The retail shopping experience is evolving at a fast clip. Omni-channel retailing is now a way of life. “Typical apparel consumers shop a brand, not a channel. They want the merchandise where they want it, when they want it, and how they want it,” notes Garter analyst, Jessica O’Brien . Coupled with this is the increasing number of SKUs retailers are pressured to keep due to increasing demand for personalization  . Given these factors, it is imperative that high-volume retailers like Nordstrom be ahead of the curve on thinking about how their supply chain will be impacted . Successful retailers are able to combine pleasing consumers and controlling inventory costs in this new environment. This is not an easy feat — it requires a highly advanced supply chain management approach and the ability to test and learn.
How Nordstrom Has Responded
To address this challenge of delighting customers while controlling costs, in the short term, Nordstrom is using and investing in the success of supply chain software companies. In 2016, Nordstrom acquired a minority stake in Dsco, a Utah-based supply chain software firm . Dsco’s flagship product is a software that allows retailers to utilize “drop shipping,” where the product is shipped to the consumer directly from the manufacturer, as opposed to shipping from one of Nordstrom’s distribution centers. Drop shipping delights the customer through facilitating faster delivery and allows Nordstrom to lower inventory carrying costs.
Nordstrom is also investing in experienced senior executive leadership in their supply chain organization, signaling the importance of this function for the company. In March 2017, the company appointed Brent Beabout as the executive vice president of supply chain . Beabout comes from Walmart, who is also known for their excellence in modernizing their supply chain to meet changing consumer demand .
Lastly, Nordstrom has pioneered efforts in leveraging sharing economy platforms to better serve consumers and move inventory more quickly. The company was one of the first to sign up as a retailer on UberRUSH, allowing consumers to have their Nordstrom orders delivered by Uber’s service (within hours in a few test markets) . Being at the forefront of trends such as delivery via UberRUSH is a key supply chain strategy. New delivery offerings can take off quickly. If this happens before a retailer has been able to test and iterate on how to make an offering integrate with their operations, they could lose out due to lack of preparation. If it is able to scale, UberRUSH will provide Nordstrom with another channel to move inventory out of their warehouses and into the hands of customers more quickly, using the power of technology they did not even have to develop.
Although Nordstrom is being thoughtful about modernizing their supply chain practices, they will need to remain vigilant about anticipating and testing how they can leverage new retail developments to continue optimizing their supply chain and delighting their customers at the same time.
One store improvement Nordstrom should test is the adoption of of smart shelves. Smart shelves are wireless inventory control systems that control inventory ordering via weight sensors. When a shelf is down to a few items or empty, the weight sensors notify the back-end system with the need to order, completely digitally. . Smart Shelves have been a topic of discussion in the retail space for a few years, but have not gained widespread adoption. . Smart shelves provide another way for Nordstrom to stay ahead of consumer demand and purchase what they know is selling in the appropriate quantities.
Another sales tool Nordstrom should test utilizing is virtual reality. Through virtual reality, consumers can create representations of themselves to try on clothes digitally . This would not only lower the barrier to purchasing new clothes for consumers, it would also optimize Nordstrom’s ordering through better predicted demand. Nordstrom supply chain professionals can monitor which items are being tried on most frequently via virtual reality in different locations and and adjust ordering appropriately.
My questions center around how Nordstrom can integrate some of these forward-looking technologies in a way that is true to their brand. Nordstrom is known for providing excellent customer service and for being on the “trendier” end in the market of large department stores . Given that, items that sell out can help to cultivate the scarcity that fashion brands like. Would Nordstrom want to over-optimize on ensuring popular items are always in stock? Additionally, trying clothes on in the store provides a touchpoint for Nordstrom sales reps to prove their value through suggesting other items and building a relationship. Is this something Nordstrom should want less of in the name of lower labor costs and providing a variety of options for customers to engage? (789 words)
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Cover image: Forbes, Image, https://specials-images.forbesimg.com/imageserve/1c56e783bcd546338e1aa093a6f60dc3/960×0.jpg?fit=scale, accessed November 2017