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2013

BY Amany Hamza, Jonathan Ellis, Kavi Johal, Michael Sirch


21202244 21153283 10280251 21 20 56 40
Agenda
Executive Summary

Nordstrom Overview
Introducing Nordstrom;
Situation Analysis;
Financial Analysis

The Global Nordstrom


Our Mission and Objectives;
Market Analysis: Brazil, UK
Market Entry: Brazil, UK

Recommendation;

Conclusion.
Executive Summary

1901: Founded as a
shoe store by Johan
Nordstrom and Carl
Wallin
1998: Nordstrom.com
launched
2009: First
International
online orders
NORDSTROM OVERVIEW

COMPETITORS USA

Nordstrom
Full Line Group
117 Stores
Nordstrom Rack
Group
121 Stores

Other retail: Nordstrom Direct


HautLook, Jeffery Nordstrom Credit Group
Boutique and Group
charitable store
Executive Summary
Situation Analysis

We put our Meeting point between A unique, The right


customers at our customers and differentiated teams to
the heart of Nordstrom fashion product offer at deliver
everything we selling points. affordable prices. sustainable
do and are truly Operates 242 stores, A range of competitive
passionate 31 states, Apparel(casual, advantages
about the Store modernisations, formal wear), through the
products that Good visual Shoes, best practice
we sell. merchandising and Accessories. across the
product presentation, Product business.
Efficient distribution Standardisation.
of supply chain
Customer Store Design Production Team
Financial Highlights 2012
INCREASED ROIC
YOY Growth % INVESTED $2B CAPITAL OVER
LAST 5 YEARS
(2012 53 week vs. 2011
52 week)
14.0%
Q3 YTD Q4 13.5%
13.0%
Sales 11% 13% 12.5%
12.0%
ROIC
11.5%
EBIT 2% 20%
11.0%
10.5%
10.0%
EPS 8% 26%

2008
2010
2012
Global NORDSTROM MISSION

A Global Leading
Merchandiser
A
Multi-Channel
In an appealing
shopping
environment,
whether in
Store and
Dynamic
Online sites.
GLOBAL NORDSTROM
AT A GLANCE

"At Nordstrom,
we value the
richness that diversity
We are committed to meet brings to our
the needs of all our workforce - it makes
stakeholders in everything our Company better
we do. With compelling and the communities
merchandise and an we serve stronger.
unyielding commitment , we
are the retailer that Our Values
customers trust.
Our Vision
Objectives
Establish a consistent brand globally

Develop a niche position with 5% year on year growth


for the next three years

Develop a good base for the future in a challenging


market

Secure long term profitability

Budget $2.5m
GLOBAL NORDSTROM Positioning

Fast High
Fashion at
Retention Acquisition Affordable
Prices

CRM Search
Promotion
Satisfaction engine
Self- optimisation NORDSTROM
expression Market Leader
More ways
Membership to shop

Our Breadth of
Appeal is Our
Customer-
Customer Loyalty Approach Centric
Perception
Marketing Mix
Brands Market
Core Lines Penetration
Product Competitive
Standardisation Pricing
USP: Vibrant Membership
fashion trend Product Price

Promotion Place
Billboard Outstanding flagship
Facebook stores, wide space
Social Media layout
Internet Marketing High store loyalty
Print Online
NUS discount M-commerce
Integrated Marketing Communication Mix

Brand
Equity

Social
Marketing

Customer-
focused

Positioning

Promotion
Holistic
Approach
BRAND ESSENCE MODEL

Fashionable and Flattering Clothes


Own Brands Attributes
Featured Brands
Benefits
Designers Collections
Concessions Values
Personality
Finest Apparel
Vanity sizing
Fashion Rewards Brand
Essence
Personal Stylist
Everyday Value Fashion-Friendly
Liberal Return Policy Feminine
StoreCard Full-Shaped Body
Offer and sales events Store experience

High-Street Fashion
Speaking with one voice
Customer-Based Brand Equity Pyramid

Brand
Resonance
Loyalty
Engagement
Community

Judgements Feelings
Brand credibility Cool
High Quality Fun
Value Proposition Excited
Timeless

