To: Professor Dawn Levy
From: Student’s Name
Date: April 26, 2020
RE: Nordstrom, Inc. Company
- Introduction
This memo takes a keen analysis of the Nordstrom Company, intending to understand its structure, operations, and products. The overview of the company will bring out crucial information that an interested investor can rely on to decide on whether to invest in the company or not. Specifically, the purpose of the memo is to bring out every detail about the company, its history, current operations, and future strategies that the company aims to undertake, for purposes of helping Mia decide on which firm to invest in. Nordstrom, as will be explained in detail in another paragraph of the memo, is an American luxury department that deals in all kinds of apparel and accessories. The memo will also seek to analyze the company’s viability into the future, its strengths, weaknesses, opportunities, and threats facing the company. Therefore, after bringing out all material facts about the company, Mia will be in a position to make an informed decision about investing in the company. Besides, a recommendation will be made on whether investing in the firm is a worthy venture.
- Company Background
The Nordstrom Company was established in 1901 by John W. Nordstrom. John was an immigrant from Sweden who came to Seattle, Washington, with only $5 as his wealth (Nordstrom Website, 2020).
The company began as a shoe store and evolved with time to incorporate designer clothes, jewelry, cosmetics, and restaurants among other businesses. The founder started the venture with the mission that customers deserved the best service, selection, quality, and value. The company’s purpose has remained the same over the years. The company’s headquarters are found in Seattle, Washington. In 1971, the firm became a public company, trading under the name JWN in NASDAQ, and its official name changed to Nordstrom, Inc. (Nordstrom Website, 2020). In 1973, it established Nordstrom Rack, a clearance center to clear merchandise for full-line stores. The company has continued to diversify its operations, and in 1998, it created an online trading platform, known as Nordstrom.com for purposes of reaching a broader client base.
Similarly, the company acquired HauteLook in 2011, a flash sale site found in Los Angeles (Nordstrom Website, 2020). It also bought off Trunk Club in 2014. Trunk Club is a firm that does online trading at its platform, TrunkClub.com, besides its seven clubhouses. Nordstrom acquired the whole entity.
From being a single store in Seattle, Washington, Nordstrom has grown, and now it has operations in 40 states within America and has established bases in Canada and Puerto Rico. Currently, it has 117 full-line stores in the three countries (Nordstrom Website, 2020). The firm has also diversified its operations to include Nordstrom and Nordstrom.com, Nordstrom Rack, Trunk Club, Jeffrey, and Haute Look. It has become one of the most regarded fashion retailers in the U.S. The Nordstrom Rack brand operates in 259 locations, Trunk Club in six areas, Jeffrey boutiques in 3 centers, and Nordstrom Local service has five centers (Nordstrom Website, 2020). Besides, the company has leveraged technology to expand operations. It now serves customers online in 96 countries across the globe.
- Products and Profitability
The company was founded as a shoe store in 1901. However, it has expanded its operations to include other products such as clothing, jewelry, handbags, house furnishings, fragrance, among others. It has also diversified its line of services to run restaurants, bars, and in-house cafes. It offers products that meet the needs of all categories of clients, from men, women to children. The company stocks all significant apparel brands in the market, such as Balenciaga, Brunello, Cucinelli, Burberry, Chloe, Christian, Gucci, Noten, Fendi, and Givenchy, among others (Nordstrom Website, 2020).
The firm offers male clothing such as activewear, coats and blazers, jeans, dress shirts, lounge, and pajamas. It also sells accessories such as belts, bags, headphones, cuff links, phone cases, sunglasses, besides all types of shoes. Products for female clients include clothing, shoes, handbags, jewelry, and accessories such as belts, gloves, and even hair. The company also deals in home items such as bedding materials, home décor, table and kitchen appliances, bath accessories, and even gifts. It also runs a chain of cafes, restaurants, and grills, making the firm among the most diversified in the country.
On profitability, the company’s income has been on a growth trajectory since its inception. In 2018, the company was ranked 183rd on the Fortune 500 list of the largest businesses by revenue in the United States (Nordstrom Website, 2020). In 2013, the firm was ranked as the top fashion dealer and retailer by the Women’s Wear Daily, a fashion-based trade magazine. By 2019, the company had been listed on the Fortune 500 for 25 years. Additionally, its revenues, assets, and equity have been on the rise. In 2019, the company’s revenue amounted to US$15.86 billion, net income equaled US$564 million, and total assets were valued at US$ 7.89 billion (Nordstrom Website, 2020). The firm’s profitability is also evidenced by its expansionist policy, where it has been acquiring competitors.
- Employee Motivation
Nordstrom company has among the most motivated staff. That is due to a ranking done by the Fortune magazine that listed it as the 196th best company in a list of 500 best firms. The firm has 74,000 employees and has various programs that motivate and develop their employees. For instance, on its website (2020), the company states that it believes in helping employees to grow their careers by promoting internally, celebrating performers, and rewarding great work. It aims to create long-lasting relationships with its employees. According to its website, the organization offers a range of benefits packages to employees, such as significant discounts on merchandise, medical cover, as well as an employer-matched retirement plan. These benefits motivate its employees besides attracting the best talents in the market to join the firm.
