Fashion Retail And Mall Management

NIFT, KOLKATA

Overview of Nordstrom Inc.

-Presented BySushant Lulla

Objectives To study the corporate history of Nordstrom Inc. To study the organisational structure of Nordstrom

Inc. To identify the product lines offered by Nordstrom

Inc. To identify the various locations where Nordstrom

is operating. To study the target market with the help of VALs

model of Nordstrom Inc. To analyse the financial statements of 5 years that

is 2013-2009

Founded by John W. Nordstrom and Carl F. Wallin and headquartered in Seattle.

•323 US stores operating in 38 states and Canada,, it also operates through its online presence and catalogues. 

Introduction

First Nordstrom Shoe Store, Seattle, WA, 1901

Mission Statement: "At Nordstrom, we value the richness that diversity brings to our workforce - it makes our Company better and the communities we serve stronger."

Slogan: "Reinvent yourself."

Corporate History

1901- Founded by John W.Nordstrom Family Business of Shoes

1989- Nation’s leading speciality retailer Apparel Shoes Acessories

20 years of uninterrupted earnings growth;

Highest profit margins in the Industry;

National Retail Merchants Association Gold Medal

Timeline

2011: acquired Hautelook

Milestones

1971- Taken pulic on NASDAQ

1975- Approached its 250 millionmark making it the 3rd largest retailer in the U.S Market

1988- First store opened outside of the West Coast (Tysons Corner). 1999- Moves to the

New York Stock Exchange

1978-1995 – Opened 46 full line stores.

2009- Introduced E-Commerce inside and outside of the U.S

1901 – John Nordstrom & Carl William opened up William & Nordstrom1929 – William sold their shares to John Nordstrom1959 – Opened 8 store in 2 states but only sold shoes.

Store Format

Departmental store in retail format • Has both brick and mortar & e-

commerce site.

Format

OFF

PRIC

E ST

ORES

FULL

PRI

CE S

TORE

S

Competitors

Perceptual Mapping

Store Locations

Nordstrom currently operates a total of 323 stores located in 39 states and Canada.•121full-line stores in the United States and Canada,• 194 Nordstrom Racks• two Jeffrey boutiques• one clearance store.

Where you Can find Nordstrom:

the Retail segment includes :o 115 “Nordstrom” branded

full-line stores in the U.S. o Nordstrom.como 167 off-price Nordstrom Rack

storeso two Canada full-line storeso Nordstromrack.como HauteLook, o five Trunk Club showrooms o TrunkClub.como our two Jeffrey boutiques o and one clearance store that

operates under the name “Last Chance.”

Organizational Structure Of Nordstrom Inc.

Directly below customers is the floor sales staff. They are the ones who deal with the customers.

As a result, Nordstrom management gives these people authority to make customers happy with their shopping experience.

NORDSTROM INVERTS THE ORGANIZATIONAL PYRAMID

•It adopts the Nordstrom paradigm, placing the importance of customers at the top of the hierarchy. • It determines how the organization strives to empower them in the proper handling of customer relationships.•This thinking also gives the organization chart a higher purpose.• Rather than being just a visual display of titles and a reporting hierarchy, the new org chart has a more holistic, strategic approach. It forces the entire enterprise to focus on providing the best possible customer experience.

Target Market

Nordstrom target market

Upper middle class who are fashion conscience and want to experiment with the latest trends.

People who want to buy luxury goods and status conscience. Age: all age groups Income : earning income above 1000 $ and above . Nordstrom is also attracting Millennials—

consumers between the ages of 16 and 34. They are well-informed about the products that they buy and are one of the key drivers of the company’s online business.

VALs model

Trend showing customers in Nordstrom

Product lines

Major brands

Marketing strategy

“ Consumer Service First Always First.”

• The marketing strategy used by Nordstrom is very unconventional because they actually use their customer satisfaction to help keep their business running smoothly.

• Nordstrom constantly changes as the market changes & that’s what is keeping them at the top the list.

• The customers can be a company’s best friend or worst enemy Nordstrom understands that and that’s why their customer first mentally have them in good standing even with their little to no use Advertising.

Market Penetration

Open door policy Nordstrom also carries an open door policy

which allows any customer or employee to talk to the store manager directly at any time & even to Erick Nordstrom the current president of Nordstrom INC.

Erick Nordstrom does not have a secretary . Every person that calls him during the specified hours , will reach him & have a chance to share their personal Nordstrom experience.

Strategic Planning

Promotions Through Internet

Facebook

Instagram

Twitter Promote sales and promotions.

Contest for retweets Use of #nordstorm 421k followers

Google AdWords

SWOT Analysis Strengths 1. Nearly 120 Full-Line stores and 110 Nordstrom

Racks2. Revenue performance is strong and has a good market reputation among customers3. 52,000+ employees4. Operates in Clothing, footwear, bedding, furniture, jewelry, beauty products, cafe, and House Ware category5. Offers free shipment options to customers which adds experience and value

Weaknesses 1.Presence in other continents Is very low2. Presence of many similar stores means market share is stagnant

Opportunities 1.Disposable income is increasing of the customers2. Tapping the international market specially emerging economies3. Acquisition of smaller retail chains4. More visibility through advertising and customer focused services

Threats 1. Reducing Sales may dilute brand equity2.Emotional connect with customer might decline3. Strong competitors and economic scenario can affect operations

Financial Statement Of Nordstrom Inc.

