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That has meant heavy spending, but the investments have started to pay off. Last quarter , the company said its online sales were starting to have higher profit margins than its in-store sales. “Nordstrom’s online operation is quite some way ahead of other department stores, both in terms of its ability to drive sales, and the way in which it is integrated into the business,” said Saunders, of GlobalData. The company has recognized “that it must serve customers wherever they want to be served,” and has developed systems “to connect online and physical shops, including pickup in store, reserve and try in store, visual searching and curbside pickup,” he said. Saunders says those efforts have “helped Nordstrom to take a lead in e-commerce among department stores.” Indeed, with 23 percent of its sales online, Nordstrom is well ahead of Macy’s 15.4 percent, Kohl’s 13.6 percent, and JCPenney’s 12.4 percent, according to GlobalData figures. That also translates into how Nordstrom looks at whether to close underperforming stores, which it has done here and there over the years. Some of Nordstrom’s competitors, including Macy’s and JCPenney, have closed dozens of stores recently. Nordstrom doesn’t look at just the sales volume of any given store, but also how that store might drive online sales and vice versa. The “digital experience and physical-stores experiences clothes online will influence how we regard the store, as opposed to just looking at the four-wall contributions of that one store,” said Erik Nordstrom, co-president.
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In late April, struggling women’s apparel chain Bebe said it was closing all 180 stores — the latest casualty amid a steady stream of defaults, bankruptcies and closures over the last year. While experts say more closures are coming, something else is occurring: The losses of traditional retail jobs are being absorbed by the likes of Amazon, with its new fulfillment centers and warehouses. But shopping is taking a new form, experts say, thanks to the internet. Michael Niemira, principal of the Retail Economist LLC, likened online shopping to the catalog sales of the early 20th century that supplied goods to consumers in areas where stores did not exist. “Today, some communities are losing stores that are not profitable, and the online distribution shopping online is filling the gap as catalog sales once did,” he said. The survivors will “stay alert to demographic and shopping trends” with fewer stores. It’s why Target Corp. is going with smaller format stores while investing $7 billion in new IT over the next three years. And it’s why megastore Wal-Mart went on a shopping spree, starting last year, to buy online firms, such as jet.com , to offset its weaknesses.
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