Performance Imagery
Affordable Prices Self-Selection
Customer Care Buying pattern

Tactics
Salience
Liked by all consumers in target segment
Promotional Communication
(Push Pull Marketing Mapping)
Continuity / Frequency
NORDSTROM

Own Brands
Personal Designer Brands
Selling Social Media Networking
Unique Fashion -
Merchandise Pay per click Advertising
Sales Force The Brand Promise

Direct
Rack

Loyalty Programs
Sales Promotion Target Audience
New Markets: UK & BRAZIL
MARKET ENTRY
Expected sales mix impacted by
Rack, Full-Line for Brazil and UK growth

UK

FULL-LINE
Market
Share 5%
RACK
RACK

BRAZIL
Strategic Focus

Raise profile of the Nordstrom brand in the UK


and Brazil through Rack and Direct channels.

Improve customer experience to strengthen


customer loyalty.

Continue global expansion through local


partnerships.
Market Analysis and Entry - BRAZIL
Porters 5 Forces- Brazil

Potential Entrants
Low entry
barriers

Substitutes
High Industry Rivalry Buyers
competition Moderate Price sensitivity
Low switching Competition Low switching
costs costs

Suppliers
Many suppliers
Logistics
Low switching
costs
PESTEL Analysis Brazil
Economical Social Technological

Upper-middle income Population: Households with


country 196.7 million access to the
GDP: Population growth internet::
$2.477 trillion rate: 37.8
GDP-Ranking: 0.9
7 Life expectancy:
Unemployment rate: 73
6.0 Overweight and
obese aged 15 and
Inflation rate all
over:
items: 48.1
6.6

SOURCES: Worldbank (2013),


OECD (2013)
SWOT Analysis: Strengths
Innovators in technology for merchandising and tracking i.e. Personal
Book, & register systems.
Known for yearly Anniversary Sale, which earns more revenue in one
week than all of the holiday shopping season, making for very
successful second and third quarters.
Forbes 100 Best Companies.
Nordstrom Racks revenue has grown consistently over last 3 years:
2,500

2,000

1,500

$ (m)
1,000

500

0
2009 2010 2011
SWOT Analysis: Weaknesses
Product Portfolio %age

Room to grow in the

Women's apparel
Childrens apparel
Shoes
category.
Men's apparel
Women's accessories Mens apparel is a
Cosmetics
Childern's apparel potential area that
Other
Nordstrom Rack does
not market to enough.
GAP Analysis Brazil
6

4 Nordstrom
Arezzo
3
C&A
2 Marisa
1 Hering
Zara
0
Gap
H&M
Hofstede Analysis - Brazil

Individualism score of 38.


100 Integrated into strong,
90 cohesive groups (especially
80 represented by the extended
70 family).
60
Brazil
Important to build up
50
UK trustworthy and long lasting
40
relationships.
30
Power Distance Score of 69.
20
The different distribution of
10

0
power justifies the fact that
PDI IDV MAS UAI LTO power holders have more
benefits than the less powerful
in society.
Brazil Macro Culture

194 Population (40%


under 20)
M
Agriculture
6th largest economy in $2. Salvador Brasilia
Mining
Manufacturing
the world
3Tr Services

So Strong Strongest
Industries
democracy
Paulo
Portuguese
African Rio de
Indigenous Janeiro
Portuguese Other European

Cultural Influences
Brazil Pricing
Brazilian Imported
Goods Goods

Source:
pwc.com
Segmentation
Target richest cities in
wealthiest states:

Sao Paulo
Bahia
Belo Horizonte
Curitiba
Rio de Janeiro

Wealth
distribution
density by
state

Source:
bookofezek
el3.wordpre
ss.com
Demographic Segmentation

Population (40%
194M
under 20)

6th largest
economy in the $2.3Tr Salvador
world

So Paulo
Brazil Social Media

65mil

33mil
Largest social
media capital in the
world
Market Analysis - Brazil
Class C Target richest cities in
18-24 wealthiest states:
R$

thenfn
71% of Sao Paulo
income 19bn Beauty
Bahia

R$ 27bn
on beauty Market
Belo Horizonte
& fashion Spent Curitiba
on X5
Rio de Janeiro
fashion 1996-
and 2010
beauty
each
year

