Retail progress reports – GAP and Nordstrom ready for omni-channel Holidays

SUMMARY:

It’s nearly time for the Holidays and that means retail wars. On eve of battle, GAP and Nordstrom update on their omni-channel capabilities.

Continuing with this week’s theme of pre-Holidays season omni-channel retail progress reports, we’ll round off for now with GAP and Nordstrom.

Both are classic examples of well-known offline brands that have been through some turbulent times with the rise of dot com challengers, as well as the arrival of lower-priced rivals, such as H&M and Zara.

Both have however managed to steady the ships as the Holidays loom. GAP this week upped its quaterly profit by 12% while same-store sales beat Wall Street expectations. Nordstrom got a rougher ride, fuelled by a public row over its limited plus-size options, but still turned in a small rise in revenues in its most recent quarter.

For GAP CEO Art Peck, the challenge ahead is built around a basic premise:

The ability to meet our customers where they are and deliver an exceptional experience, whether that is online, on a mobile device, or in our 3,300 stores around the world.

To assist in achieving this. the past six months have been focused around customer acquisition, he says:

We’ve accelerated the growth of our customer file database to the mid-single digits from negative, helping drive our online and mobile businesses to grow in the high teens.

These investments are also driving multi-channel behavior with all of our brands beating industry store traffic in Q3. This marks the third consecutive quarter for a traffic beat for Gap and Old Navy and the first for Banana Republic. This is an important and excellent improvement compared to where we were even a year ago.

The firm has also spent time and money to roll out improvements to its customer-facing tech:

We’ve also continued to build on our features and functionality and capability in our web and app-based technologies to improve the customer experience. Also, as we’ve had Ship from Store, Find in Store and Reserve in Store for several years now, this quarter we’ve added Buy Online and Pick Up in Store to two markets, Chicago and San Francisco. It is early days, but we’re extremely encouraged by the results so far.

Beyond online and mobile, our multi-tender loyalty program, BRIGHT Rewards, is now live at Old Navy in Dallas and Atlanta. Customers are heavily engaged so far. With the test stores, we’ve seen a 2x lift in the number of customers we’re able to contact versus our card-based rewards program. This is an exciting step forward to be able to reach our engaged non-card holding customer and offer her a tiered version of our rewards offering.

Away from customer view, but intrinsic to boosting the customer experience, there’s also been some important spend on essential infrastructure:

We are continuing to invest in the underlying capabilities in fulfillment in our distribution centers (DC)…we are investing in leveraging existing building capacity in our retail DCs to be able to fulfill direct orders out of those DCs as well. That really is meeting the continuing and accelerating demand that we’re seeing in our online space. That’s a big part of it. There’s technology investment and there are other pieces as well, but that’s an important customer-facing piece.

Nordstrom newness

Meanwhile over at Nordstrom, online retails across the brand’s various digital platforms now accounts for 25% of total sales. Co-President Blake Nordstrom believes that the firm’s well-positioned for the upcoming Holidays:

During this holiday period, we believe the strength of our digital capabilities along with our local market assets, our people, product, and place represent a significant competitive advantage in serving our customers.

Being able to enagage customers at all times is a priority, he adds:

We’re focused on making Nordstrom a convenient place for customers to do their Holiday shopping. We have a number of initiatives in place….We’ve invested in key categories and brands that resonate most with our customers. This includes expanding our online selection and fulfillment capacity to support the peak volumes that we expect during the holidays.

To make shopping faster and easier, we offer in our full-line stores Buy Online Pick up In-store with an option for curbside services. Also, in several markets, we have available Reserve Online and Try In-Store and same-day delivery services. Next month, we’ll offer 24-hour curbside pickup in major markets, including Seattle, Chicago, Dallas, and San Diego.

An aspiration for Nordsom is “providing newness” when it comes to customer engagement and experience, explains Nordstrom:

[One] way we’re engaging with customers on their terms is our Reserve Online and Try In-Store service, which we recently expanded to more than 50 stores across the country. Our customers appreciate its speed and convenience. It frees up their time, and if they choose to do additional shopping in our store, this results in a material lift in their spend.

We’re also connecting the digital and in-store experience with our Style Boards. This digital selling tool leverages the expertise of our salespeople and enables customers to receive personalized product recommendations on their mobile phones.

Another way to improve customer perceptions and stickiness with the brand is in the area of increased shipping options, he adds:

Shipping options, that is a place that we think we can absolutely win with the customer. Again, it’s leveraging our assets. We have a lot of different ways for the customer to engage with us and a lot of different ways of connecting the merchandise the customer wants with how they want to receive it. So, be it in a store, be at their home, be at the discovery portion being digital or in a physical environment.

So, you will continue to see us offer more options for the customers. Because we think t’s not just getting merchandise to the customer faster, it’s giving the customer control of how they want it while also offering as much selection as possible for the timeframe that they want to get the merchandise.

My take

Next week sees the US Holidays retail period kick off in earnest, now mimicked by other countries. Thanksgiving, Black Friday, Cyber Monday, Christmas – all to come. And with them will come a tsunami of stats around who wins and who loses, online and offline. We’ll pick up that as and when. But the winners in the war against Amazon will be those with the strongest omni-channel capabilities – and that means offline as well as online.

Image credit - Nordstrom/GAP

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