The firm also supports special programs such as training and seminars for their employees. According to Nordstrom’s 2018 newsletter, the firm has since 2007 partnered with BSR’S HERproject to conduct worker empowerment activities in its many factories across the world. The training centered on areas such as gender equality, minimizing sexual harassment, and violence against women. More than 18,500 workers had been trained since the program was launched in 2007 (Nordstrom Website, 2020).
- Corporate Social Responsibility
Social responsibility refers to a firm’s commitment to engage in activities that improve the welfare of the society in which they operate. They are voluntary acts that promote sustainable business practices. The Nordstrom company has a strong corporate social responsibility that involves giving back to society, encouraging the use of clean energy, and promoting environmental conservation practices such as recycling waste products. The firm’s social responsibility is anchored on two main pillars, taking care of the communities and respecting the environment.
The organization helps to take care of communities mainly through charitable giving. It gives support to communities through corporate giving, employee giving, and volunteerism. Through corporate giving, the firm donates yearly to nonprofit institutions across the United States and Canada. Much of its support goes to organizations that support families and children. In 2018, the company donated an equivalent of $12 million to over 600 organizations across the areas the company operates (Nordstrom, 2018). Additionally, the company scales up its corporate giving efforts during disasters and crises by donating to institutions directly addressing the emergency. For example, during the 2018 California Forest infernos, the firm donated an equivalent of $100,000 to help stop the fires (Nordstrom, 2018).
The firm also supports communities through employee giving and volunteering. The employees donate both money and time. In 2018, employees volunteered a total of 40,000 hours to charity and an equivalent of $1.93 million donations to 2413 organizations. Through its program, New Balance and Shoes That Fit, the organization donates shoes to vulnerable children across the United States. In 2018, the firm gave over 29 335 pairs of shoes to school-going children in 356 schools (Nordstrom, 2018).
On environmental conservation, the firm is committed to reduce its energy consumption and increase waste management. In 2018, the firm surpassed its goal of replacing fluorescent light bulbs in its centers with LED bulbs to reduce energy consumption (Nordstrom, 2018). The firm is also working to install solar panels on its premises in an effort to embrace renewable energy. The company has also endeavored to use renewable materials in making of their products in a bid to reduce waste. The food waste arising from its restaurants and cafes is decomposed to minimize environmental pollution.
- Future Plans
Many of Nordstrom’s plans are geared towards sustainability through environmental protection. The company, in its April 2020 newsletter, has announced various measures towards ecological conservation to be achieved by 2025. The firm aims to phase out single-use plastic bags from its packaging. It also seeks to set a science-based approach towards reducing greenhouse emissions, to extend the life of over 250 tons of apparels, as well as donate at least $1million towards innovations geared at textile recycling (Nordstrom, 2020). The firm plans to expand its operations to other locations such as Missouri, Washington, British Columbia, Canada, and Kansas City between 2020 and 2021 (Nordstrom Website, 2020).
- Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis
The company’s growth over the years has not been without challenges. Its growth also faces threats from competitors and other external factors. However, all is not gloom since the company has its areas of strength and opportunities for growth. One of the advantages that Nordstrom has is its strong brand presence. The company has operations in over 40 states in America as well as others in Canada and Puerto Rico. As stated earlier, the company has been on a growth trajectory, making a lot of profits. That gives it the ability to buy off competitors (Business Strategy Hub, 2020). Some of the weaknesses facing the company are the perception that their merchandise is highly expensive. It also has a limited presence globally, with centers in the United States and Canada. Among the opportunities for growth is online trade since only 30% of its sales arise from ecommerce (Nordstrom Website, 2020).
. The company can build on e-trade to increase sales hence revenues. It also has the chance to invest in other places outside America and Canada, such as Africa, Asia, among others. Its other most significant opportunity is its investment in second-hand apparel, which is proving a worthy venture (Morgan, 2020). Its threats are string competition from firms such the Macy’s, Bloomingdales, Kohl, Neiman Marcus, among others (Business Strategy Hub, 2020). It also faces the risk of counterfeit products in the market. Besides, the firm was recently sued for price manipulation by a client (Cousins, 2019). Lawsuits are a threat to the business.
- My Opinion and Advice to Mia
In my view, Nordstrom is among the best firms to invest in the fashion industry. Its growth over the years since 1901 is a clear indication that it is a stable company. Besides, its policy of diversification is a safeguard against failure. From starting as a shoe store, the firm has expanded and diversified to run restaurants and cafes. Such a level of diversification protects the business from market shocks in any sector of the economy. You should consider investing in the firm, either in the cloth sector or the hospitality section. Overall, the company is a going concern, and Mia can invest in it.
