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article imageWhy Nordstrom Q4 earnings are better than expected Special

By Tim Sandle     Mar 1, 2019 in Business
Nordstrom just reported better-than-expected fourth quarter results. A big component of their success comes from its ‘Nordy Club’ loyalty program, which it reported has over 11 million members.
Nordstrom Inc. is a U.S. chain of luxury department stores, also operating in Canada. The company focuses on clothing, accessories, handbags, jewelry, cosmetics, and fragrances. Nordstrom, Inc.'s common stock is publicly traded on the NYSE under the symbol JWN.
As well as physical retail, the company has a digital focus. In 2018, as Digital Journal reported, Nordstrom purchased two independent technology startups: BevyUp and MessageYes. BevyUp lets store staff communicate with customers, while MessageYes sends personalised mobile messages.
Nordstrom has reported better-than-expected fourth quarter results. Significant to this relates to the company's ‘Nordy Club’ loyalty program, which it reported has in excess of 11 million members (equating to around one-third of its customers). The Club generates 56 percent of company sales.
Analyzing these results, Tom Caporaso, CEO of Clarus Commerce and loyalty program expert, explains to Digital Journal the significance o the growth and what this signals for retail in general.
Caporaso outlines the state of the retail landscape: “Today it’s no secret that department stores are facing increasing pressure from Amazon, but Nordstrom’s best weapon in the battle may be its ‘Nordy Club’ program."
He goes on to explain what Nordstrom is doing different to other retailers: B"y offering customers exclusive benefits and experiences, the retailer is able to enhance its relationships with existing customers, all while giving new customers more reasons to engage with them. And with four established spending tiers and an invite-only “icon” status for top Nordstrom cardmembers, the program has certainly become a status symbol for its most loyal fashionistas."
As to where the company can go in 2019, Caporaso adds: "Looking ahead at the rest of 2019, Nordstrom should look to further optimize the Nordy Club to continue to retain and attract shoppers. One critical component of this is to ensure in-store associates are equipped with the in-depth knowledge and resources to encourage customers to sign up. Employees can be a retailer’s biggest brand loyalty advocate, so it’s important for Nordstrom to leverage them as they look to build a stronger connection between customers and the program."
There are other things that Nordstrom can consider as well, Caporaso opines: "Additionally, Nordstrom can also consider layering in a paid tier for the Nordy Club. Today its program requires members to spend money over time to receive benefits, but with a paid program they would pay a recurring fee for special, personalized offerings they can use right away. By targeting Nordy Club’s best customers with even more exclusive offerings, this tier would help Nordstrom turn its most loyal, frequent shoppers into true advocates -- the most valuable asset Nordstrom could ask for.”
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