Posts Tagged 'Nordstrom'

Is Gen Z uniquely bargain-conscious?

From a couple of recent posts on RetailWire, here are some comments about whether today’s Gen Z shopper entering the consumer landscape is more price-conscious than his/her older sibling, parent or grandparent. My opinion:

Shoppers regardless of age are more price-conscious and value-oriented than ever. Some of this is residue from the Great Recession, and some of this results from the “empowered shopper” with plenty of price data as close as the nearest cell phone.

I wouldn’t describe Gen Z as uniquely price-oriented. I’ve taught a college-level retailing class for ten years, and it’s always a challenge to discuss retailers that the students can’t afford to buy from. (And today’s college students fall right into the Gen Z age profile.) These are mostly students who are working through college while taking on significant debt, so it’s no wonder that they visit TJMaxx instead of Nordstrom. But their spending power will change as they form households and grow their career earnings potential.

And from a later post on the same topic:

I’m not convinced that Gen Z shoppers are any more or less bargain-conscious than their older siblings, parents or grandparents. It’s the world we have lived in for a long time — not just post-recession or with the advent of m-commerce. It’s not by accident that Target, Walmart, Kmart, Kohl’s and others opened their doors in 1962 because it signaled a “search for value” that hasn’t let up.

I’m more focused on the two items on the list that will affect stores’ real estate strategies for years to come. If Gen Z shoppers are both mall-agnostic and commute-averse, this will benefit neighborhood retailers — or at least those retailers willing to rethink their traditional approaches to site selection. And, of course, it benefits e-commerce retailers like Amazon who bring a different meaning to “localization.”

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Department stores expand off-price concepts

Macy’s reported in its year-end earnings call that it plans to expand its Backstage off-price concept to 100 more stores this year. (And Backstage is located inside existing Macy’s locations.) Here’s what I had to say on RetailWire about the wisdom of this trend:

There is a big difference between what Nordstrom and Kohl’s are doing (building out freestanding Rack and Off/Aisle stores) and what Macy’s is attempting by locating its Backstage concept inside its full-line stores. Either way, department stores are jumping on the off-price bandwagon because it’s a hot segment with the “treasure hunt” experience that some shoppers are looking for. But at what point does the segment get overcrowded?

Macy’s may feel strongly enough about Backstage to roll it into more locations, but from my experience it does nothing to enhance the overall store “brand.” (Bob is dead-on regarding the housekeeping.) And the merchandise content is not compelling, since Macy’s “upstairs” brands feel safer dealing with TJX than having their goods show up in Backstage. From what I’ve observed, there is a lot of closeout product from brands that you might find at JCP or Kohl’s but not on the main floor of Macy’s.

Who’s next for cashier-less checkout?

RetailWire panelists speculated recently about how long it will take for the Amazon Go experiment to be adopted by other retailers. Here’s my brief take on the issue:

Some stores will never be suited for a cashier-less system (most obviously, retailers like Nordstrom) but it has application to plenty of other stores. It’s a question of scale and how long it will take for enough early adapters to drive the cost of these systems down for everybody else. Think about the evolution of RFID: It’s been hailed as the next big thing in inventory management but has taken seemingly forever for even big national chains to adopt the technology. I don’t expect this to be any different given the short-term capital expense involved.

Value perception not tied to discounting

Retailers who assume that customers’ value perception is based on “Did I get the best price?” are making a strategic mistake. Here’s a recent RetailWire comment on the topic:

Whether “discount” is part of your brand DNA, “value” needs to be. But don’t confuse one with the other — customers’ value perceptions may not be shaped by whether your store has the lowest price. It’s really about whether they are paying a fair price (in their minds) for the goods and services received, so “lowest common denominator” is not always the right answer.

Once you make the distinction between value and discount, I do agree that “convenience” is a common thread across all kinds of retailers. But what constitutes convenience? For some stores, it might be a saturation approach to their location strategy (think Starbucks or Walgreens). For others, like Nordstrom with fewer locations, it might involve everything from free shipping to the 24/7 curbside pickup that they are testing this holiday season. The Amazon model doesn’t fit all circumstances, but Amazon has clearly raised shoppers’ expectations.

The “upselling” opportunity depends on training

From a recent RetailWire discussion, here are my thoughts on the volume opportunity of “upselling.” As usual, the issue depends on the kind of retailer we’re talking about:

Upselling can’t work everywhere — in a mass merchant or discounter, for example, where associate training is more focused on “process” like running the registers or restocking the shelves. But there are plenty of specialty stores (and even department stores) that need to make upselling part of associate training in the first place. Filtering out candidates during the hiring process if they are uncomfortable engaging with customers is the obvious place to start, followed by extensive role modeling after the hire.

Who does this the best? I’d argue that Nordstrom has always made it part of the company culture. In the shoe department, for example, associates are trained to bring out three pairs if the customer picks just one to try on. It’s a simple lesson for other stores to learn, if they’re willing to try.

Does “customer service” still have a meaning?

I’ve long maintained that “customer service” is in the eye of the beholder, especially depending on the type of retailer or website being visited. This is more true than ever in today’s “omnichannel” world, and here’s a recent RetailWire comment on the topic:

Customer service is part of (but not all of) the customer experience. The entire experience includes the store’s “silent salespeople” (store atmospherics, design, etc.), the interaction with e-commerce, the pricing strategy and above all the merchandise.

Meeting or exceeding customers’ expectations for “good service” depends on the type of store, as other panelists rightly point out. Good customer service in a high-touch atmosphere like Nordstrom is far different from what the Target shopper expects: Merchandise in stock, easy to find, and easy to pay for quickly. But getting this right is only one piece of the puzzle for any retailer.

Second quarter sales show a pulse

The stock market did not react well to most stores’ second quarter earnings, but there were hints of improvement from most retailers. My comment below (from RetailWire) focuses on Nordstrom in particular but several other stores show signs of figuring out omnichannel too:

The results of Nordstrom’s Anniversary Sale (and the “less bad” sales reports from Macy’s and Kohl’s) may point toward a stronger second half than expected. It’s too early to tell if we’re seeing a full-fledged revival of women’s apparel sales (still reported as a weak spot on Kohl’s earnings call), but the Nordstrom numbers are encouraging.

I shopped the Anniversary Sale in a couple of markets, and you’d be hard pressed to find a robust sale offering in men’s or women’s — so there must have been some traffic-driven regular-price selling in the mix. Hats off to Nordstrom for sticking to its promotional discipline, and for continuing to ride the success of its Rack and e-commerce businesses.


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