Nordstrom's sales drop after cutting Direct Mail
Erik B. Nordstrom, Co-President of Nordstrom, cut his forecast for sales and profit
after they had a weaker than expected Q1. In a May 21, 2019 Earnings Call, Erik
Nordstrom noted “While we believe our customer strategy and business model position
us for long-term success, our first quarter top line results were well below our
expectations.”
However, the execution
of our rollout was not as successful as we had planned. As part of our decision
to move to a digital-first program, we eliminated paper notes but later
discovered that a segment of our customer base relies on receiving these notes
by mail.
Nordstrom noted “During the first quarter, we had some executional misses with
the customer experience that had an impact on sales across Full-Price and
Off-Price both in stores and online.” He continued “Beginning with loyalty. We
have a well-established program with nearly 12 million active customers
contributing more than 60% of sales in the first quarter. Last fall, we evolved
the program with The Nordy Club, which allows customers to earn reward notes
faster and provides early access to product and events.
However, the execution
of our rollout was not as successful as we had planned. As part of our decision
to move to a digital-first program, we eliminated paper notes but later
discovered that a segment of our customer base relies on receiving these notes
by mail.
As a result, we saw a reduction in traffic across Full-Price and
Off-Price.
He concluded: “In closing, we own our result, and we’re focused on getting our
sales back on track. As always, the customer is at the center of everything we
do, and through that lens, we’re committed to better serving them on their
terms”.
Let’s think about what he said: Nordstrom stopped mailing notes to its
loyalty customers as they tried to launch the program online and reach
customers faster. But what really happened? Nordstrom saw a reduction in
traffic to their stores as customers relied on receiving the rewards by
mail. Clearly Nordstrom executives were not anticipating this reaction.
What is the takeaway? Consumers still rely upon direct mail.