During the U.S. recession, Nordstrom was outperforming its rivals like Macy’s and Saks.
Shortly after the recession in 2009, its overall
sales reached $8.26 billion[1], and
its gain outpaced the 13 percent advance of the
Standard & Poor’s 500 Retailing Index, while Saks had dropped 50 percent and Macy’s has lost 0.3 percent[2].
How could Nordstrom survive and thrive the recession? The secret
is not involved a piercing insight into customers. Rather, it is inventory management that
contributes to success.
Nordstrom introduces a single view of goods, which combines its
in-store and online inventory systems, and displays
stock from both the Web warehouse and its stores all at once. Say that if a customer is looking for a CK coat via Nordstrom.com, she can see
whether the coat is
available at nearby stores and reserve it for pickup the same day. More significant, if the coat is out of stock on the web warehouse, you can still order it from any other regular stores.
By comparison, Wal-Mart
can ship online items to nearby stores, and Target just displays items in
different stores without selling them in advance.
However, inventory itself is a
problem. Since there always
exist incongruity among customer service, inventory-related costs and operation, maximizing customer service somewhat
indicates expand inventory, and correspondingly increase cost. Therefore,
Nordstrom make a trade-off between inventory and customers’ need by confining
inventories to a stage where orders are well correspond with recent sales trends. If
the sales of certain merchandise fell 4 percent in the previous 2 months, for
instance, the order must be limited in the coming quarter.
The inventory
management has significant impact on Nordstrom. The
inventory turnover of Nordstrom shifted from 4.84 in 2005 to 5.41 in 2009,
indicating that very little markdown should be performed late in the season. Under that
circumstance, the company does not need to figure out an approach to maximize
the profit by calculating relativity and relationship between the original one
and the discounted one. Compared with the sale before the implementation of
inventory management, Nordstrom sales have increased by 8 percent[3].
Therefore, the inventory management of Nordstrom is of great significance since it reduces costs as well as increases the efficiency.
But there comes
a question, why other peers like Saks do not operate this way?
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