Source:
latinlink.com
sophiamind.c
m/
Brazil Target Market
Target richest cities in
wealthiest states:

Sao Paulo
Bahia
Belo Horizonte
Target Audience: Class C
Curitiba
Rio de Janeiro
Online consumers

14-28 year old women

Teenagers with expendable income

Fashion conscious young professional women


Source:lati
nlink.com
Brand Awareness - Digital
Brand Awareness - Physical
Spend more per capita
than any other nation
$43.3m per day

Injected $5.9bn into


U.S economy in 2010
an average of $5,400
per Brazilian

Brazilians that shop in


the US recognise the
Nordstrom brand
Customer Life Cycle - Brazil
Introduce brand and Focus on trend
generate interest changes and
through digital and seasonal products to
physical marketing increase sales

Brand
Stimulate
awareness

Retain Monitor

Re-introduce the Use analytics from


brand using sales and social
consumer media to adapt the
intelligence brand offering
previously collected
Market Analysis and Entry - UK
Porters 5 Forces- UK

Substitutes
Low switching
costs

Suppliers
Buyers
Many suppliers Industry Rivalry Price sensitivity
High Moderate Recession
competition
Competition Low switching
Low switching
costs
costs

Potential Entrants
Low entry
barriers
SWOT Analysis- Strengths
Innovators in technology.
Known for yearly Anniversary Sale.
11th in Interbrand.com top 20 US companies.
Nordstrom sales figures have grown consistently over last 3 years:

12,000
10,000
8,000
6,000
$m
4,000
2,000
0
2007 2008 2009 2010 2011

Source: Nordstrom Annual Report 2011


SWOT Analysis- Weaknesses

Room to grow in the


Childrens apparel
Women's apparel category.
Shoes

Men's apparel
Mens apparel is a
Women's accessories
potential area that
Cosmetics
Nordstrom Rack
Childern's apparel

Other
doesnt market to
enough.

Source: Mintel 2012


SWOT Analysis- Opportunity
Expanding their children's line.

Use the existing partnership with Topshop to their advantage for market entry.

Enter UK and Brazil market with penetrative pricing.

Use the UK as bridgehead into Europe.

Online Shopping.

(M- Commerce)
SWOT Analysis- Threats
- Growth of online consumerism in the UK.
Website needs to be competitive.

- Rising taxes (business rates).

- Economic stagnation.

- Inflationary pressures in the supply chain.

- Competitor's:
The Customer
Attitudes towards buying clothes, March 2012
Thinking in general about buying clothes, which of the following statements do you agree with?

How Often do Women Buy Clothes?


February 2011,
Base: 991 female internet users aged 16+

Source:
GMI/Mintel
UK Market Size- Mintel Forecast

8,000

7,000

6,000

5,000

m 4,000

3,000

2,000

1,000

0
2010 2011 2012 2013 2014 2015

Source: Mintel 2012


Target Audience- Physical Retailers

Source: Mintel 2012


Target Audience- Online Retailers

Source: Mintel 2012


UK Target Market

Nordstrom Rack

- Location in Greater London.


- 16-24 year old students in full-time education.

Nordstrom Rack Online


- 16-24 year old students in full-time education.
Hofstede Analysis- UK
Long Term Orientation score
of 25.
100

90 Businesses are focused on


80 short term quarterly goals and
70
quick results.
60

Brazil
Individualism score of 89.
50
UK
40
The affluence of Britain has
30
increased throughout the last
20 decade, with wealth also
10 spreading North.
0
PDI IDV MAS UAI LTO
Rise of rampant consumerism
Geert-hofstede.com and a strengthening of the
Me culture.
UK Macro Culture
7th largest
economy in
194
the world M

$2.2 Manchester Constitution


Tr al Monarchy
Poor
& Elected Agriculture
Parliament
Climate
Mining
Manufacturing
London Services
Catholics
English Protestants
Muslims
Gaelic Hindus
Sikhs
Welsh Jews
Atheist

Portuguese Special
Portuguese
relationship
Birmingham
African with US
Indigenous
Other European
Our Position in the Market - UK
Monitoring why?
Changing
environments Variable
Customer Needs