Dollars in millions except per share and per square foot amounts. Source: https://materials.proxyvote.com/Approved/655664/20150302/AR_238326/pubData/source/366397_LoRes.pdf

Key performance indicators and ratios

Net sales

There is an increase in the net sales of the company by 7.8% from 2013 to 2014.

This has happened due 65 new stores have opened up there is an increase in sales.

Net Sales By Channel Of Sale

Over all increase in the no. of stores led in increase in sales

Percentage of net sales by merchandise category:

2013 2012 20140

20

40

60

80

100

120

31 31 30

23 23 23

16 16 16

14 13 1411 11 113 3 42 3 2

otherkids apparelcosmeticswomens accessoriesmens apparelshoeswomens apparel

year

% o

f net

sal

es

Implication

The share of women's apparel is the most as they offer the most variety in this segment. Women being their main customers buy the most amount of merchandise as they offer great discounts and specials deals.

Earnings Before Interest And Income Taxes (Ebit) ($)

This indicator gives information on a company's earnings ability.

Decrease in EBIT margin largely results from reduction in revenue and higher operating costs

Sales Per Square Foot And 4-wall Sales Per Square Foot ($)

There is a decline in 2013 in sales per sq. ft. with an increase in the next year of 4%.

As real estate is expensive and none of the area should be left unutilized and underused , with increase in floor

area there is rise in sales.

Number of stores

Nordstrom expanding by opening more number of stores to grab the market.

Gross Margin return on inventory GMROI= gross margin/ average inventory

2012 2013 20143.2

3.25

3.3

3.35

3.43.45

3.5

3.3

3.47

3.3

YEAR

GM

ROI

Implications The Gross Margin Return On Inventory Is Decreasing

Gross Margin Is Decreasing With The Inventory Remaining Constant – Loss - Sales Are Decreasing -People Not Liking The Stock Or The Other Reasons.

Average Inventory Cost Is Increasing With Gross Margin Remaining Constant. Could Be Due To Bad Relationship With Vendors Or Increase In Costs Of Manufacturing.

Both The Inventory Cost And And Gross Margin Are Decreasing . There Is A Loss.

Gross Margin Per Square Feet

GMPSF= gross margin/ area(sq ft)

2012 2013 2014169.6169.8

170170.2170.4170.6170.8

171171.2171.4

171.21

170.23

171.21

year

GM

PSF

The Increase In Sales With Increase In Floor Space Shows Positive Results.Sales Has Increase And Sales Per Square Feet Of Retail Space Has Also Increased-Consumers Are Increasingly Preferring Nordstrom As Their Shopping Destination.

Gross Margin return on labor GMROL= gross margin/ number of labors

2012 2013 20146980070000702007040070600708007100071200

70983.6 70864

70208.95

YEAR

GM

ROL

It means a measure of inventory productivity that expresses the relationship between your gross margin & full time employees .

STOCK TURNOVER

2012 2013 20144.24.44.64.8

55.25.45.6

5.375.07

4.67

YEAR

STO

CKTU

RNO

VER

Inventory turnover rate decreased to 4.67 times in 2014, from 5.07 times in 2013. Ending inventory per square foot increased 8.8% compared with the same period in 2013, which outpaced the total sales per square foot increase of 3.9% primarily due to planned inventory growth related to Nordstrom Rack and Nordstromrack.com and HauteLook.

Return on Invested Capital %

2012 2013 201413.5

14

14.5

15

15.5

16

16.5

14.65

15.6716.28

YEAR

ROIC

A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. By this from the figures above stating that nodstrom is investing properly .

Current ratio

2012 2013 20141.952

2.052.1

2.152.2

2.252.3

2.16

2.28

2.06

YEAR

Curr

ent r

atio

The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities.

Quick ratio

2012 2013 20141.41.451.5

1.551.6

1.65

1.61 1.63

1.49

YEAR

quic

k ra

tio

The quick ratio is a financial ratio used to gauge a company's liquidity.The quick ratio compares the total amount of cash + marketable securities + accounts receivable to the amount of current liabilities.  

Debt – equity ratio

2012 2013 20141.4

1.45

1.5

1.55

1.6

1.65

1.61 1.63

1.49

YEAR

debt

-equ

ity r

atio

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets

Fixed asset turnover

2012 2013 20144.44.454.5

4.554.6

4.654.7

4.754.8

4.85

4.54

4.81

4.54

YEAR

Fixe

d as

set t

urno

ver

The fixed asset turnover ratio is an efficiency ratio that measures a companies return on their investment in property, plant, and equipment by comparing net sales with fixed assets. In other words, it calculates how efficiently a company is a producing sales with its machines and equipment.

Cash Conversion Cycle

2012 2013 201476

76.5

77

77.5

78

78.5

78.13

76.7777.22

YEAR

Cash

con

vers

ion

rati

o

The cash conversion cycle is a cash flow calculation that attempts to measure the time it takes a company to convert its investment in inventory and other resource inputs into cash.

Dividend payout ratio

2012 2013 20142828.5

2929.5

3030.5

3131.5

32

29.3

31.731.1

YEAR

Div

iden

d pa

yout

ra

tio

The dividend payout ratio is the percentage of earnings paid to shareholders in dividends.

References http://financials.morningstar.com/ratios/r.

html?t=JWN https://materials.proxyvote.com/Appr

oved/655664/20150302/AR_238326/pubData/source/366397_LoRes.pdf

http://www.nasdaq.com/symbol/jwn/financials?query=income-statement

Thank You