The traditional retail model has drastically changed over the past couple of decades. Technology has served as a major driving force in enabling much of this change. Further, the emergence and growth of large e-commerce retail players such as Amazon and EBAY has added a new layer of convenience and has influenced consumer purchasing behavior. So when consumers can purchase virtually any good or service by pressing one button, the last thing they want to do is wait in long lines at a brick and mortar retail store. Nordstrom, a company intently focused on superior customer experience, recognized the need to limit customer check-out wait time in 2011 and made a large investment in mobile point of sale devices. These devices enabled employees roam freely and check out customers from anywhere in the store. Nordstrom was the first fashion retailer to utilize this type of technology and reaped many financial and operational rewards for this strategic decision. Retails stores like Apple and Home Depot were also early adopters of mobile point of sale devices, all of these companies introduced point of sale devices to enhance the customer experience and challenge the traditional bounds of the a retail store.
Nordstrom announced the roll-out of the mobile point of sale devices in early 2011 as part of a broader technological investment into their stores which included enhancing in-store wi-fi capabilities and upgrading the company website. The mobile device was essentially a modified iPad touch with a credit card reader attached and allowed the employees to roam freely around the store to both assist customers with purchasing decisions and help them check out. The initial deployment tested the technology in certain store locations and led to the eventual roll out of 6,000 devices over their 117 full-line stores. The full roll out included more mobile devices than registers and ran parallel with the integration of the store and online inventory which provided the option for Nordstrom to ship products directly to the customer during the point of sale. The mobile device also allowed for customers to receive their paperless receipt through email.
What started as a means to increase efficiency and decrease customer wait times led to an overall improvement in business performance. The point of sale devices limited the time that customers had to think about their purchases before they reach the register. This is a critical factor in a high end store where purchasing decisions often involve a few hundred dollars and are can be impulsive splurges which often result in high abandonment with increased wait time. After the implementation of the devices, Nordstrom decreased the abandonment rates and saw the average purchase price and number of items sold go up significantly. Nordstrom leveraged this platform to reinforce their business model of superior customer service and extend the capabilities of their operating model by creating additional capabilities upon which to execute on their customer promise. Nordstrom’s foray into digitization of the checkout process compliments there e-commerce platform and allows the company to better compete with its pure play online competitors. Further, mobile devices have positively contributed to Nordstrom’s bottom and top line as they are less expensive that traditional cash registers and enables Nordstrom to do more with less employees. As a result of the massive benefits experienced by Nordstrom and other early adopters, many large retailers have followed suit and implemented mobile point of sale devices.
Given the massive rewards that Nordstrom experienced from its digital transition, the question remains whether Nordstrom will continue to invest and leverage technology as an competitive advantage. While luxury goods are more insulated from competitive e-commerce players than traditional retailers, I believe that they must continue to innovation to remain competitive and grow sales.