Profitability

Organisational
learning
Monitoring what?
Shareholder Value

Customer Value
Competitive
Advantage

Brand Value

Cultural learning

Ethical behaviour
Customer Value (1)
Company webpage
Service points/Staff
Customer Customer phone
Service Quality Agents

Personal call (regular


customers)
Home Delivery app
delivery
(UK)
Customer Value (2)
Online Product Ranking
Data mining
My best dress award
Fashion battle

Real product

Staff
Casting shows/stars
Fashion magazines
Professional market
research
Fashion scouts
Brand Value
Brand
awareness
Perceived
Brand quality
equity Perceived
value
ten Loyalty/satisf
action

Collaboration
with
Interbrand
Same sources
as for CV
card system
Shareholder Value

Benchmarking:
London Sao Paolo
Ratios New York
Stores best of class
store

ROI
Budgeti Market share
ng Relative Market share
Competitive Advantage

Strategy Review
5 forces
Resources and Capabilities
SWOT
STP

Observation
Stores (Quality scouts)
News (Information Manager)
Cultural learning
Analysis review
Cultural Framework
Hofstede
Hall
Experiences

HR collaboration
Strategy meetings:
Diversity view on
strategy
Training requirements
Ethical behavior

Code of Ethics Operational

Report to HQ Store
Guidelines. performance
review
Challenges.
Personal
Training conversations
requirements. with Ethical
Officer and
staff
Data Collection

Internal External
Collaboration with interbrand
Data sharing with OECD
Loyalty card system
and Worldbank and other
Intelligent till systems
international organisations in
Brazil

Use of government statistics


Online surveys:
Twitter/Facebook/INstagram in UK
Surveys with customers
Ethical behaviour - updated version
R&D &
Production

Researchers

Customer
phone

Fashion
scouts

Financial
department
Marketing Budget
Marketing Budget Plan
Last updated: 11/02/2013

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

Personnel
Salaries, wages 200 200 $400
Benefits 0
Payroll taxes 10 10 10 10 40
Commissions and bonuses 20 20 20 20 80
Personnel Total $200 $10 $20 $10 $0 $30 $0 $0 $30 $0 $200 $20 $520

Market Research
Primary research 10 10 10 10 10 $50
Secondary research 10 10 10 10 10 10 10 70
Market Research Total $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $120

Marketing Communications
Branding 30 20 10 10 $70
Advertising 100 50 50 30 20 15 265
Web sites 10 10 10 30
Direct marketing 20 20 40
Collateral 0
Press relations 5 5 4 4 10 28
Public relations 5 5 5 5 5 10 35
Analyst relations 2 2 4 2 2 4 16
Events 50 30 40 120
Marketing Communications Total $172 $102 $119 $25 $2 $4 $35 $0 $41 $20 $20 $64 $604

Channels
Channel communications and training 50 50 20 10 10 10 $150
Channel promotions and incentives 10 10 10 10 16 10 10 10 60 60 70 276
Channel commissions/bonuses 0
Channels Total $60 $60 $30 $10 $16 $20 $10 $10 $10 $70 $60 $70 $426

Customer Acquisition & Retention (CAR)


Lead generation 10 10 10 10 10 10 10 $70
Customer loyalty 20 10 10 10 10 60
CAR Total $20 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $130

Other
Postage 10 10 10 10 $40
Telephone 10 10 10 10 10 50
Travel 150 100 100 100 50 50 550
Computers and office equipment 20 20 20 60
Other Total $170 $110 $10 $130 $0 $10 $10 $10 $120 $10 $60 $60 $700
Total Marketing Budget($000) $632 $302 $199 $195 $38 $84 $75 $40 $221 $120 $360 $234 $2,500
Forward-Looking Statement
Products

Exiting New

NORDSTROM Marketing Strategies


Exiting
Market Product
Penetration Development

Market
Product-Market Growth Matrix Ansoff
Outperformed Present Products (casual wear, Market
Diversification

New
formalwear, shoes, accessiores), Development
Maximise Brand Roll out,
Growth Opportunities in new markets.

