The nordstrom way

The origins of Nordstrom trace back to 1901, when John W. Nordstrom, a Swedish immigrant, and Carl F. Wallin, a shoemaker, inaugurated a modest shoe store named Wallin & Nordstrom in downtown Seattle. The establishment was grounded on the principle of superior customer service, epitomized by the motto "the customer is always right." On its first day, the store earned a modest $12.50, but through relentless effort, its annual revenue soared to $47,000 by 1905.

The founders expanded their workforce and opened another location in Seattle in 1923. John Nordstrom retired in 1928, passing his shares to his sons, Everett and Elmer, for $120,000. Carl Wallin retired the following year, selling his portion to the Nordstrom brothers, who then renovated and rebranded the stores as Nordstrom's. Despite the challenges of the Great Depression in 1931, the brothers managed to keep the business afloat with wise management. In 1932, Lloyd, the third son of John, joined the company, with each brother taking on specific roles to drive the business forward.

Nordstrom's business philosophy revolves around a straightforward yet powerful objective: empowering employees to treat customers with the same care they would want for themselves. This guiding principle forms the bedrock of Nordstrom's organizational structure, meticulously crafted to facilitate exceptional customer service.

Central to Nordstrom's success is its robust internal culture, anchored by core values that uphold its customer-centric ethos. At the heart of this culture is the inverted pyramid structure, where sales staff are positioned at the foundation. This structural design underscores the notion that every individual within the company supports frontline sales teams.

This unique organizational setup eliminates traditional barriers on the sales floor, enabling any employee to assist with sales across departments. This flexibility ensures that customer needs are prioritized over departmental boundaries, fostering a seamless shopping experience.

Nordstrom's commitment to nurturing talent is evident in its promotion policy, which exclusively promotes from within. Managers rise through the ranks, starting as sales associates themselves, ensuring they possess a deep understanding of customer service at every level of leadership.

Nordstrom aims to create a memorable shopping experience for every customer who visits its stores. The in-store environment is considered an extension of Nordstrom's superior customer service philosophy. Several key elements work together to shape the Nordstrom shopping experience. Even before entering the store, Nordstrom strives to make things convenient through ample parking. Valet parking is also offered during busy sale periods.

Once inside, the focus is on enthusiasm and ease of movement. Wide aisles allow customers to circulate freely and goods are arranged by lifestyle categories so complete outfits can be assembled efficiently. Sales associates stay with shoppers to assist them throughout the store. The open floor plan provides unobstructed sightlines so customers can view the entire store.

Comfort is also paramount. Soft furnishings in each department create an inviting atmosphere conducive to browsing and trying on items. As a result, about 50 percent of total floor space is dedicated to selling areas compared to 70 percent at stores like Macy’s. However, Nordstrom packs more inventory per square foot to offset the difference. Even small details add value, like plush upholstered furniture in shoe departments. The custom chairs are made to withstand daily use, with taller legs and arms so customers can get in and out with ease, allowing them to focus on the shoes.

Nordstrom's success hinges on a unique approach to staffing and management that fosters an entrepreneurial spirit among its salespeople. The company prioritizes hiring individuals who are inherently nice and personable over those with extensive sales experience, subscribing to the belief that the foundations of excellent customer service are often laid during one's upbringing, not through formal training. This philosophy allows Nordstrom to bypass the need to retrain employees who may have been schooled in different sales techniques.

The retailer also grants its employees a high degree of flexibility, eschewing rigid sales training in favor of empowering them to serve customers in the manner they see fit. This lack of stringent guidelines enables sales associates to concentrate fully on customer satisfaction without the fear of breaching company protocols, as Nordstrom operates with minimal operating rules.

High expectations are set for the sales staff, with a clear focus on results. Salespeople are assessed based on their performance outcomes, with those failing to meet targets subject to termination. This approach ensures that only the most motivated and effective employees remain, fostering a culture of natural selection that retains top talent.

Nordstrom's sales success hinges on exceptional customer service, with a focus on cultivating long-term relationships rather than immediate profits. Sales associates at Nordstrom are committed to earning the trust and loyalty of customers through dedication and expertise. Central to this approach is the personalized customer book maintained by each associate, detailing extensive customer information, from contact details and preferences to purchase history. This tool, along with daily goals and to-do lists, helps associates tailor their outreach and service.

Associates also leverage phone calls as a vital tool, making over 40 calls a day to inform customers about new items, sales, and to maintain the customer relationship. This level of personalized communication is key to building an emotional connection with customers. Nordstrom associates often become so trusted by their regular customers that they are relied upon to make purchase decisions, reflecting the depth of the relationship built.

Despite facing major challenges brought about by new technologies, Nordstrom sees customer service remaining the core premise of its future success. Most consumers shop at Nordstrom for the service and selection rather than just low prices. So Nordstrom aims to continue providing great service in nice stores, while pricing competitively with online retailers. To do so, Nordstrom sells private label merchandise, currently 20% of sales, to maintain reasonable "price/value" margins.

Nordstrom also competes with discounters by opening Nordstrom Rack, Last Chance, and Factory Direct stores, experimenting with online sales, and launching a catalog division. Even in these initiatives, customer service is stressed—for example, direct sales include free return shipping. Nordstrom is also entering strategic partnerships with manufacturers for exclusive products.