How Fashion Retailer Nordstrom Drives Innovation With Big Data Experiments

Nordstrom is an American upscale fashion retailer with 225 stores and doing over $ 10 billion in annual sales. John W. Nordstrom founded it in 1901 and it embraces new technologies, including big data. Nordstrom understands the possibilities of big data and is willing to experiment with it. Although some of the experiments they do did not get the expected results, or caused a public uproar, they are moving in the right direction with big data.

Nordstrom is an American upscale fashion retailer with 225 stores and doing over $ 10 billion in annual sales. John W. Nordstrom founded it in 1901 and it embraces new technologies, including big data. Nordstrom understands the possibilities of big data and is willing to experiment with it. Although some of the experiments they do did not get the expected results, or caused a public uproar, they are moving in the right direction with big data.

Online customers are used to being tracked, followed and know that their every move is analysed. In traditional bricks and mortar shops this is a new movement to which customers have not yet gotten used to. Earlier we discussed the software RetailNext, which is a tool that tracks who enters the store, where they walk, how long they stay in the store or how long they stop at certain areas. Nordstrom started an experiment in Dallas-Fort Worth area in the fall of 2012 where they used such a tool as well as WIFI signals to monitor customer behaviour. Although retailers cannot personally identify individuals, when Nordstrom posted a sign about this, their customers became unnerved. Due to all the comments Nordstrom received they decided to stop the experiment again.

Fortunately for Nordstrom, the experiment did not end up into a PR nightmare. This is probably thanks to their transparent approach and that they stopped the experiment again after negative comments. This experiment is not the only experiment that they have in place. They have developed an innovation lab that tries to discover the future of retail. Nordstrom Innovation Lab consists of a team of techies, designers, entrepreneurs, statisticians, researchers, and artists and they currently have several experiments in place.

One of these experiments from the Innovation Lab is a mobile technology that pushes the profiles of customers that enter a store to salespeople in those stores. In an attempt to further integrate online and offline they developed an application that customers can download. Customers can enter their preferences, so it is opt-in only, in that app and when they enter a store these preferences, as well as online purchase histories, are pushed to salespeople, leading to a better shopping experience for the customer.

Nordstrom’s objective is to create the finest customer engagement both online and in the traditional store space. As such they have implemented a cross-channel inventory project to effectively allow customers to see in real-time where a product is available and when they can expect to receive it. Nordstrom has been able to integrate online inventory as well as in-store inventory and this gives shoppers an unprecedented experience and the opportunity to leisurely shop how, where and when they want. Providing this real-time services has proven to be successful as thanks to all the data used same-store sales increased for Nordstrom.

Nordstrom is investing heavily in such big data, and other, projects as can been seen from the $1 billion investment in e-commerce for the next five years. Their goal is to figure out what products to promote to which customers when and via what channel. Nordstrom wants to provide a customized personal experience and with the vast amounts of data they collect they can achieve this goal. Apart from the data from their website or the Point-of-Sales data, they generate lots of data from their 2 million likes on Facebook, 4.5 million followers on Pinterest and 300.000 followers on Twitter. In addition they generate vast amounts of data from their Fashion Rewards Program as customers that want to enjoy the large amounts of benefits provided in this program will have to use a Nordstrom credit card that tracks shopper spending and reward points.

For Nordstrom, providing customers a personalized and relevant experience is all about data, big data. With different experiments they learn what works and what does not work and as such have a competitive advantage. As Jamie Nordstrom, President Nordstrom Direct, explained in 2012 during the Shop.org Summit: “Some strategies and ideas will work. Others won’t. If you don’t test new things, you’ll never innovate. Don’t panic if something doesn’t work — celebrate it!”