Nordstrom’s Innovation Lab, based in Seattle has been tasked with the job of mining data gathered from Facebook, Pinterest, Twitter and its loyalty card to create curated experiences for customers based off of their preferences and in-store shopping activity. For example, trending and popular products online can be displayed more prominently in-store to encourage purchases. It gives consumers the benefit of convenience and having their voice heard and ensures that the product that they see is more closely linked to what they actually want. The Innovation Lab is also focused on lean start-up fundamentals by quickly testing products and scraping them if thye are not successful. For example, the Innovation Squad began building a sunglass buying iPad app in their flagship Seattle store where they tested different features with customers that included the ability to take pictures and compare side-by-side photos to decide which pair to buy. They spent over a week in the store building the app and testing each additional feature with customers and sales people to continue iterating based upon feedback. However, in the end they decided the app was not as helpful as they wanted and it was never rolled out across stores. Nordstrom’s approach is interesting because it continually pushes for innovation while not becoming wedded to ideas and instead focusing on creating new apps and options that consumers actually love. The concepts of design thinking, ideation, and pivoting quickly are all on display here.
Value is created in this model by providing customers with easier ways to interact with and find products that are meaningful to them. It also adds a convenience factor by creating solutions that do not even require customers to be in store. Consumers can also pick and choose which technological innovations are most helpful to them and can opt in to whichever services they find most compelling.
Nordstrom has been heavily incentivizing consumers to use their Nordstrom credit card so they can better capture who is buying what and in what quantities. They are also able to use technology like WiFi signals to see where people are traveling in the store and how long they are staying. This is a good metric to use as a proxy for what products may be most engaging and which displays may need to be fixed or updated. Another unique value capture play is their texting app, TextStyle. This app allows personal shoppers at Nordstrom to text customers who opt into the program with ideas on what to purchase based on their likes and previous buys. Customers can then purchase the product right then and there by texting back a unique code, thus bypassing lengthy financial input processes since that information is already on file in the store. This allows Nordstrom to capture data from its various technological and personal interactions to up-sell customers and give them opportunities to buy product even when they are not in the store. It will also encourage consumer’s to have higher conversion to purchase ratios because the recommendations are based off of personalized data. Another similar option was PocketStyle where customers could ask personal shoppers questions about anything from makeup tips to fashion dos and don’ts. This is another option that helps consumers find the products they need will also increasing loyalty to the Nordstrom brand due to the personalized aspect of their interaction with store personnel.