High QUESTION Mark Star


A good market but will Products that are Boston Matrix
the product do well in it? doing well quickly.
Challenges
Convert the Question Marks and Stars into Cash
Market Cows of the future
Growth Dog Cash Cow Manage the Dogs
Struggling in a slow Continuing to do well The profits earned from Cash Cows can be used to
market. in an established develop and promote Stars and Question Marks.
Low Market.

Low Market Share High


Product Life Cycle and the Boston Matrix

Sales Cash from Portfolio (B Full


Line) is used to support Portfolio
(C- Featured Brands )through (3)
(1) growth stage and to launch Cash from Portfolio (C-
Portfolio (A Rack) is at Topshop Exclusivity. The Rack Featured Brands ) is used
Maturity stage cash cow. now possibly a dog? to support growth of
Generates fund for the Portfolio (D- Multi-
development of Portfolio (D- (2)
Brands) and possibly
Multi-Brands) finance extension strategy
for B?

D
B C
A

Time
Contingency Plans

Outlet Joint
Store Venture

Last
chance
clearance

Scrap / Ceasing
Recycle Business
Recommendation and Conclusion
UK
High quality merchandise sold at discounted prices to students in Greater
London aged between 16-24.

UK market size predicted to grow to 7bn in 2015. This with recession


means that consumers will want to spend money if they feel it is 'worth it'.

Consumers have all the bargaining as there are so many organisations


competing against each other.

Brazil
Growing digital consumption and relatively slow uptake by competitors
creates a significant gap in the Brazilian retail market for quality products

Attractive market: Brazilian economy is strong, has a developing middle


class with expendable income and a young population
Recommendation and Conclusion
TimeLine:
The market entry needs to be heavily promoted
during the holiday season. This is when
consumers are doing most of their shopping.

We foresee that Nordstrom will dominate these


two markets if we focus on young fashion with
tasteful styling at affordable prices.

The efficient execution of our global marketing


model will lead Nordstrom into the Fashion
market with more expansion plans in other
countries in the near future.
Thank you
for your
attention!
Appendices
References
1. Answers, (online), available at: http://www.answers.com/topic/nordstrom-inc #
2. BBC, (online), available at: www.bbc.co.uk
3. Ceasing a business in UK regulations, Growing Business, (online), available at:
http://www.growingbusiness.co.uk/the-cost-of-closing-down-a-business-has-gone-up.html
4. Clothing Retailing Market Report 2012, Keynote, (online), available at:
https://www.keynote.co.uk/market-intelligence/
5. Forbes, (online), available at:
http://www.forbes.com/sites/lydiadishman/2012/02/20/nordstroms-savvy-sales-strategies-for-
stellar-growth/
6. Geert, (online), available at: www.Geert-hofstede.com
7. Interbrand, (online), available at: www.interbrand.com
8. Microsoft Advertising- Clothing & Footwear Trends, Adam Goodman, May 2011.
9. Mintel Report- Fashion Online UK March 2012.
10. Nordstrom Annual report 2011
11. Nordstrom Retail Marketing BA 495 (online), available at:
12. 2. PR Web, (online), available at:
http://www.prweb.com/releases/retail/fashion/prweb10494886.htm
13. The Brand wheel, (online), available at: www.therightgroup.com.au
14. UK Trade and Investment, (online), available at:
http://news.bis.gov.uk/imagelibrary/downloadmedia.ashx?MediaDetailsID=6389&SizeId=-1
References
15. arezzo.com.br/inverno2013/
16. bloomberg.com/news/2013-01-15/brazil-november-retail-sales-rise-for-sixth-straight-month-1-
.htm
17. bookofezekiel3.wordpress.com/2010/03/19/dear-president-luis-de-silva-its-good-to-share-
proportional-to-population/
18. cea.com.br/
19. Chee, H Harris, R. (1998). Gap Analysis. In: Chee, H Harris, R Global marketing strategy.
London: Financial Times Pitman Publishing . 71
20. cia.gov/library/publications/the-world-factbook/geos/br.html
21. comscore.com/Insights/Presentations_and_Whitepapers/2013/2013_Brazil_Digital_Future_in_
Focus
22. comscoredatamine.com/2010/10/orkut-facebook-and-twitter-growth-in-brazil/
23. en.wikipedia.org/wiki/Brazil
24. Nordstrom Investor Relations - http://phx.corporate-ir.net/phoenix.zhtml?c=93295&p=irol-
irhome
25. forbes.com/sites/ricardogeromel/2012/03/23/brazils-e-commerce-is-booming-record-breaking-
figures-in-2011-growth-of-26-earnings-of-11-bi/
26. gap.com/products/womens-clothing.jsp
References
15. hering.com.br/
16. hm.com/gb/
17. huffingtonpost.com/2012/03/11/brazilian-spending-us_n_1337354.html
18. huffingtonpost.com/brian-honigman/100-fascinating-social-me_b_2185281.htm
19. institucional.geravd.com.br/arquivos/acontece/WebShoppers.pdf
32. instituteofcustomerservice.com/1711-8843/The-UK-Customer-Satisfaction-Index-January-
2012---executive-summary.html
33. just-style.com/analysis/zara-grows-in-brazil-while-gap-and-hm-dither_id112354.aspx

