Nordstrom’s Goal: Add Five Million Customers to Its Loyalty Program in Next 12 Months

Nordstrom experienced a less than stellar first-quarter performance. While sales increased 2.5%, it experienced a comp decrease of 1.7%, which fell short of its planned low single-digit increase. Perhaps, Nordstrom’s plan to expand its loyalty program on May 18 comes at an opportune time.

“Despite our focused efforts to manage through this current environment, we are not satisfied with our results,” Nordstrom Co-President and Director Blake Nordstrom said during the company’s May 12 earnings call, according to Seeking Alpha. “Given these sales trends, our inventories were too high, which puts pressure on our margins and necessitates additional markdowns. Our team has aggressively addressed our inventory position, and as a result, we ended the quarter with inventory up 5% versus sales growth of 2%.”

Nordstrom plans to roll out an expanded Nordstrom Rewards loyalty program on May 18.

“We’re rolling out an expanded Nordstrom Rewards loyalty program that will allow all of our customers to earn rewards with or without a Nordstrom card,” Blake Nordstrom said. “Our Rewards customers are many of our most loyal and best customers, spending four times more annually. Today, only about one out of five customers are part of our program, yet their spend contributes roughly 40% of our sales. This opportunity to reward all of our customers is big. Over the next 12 months, our goal is to add five  million customers to our program. This will drive more sales and trips, and more importantly, it will enable us to better engage with our customers.”

On April 18, Nordstrom announced expense reduction efforts, predominantly in its Seattle headquarters, of $60 million. This includes the elimination of approximately 400 roles, which is about 7% of its corporate positions.

“This will improve our focus and execution and make us more nimble to respond to the business environment,” Blake Nordstrom said. “As we look at the balance of the year, we are actively implementing a number of initiatives to drive top-line growth and improve the customer experience. On the technology and ecommerce side, we are investing to create a more seamless experience across stores and online. This reflects continued modernization of our technology platform, including a scalable merchandising solution as well as service and experience features. These are significant projects. They account for two-thirds of our overall technology investments this year.”

Nordstrom is focused on improving convenience in its stores.

“As a recent example, we enhanced the buy online, pickup-in-store experience by providing curbside pickup in all of our full-line stores,” Blake Nordstrom said. “Additionally, we are upgrading our scheduling tool to support our team’s efforts to ensure we have the right people in the right place at the right time. This will help improve customer service and productivity.”

Michael G. Koppel, Nordstrom’s Chief Financial Officer & Executive Vice President, added that the company is “aggressively prioritizing its resources to assure that every dollar spent is meaningful to the customer experience, and we’ll continue to challenge activities that are not.”

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