Nordstrom Boosts Store Fulfillment Capabilities

As Nordstrom plans to reopen stores, the department store and off-price retailer is boosting its digital and store capabilities. The company also plans to permanently close 16 full-line stores.

“We’ve been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations. The impact of COVID-19 is only accelerating the importance of these capabilities in serving customers,” said Erik Nordstrom, CEO of Nordstrom. “More than ever, we need to work with flexibility and speed. Our market strategy helps with both, bringing inventory closer to where customers live and work, allowing us to use our stores as fulfillment centers to get products to customers faster, and connecting digital and physical experiences with services like curbside pickup and returns.”

Nordstrom is also restructuring its regions, support roles and corporate organization for greater speed and flexibility. This restructuring is expected to result in expense savings of approximately $150 million, or 30% of the company’s previously announced plans for net cash reductions of more than $500 million in operating expenses, capital expenditures and working capital. These actions, combined with its initial savings plan of $200 to $250 million, represent a reduction in non-occupancy related overhead expenses of approximately 20%.

With stores being temporarily closed since March 17, Nordstrom plans to reopen stores in a phased, market-by-market approach where allowed by local authorities and with the health and safety of employees, customers and communities as a priority. Given this phased approach, the company is shifting its Anniversary Sale event from July into August.

While stores are temporarily closed, the company said it is generating solid online traffic and conversion and clearing excess inventory through increased marketing and promotional efforts. The company’s store fulfillment capabilities are an important way to leverage inventory and bring greater selection to customers in its markets. Beginning in mid-April, the company added these capabilities at Nordstrom Rack stores, which enabled store fulfillment throughout Nordstrom’s entire fleet of stores.