34. kpmg.de/docs/Folder_Market_Entry_ing-Final.pdf
35. latinlink.usmediaconsulting.com/2011/11/what-brazilians-buy/
36. lib.utexas.edu/maps/americas/americas_pol96.jpg
37. luxuryinstitute.com/blog/?p=2310
38. marisa.com.br/
39. online.wsj.com/article/SB10001424127887323301104578257950857891898.html
40. pwc.com/en_GX/gx/retail-consumer/pdf/brazil.pdf
41. socialbakers.com/facebook-statistics/brazil
References
32. sophiamind.com/en/research/beauty/women-are-satisfied-with-the-beauty-products-
available-today-however-they-are-not-loyal-to-specific-brands/
33. Thompson Reuters Street Events Nordstrom at Bank of America Merrill Lynch
Consumer and Retail Conference
http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CDQQFjA
A&url=http%3A%2F%2Fphx.corporate-
ir.net%2FExternal.File%3Fitem%3DUGFyZW50SUQ9MTc1ODI3fENoaWxkSUQ9LTF
8VHlwZT0z%26t%3D1&ei=9jRUUfveM8G1PZ3FgcAF&usg=AFQjCNFzAsh3W9As7rK
F4gAWEujdxUH1iA&sig2=5k0TOzwYYKZCyg1hUkPqmQ&bvm=bv.44342787,d.ZWU
&cad=rja
34. time.com/time/world/article/0,8599,2075717,00.html
35. zara.com/webapp/wcs/stores/servlet/home/uk/en/
Back-up
Financial Summary
THREE CONSECUTIVE YEARS

Added +$1B
in sales

Nordstrom
Rack $2bn

Nordstrom Rack Income Generated


2011
Brazil Retail expectations

One-on-one
customer
service
Pay in
instalments

Latest
fashion
Brazil Retail Customs

Shop in
groups
Prefer
shopping
malls
Latest
fashion
GAP Analysis UK
100
90
80
70
60 Nordstrom
50
GAP
40
30 H&M
20 Zara
10 Next
0 TK Maxx
Hofstede Analysis- UK
Long Term Orientation score
of 25.
100

90 Businesses are focused on


80 short term quarterly goals and
70
quick results.
60

Brazil
Individualism score of 89.
50
UK
40
The affluence of Britain has
30
increased throughout the last
20 decade, with wealth also
10 spreading North.
0
PDI IDV MAS UAI LTO
Rise of rampant consumerism
Geert-hofstede.com and a strengthening of the
Me culture.
Hofstede Analysis - Brazil

Individualism score of 38.


100 Integrated into strong,
90 cohesive groups (especially
80 represented by the extended
70 family).
60
Brazil
Important to build up
50
UK trustworthy and long lasting
40
relationships.
30
Power Distance Score of 69.
20
The different distribution of
10

0
power justifies the fact that
PDI IDV MAS UAI LTO power holders have more
benefits than the less powerful
in society.
Brand equity ten

Brand awareness Loyalty Market price

Organisational
Popularity Perceived value Perceived quality
associations

Brand personality Market share Differentiation