Nordstrom announces aggressive $1B e-commerce plan

Nordstrom (NYSE:JWN) has announced a five-step plan to spend $1.2 billion this year on e-commerce and new stores, up from $750 million in 2014.

First, the company's distribution center in Pennsylvania, which was announced as part of a $79 million investment when construction on it began last year, will be outfitted to offer two-day delivery, reported Fortune. Almost half of online shoppers live within two-day ground shipping range of the new facility, meaning a large portion of orders will now reach consumers three days faster.

Second, Nordstrom will add products to its online assortment. This enhancement goes for both Nordstrom.com and Rack.com, which launched last year. This could be a challenge for the retailer because outlet stores online typically have less inventory thanks to the unpredictable business climate—most of the merchandise is closeout inventory.

Third, Nordstrom will use more physical stores to handle online returns. A growing trend in omnichannel retailing, the move helps retailers be more efficient and brings shoppers back into the store.

Fourth, Nordstrom is going to add more to its awards program by sending more personalized offers. Last year the company's rewards members generated 40 percent of all sales and gained 1 million new members.

And finally, Nordstrom is aiming to improve technology within physical stores. Nordstrom is testing out smart fitting rooms in a few stores and will also upgrade its POS systems, mobile site, online checkout process and give its sales staff texting tools.

Nordstrom is looking to reach $20 billion in sales in 2020 thanks to its increase in digital options, up from $13 billion in 2014. The company gets about 18 percent of its sales from e-commerce, a figure that can be attributed to its flash site HauteLook and its Rack e-commerce site.

Experts predict Nordstrom's e-commerce sales will grow to about $3.5 billion, up from the current average of $2.5 billion. The company was recently voted in a Market Force Information study as the No. 1 most satisfying online shopping exeprience, with 56 percent of customers saying they were most satisfied. The result was a 72 percent conversion rate. Not surprisingly, Nordstrom also tops the list for most engaged retail brand on Pinterest, according to a recent data collection on Curalate.

For more:
-See this Fortune article

Related stories:
Nordstrom invests $79M in online distribution center
Nordstrom, Footlocker shoppers' favorite retailers
Macy's, Nordstrom pilot 7-ft. 'digital storefront' inside mall
Nordstrom most engaged brand on Pinterest
Shoes of Prey launches store-in-store at Nordstrom

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.