- My Connection to the Company
My connection with the company arises due to my interest in the fashion industry. While growing up, I was always attracted to fashion trends, and I used to research a lot about any upcoming trends. That is how I got to know Nordstrom, and I developed a lot of interest in its products. In the future, I would like to work for the company due to its influential employee culture and the incentives it offers to all its staff. Generally, the company is a respected brand in the market, and it is bound to grow further.
Comparison Between Nordstrom and Macy’s Inc.
The two companies, Nordstrom and Macy’s, are closely related since they both belong to the fashion industry. Many of their policies are related, and each firm is a strong competitor to the other. An analysis of the two firms brings out all information about the companies, and such information would help an investor to choose the company to invest in between the two. Between the two, Nordstrom is older. It was established in 1901 by John Nordstrom, while Macy’s was founded in 1929 by Xavier Warren. Nordstrom began as a shoe store while Macy’s started as a Federated Department Store dealing with general merchandise. Among the two companies, Macy’s became a publicly-traded company earlier in 1911, compared to Nordstrom, which was registered on the stock exchange in 1971. Nordstrom Inc. acquired its official name in 1973 while Macy’s 2007, after several of its stores, dropped their first names.
On products and profitability, the two firms are closely related. Nordstrom deals with fashion clothes, shoes, jewelry, and fragrances. It also runs restaurants, bars, and cafes while Macy’s trades in fashion products, consultancy, and luxury beauty products. Nordstrom is more diversified since it has expanded to the hospitality industry in the form of restaurants, cafes, and pubs. However, on profitability, Macy’s is more profitable since its assets in 2019 were valued at US$ 19.194 billion, while in the same year, Nordstrom’s assets equaled US$ 7.89 billion.
In terms of employee motivation, both firms strive to motivate their staff and bring out the best from them. Nordstrom had 74,000 employees in 2018, while Macy’s had 130,000 personnel in 2019. Therefore, Macy’s has a larger workforce. Macy’s develops its staff through work-study programs financed by the company, while Nordstrom offers simple training and seminars to their team. Nevertheless, both companies have diversity programs to ensure diversity in their workforce. However, Nordstrom has appeared in Fortune magazine on the best 500 companies to work for in 25 years.
On social responsibility, both companies strive to give back to the societies they operate in either through donations and volunteering. They are also committed to sustainability measures aimed at reducing energy consumption and waste management. In 2018, Nordstrom donated over $12 million to over 600 organizations, while its staff volunteered over 40,000 hours to charity. Macy’s Inc., in 2018, donated over $3.5 million to food banks and emergency food assistance programs. In its plans, the companies aim to promote clean energy by embracing the use of solar panels. Macy’s wants to reduce energy consumption by 10% in 2025, while Nordstrom intends to phase out single-use plastic bags by 2025, among other measures.
Regarding strengths, weaknesses, opportunities, and threats, both companies face similar scenarios. Both companies enjoy the strength of financial capital, and they can easily buy out their competitors. However, Nordstrom is more diversified compared to Macy’s, as highlighted earlier. The two companies face threats of competition from related firms such as Kohl, JC Penney, among others. Macy’s faces the danger of counterfeit products in the market while Macy’s has a shortage of talents.
In conclusion, my advice to Mia is that she should invest in Nordstrom Inc. Despite the two companies being closely related almost in all aspects, Nordstrom is more diversified in its operations, which makes it less risky to invest in. Besides, Nordstrom is only found in Canada, the U.S., and Puerto Rico. It, therefore, has many opportunities for growth by expanding to new markets such as Africa and Asia. The two companies are very profitable, and both are suitable for investment. However, I would choose Nordstrom due to its diversity.
References
Business Strategy Hub (2020). “Nordstrom SWOT analysis.” https://bstrategyhub.com/nordstrom-swot-analysis/
Cousins, F. (2019). “Lawsuit accuses Nordstrom of running ‘fake sale’ Scheme.” Top Class Actions. https://trofire.com/2019/12/09/lawsuit-accuses-nordstrom-of-running-fake-sale-scheme/
Morgan, B. (2020). “Retailers’ Secret to success? Evolve: Just ask Macy’s and Nordstrom.” Forbes. https://www.forbes.com/sites/blakemorgan/2020/02/12/retailers-secret-to-success-evolve-just-ask-macys-and-nordstrom/#1fa08dcd2d1f
Nordstrom Website. (2020). “About us.” https://press.nordstrom.com/about
Nordstrom. (2018). “2018 Corporate social responsibility report: Sharing our progress.” https://n.nordstrommedia.com/id/7b9be246-8985-4ee4-9b3b-cb167c902782.pdf
Nordstrom. (2020). “Nordstrom expands commitment to protect the environment with new sustainable goals and initiatives.” Press Release. https://press.nordstrom.com/node/41411/pdf