I can't recall - is it NYT or WSJ that some people can't read through links??? Anyway, here's the text of the article:
SEATTLE — Retailers have been flailing about a bit in their efforts to get people to shop again, deploying all sorts of gimmicks and promotions to spur customer spending.
Wal-Mart hoped that deeper cuts in its standard rollbacks would be a draw, but then said the prices went too low. At Saks, perhaps customers would go for designer labels if the lines offered less-expensive items. And for Macy’s, how about inexpensive clothes by Madonna?
The secret, at least for Nordstrom, has not involved a piercing insight into a customer’s mind. Rather, it has changed the way that it handles, of all things, inventory. And that has brought the department store more success in improving sales than at most of its competitors, whose recent reports signaled that their consumers were still cautious.
The change works this way: Say that a shopper was looking at a blue Marc Jacobs handbag at Nordstrom.com. She could see where it was available at nearby stores, and reserve it for pickup the same day.
More significant, if the Web warehouse was out of that bag, it did not matter. Inventory from Nordstrom’s 115 regular stores is also included. Maybe there was just one handbag left in the entire company, sitting forlornly in the back of the Roosevelt Field store — it would be displayed online and store employees would ship it to the Web customer.
What Nordstrom did on its Web site — displaying stock from both the Web warehouse and its stores all at once, was unusual. And that, said Jamie Nordstrom, president of Nordstrom Direct, drove “some pretty meaningful results.”
In fact, Nordstrom, based in Seattle, has been the department store with one of the best improvements in same-store sales over the last year, when its overall sales reached $8.26 billion. While it may not seem revolutionary, a melding of Web site and store is surprisingly rare in the retailing world.
“You’re talking about traditional retailers that have traditional ways of doing things, and sometimes those barriers are hard to break down,” said Adrianne Shapira, an analyst at Goldman Sachs.
Wal-Mart has added a feature where online shoppers can ship items to nearby stores, and Target.com shows which stores carry which items, but customers cannot buy them in advance.
Among Nordstrom’s competitors, such fluidity is hard to find, Ms. Shapira said. “I don’t see anyone going to the length they are,” she said of Nordstrom. In the 11 months since Nordstrom made the inventory change, its same-store sales — sales at stores open more than a year, a crucial measure in retail — have outperformed the department store average measured by Thomson Reuters.
In those 11 months, Nordstrom’s same-store sales increased by an average of 8 percent. In the 11 months before the shift, they decreased an average of 11.9 percent. (The improvement is not all because of the inventory change — the economy improved, and Nordstrom made other operating changes.)
Nordstrom began overhauling its online approach two years ago, adding the option to shop and buy online and pick up the item in a store. “It was the first thing that we did, because the No. 1 call we got at our call center was, ‘Hey, I’m looking at this item online, can I look at it at my store?’ ” Mr. Nordstrom said.
The company was also trying to increase the number of people who shopped at Nordstrom in more than one way, since those so-called multichannel shoppers spend four times, on average, what a one-source shopper does, Mr. Nordstrom said.
Inventory was a big issue, too. If Nordstrom.com did not have the item someone wanted, it was not as if the customer would wait for the company to restock it, Mr. Nordstrom said. “If we don’t have it, you’re going to go back to Google and say, ‘Who else has it?’ ” he said. “We have 115 full-line stores out there — chances are one of them has it.”
In September 2009, the company wove in individual stores’ inventory to the Web site, so that essentially all of the stores were also acting as warehouses for online.
Results were immediate. The percentage of customers who bought merchandise after searching for an item on the site doubled on the first day, and has stayed there (although, Mr. Nordstrom cautioned, that doubling was from a small base).
“Customers that were looking for an item, we had their size,” he said. That meant the company hired a few more shipping employees to wrap and send items from each store. But, he said, increased sales more than offset the cost.
It also means that inventory is moving faster, and often at higher prices. “If we’re out of something on the Web site, it’s probably late in the season and the stores are trying to clear it out,” he said. “By pulling merchandise from the store, you’ve now dramatically lessened the likelihood that you’ll take a markdown.”
Nordstrom’s inventory turnover, which measures how quickly a company goes through inventory in a given year, went to 5.41 in 2009 from 4.84 in 2005, a five-year high.
“The health of our business when we’re turning faster versus turning slower, it’s night and day,” Mr. Nordstrom said.
Keith Jelinek, director in the global retail practice at the consulting firm AlixPartners, said that Nordstrom’s changes could give it a competitive advantage, but showing accurate inventory information to customers was difficult.
“The customer ordering via the Web site is not concerned with where the product is, only that it is in stock,” Mr. Jelinek said in an e-mail message, but that could easily go wrong if a sales clerk entered an incorrect item number, which would “incorrectly display what the customer could see online. While, for the retailer, their financial inventory is still accurate.”
On Saturday, Nordstrom introduced an updated Web site, trying to make it more interesting for customers and easier to navigate.
The new site adds editorial features, like blogs about fashion and videos and photos of Nordstrom customers showing the clothes they chose for work and for weddings. Mr. Nordstrom said the company drew from sites like Net-a-Porter, which combine magazinelike stories with shopping. The site will also allow customers to post messages or photos. While customers are no doubt swamped with social-networking options already, Mr. Nordstrom pointed to the more than 120,000 product reviews added to Nordstrom.com since that feature was introduced last fall.
The company has also improved how shoppers can search for products, allowing searches with multiple criteria — check boxes allow someone to search for, say, a purple cocktail dress under $150 for a curvy figure.
Web-design experts asked to review the site were split on its success. Martin Zagorsek, a partner at Launch Collective, a fashion-business consulting firm, said that the editorial features did not promote the products mentioned within them, which was “a no-brainer.”
But Andy Rhodes, director for commerce at the marketing firm SapientNitro, said that Nordstrom had long been ahead of the game on the digital-to-physical connection, “and it’s nice to see they’ve brought that capability to the forefront with the new Nordstrom.com.”
All the changes, Mr. Nordstrom said, were about satisfying customers, but that translated into profits.
“We can sell more without having to buy more inventory,” he said. “That plays through to margins and, ultimately, earnings.”
