop, and service is always our No. 1 priority,” he said. “Our customers define what good service is. … For our customers that prefer to shop online, we aim to make the experience seamless and engaging through technology.”

Operational optimization is another priority for Nordstrom as it seeks to maintain its momentum. Improvements in the supply chain have not only helped reduce operating expenses but have also increased the speed of order fulfillment.

“Faster fulfillment and delivery of items drove an over 40% improvement in the speed of customer returns in the third quarter,” Nordstrom said. “Returns that come in faster mean that we can process, inspect, and get the items back into our inventory in a sellable condition in less time, increasing the product’s overall full price exposure.

“Throughout the year, the supply chain team’s efforts have also supported our new Rack store openings successfully. More recently, they have positioned us well heading into holiday in terms of inventory flow, staffing and shipping capacity.”

Despite some challenges, including a slight slowdown in sales at the end of October, Nordstrom officials remain optimistic about the upcoming holiday season. Smith noted that while the external environment remains uncertain, the company’s ability to execute its strategies across both banners and provide great customer service puts it in a strong position to succeed.