In the wake of a disappointing quarter, Nordstrom is set to launch an expanded loyalty program on May 18. The updated Nordstrom loyalty program–dubbed Nordstrom Rewards–will allow all customers to accrue points with or without a Nordstrom credit card.
It looks like the new Nordstrom loyalty program will still exclusively consist of points for purchases, but with the absence of a credit card, all customers are now welcome.
Co-President and Director Blake Nordstrom announced that Nordstrom loyalty members spend four times as much as other shoppers annually, and their spend “contributes roughly 40% of sales.”
The department store is aiming high in this expanded loyalty campaign–they hope to add 5 million customers over the next year.
Nordstrom has been launching other efforts to cut costs and grow conversion and repeat purchases. Blake Nordstrom noted that the retailer “enhanced the buy online, pickup-in-store experience by providing curbside pickup in all of…[their] full-line stores.” They’re also upgrading their scheduling tool to improve customer service and productivity. They’re dedicating two-thirds of their technology spending to improving its tech platform and to better synchronizing how they serve customers online and offline.
The retailer is hoping that the Nordstrom loyalty program and these other enhancements will boost in-store performance, which has been lackluster. Sales at brick-and-mortar Nordstrom locations fell by 7.7% in the past year.
E-commerce has been a notable area of growth for Nordstrom–it now represents over 20% of their sales, up 12% from 2011. The combined sales from Nordstrom.com, NordstromRack.com, and HauteLook amounted to $661 million in Q1 2016, up 10.7% from this time last year.
The discount sites NordstromRack.com and HauteLook were responsible for a large portion of that growth. Sales on Nordstrom.com only grew 3.1% from last year. One-third of Rack shoppers go on to shop at regular Nordstrom stores or on its website, though, which spells a large potential crossover opportunity.
Morgan Stanley analysts note that the plunge in sales at full-price Nordstrom locations was “driven entirely by lower trips/transactions.” This amounts to a warning sign for luxury retailers, as wealthy consumers are becoming much more discount-sensitive.
What’s all of this leading towards? Between the Nordstrom loyalty program and increased multichannel opportunities, the retailer is aiming for $20 billion in sales by 2020. Whether or not that’s a viable goal is yet to be determined.
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