Keeping in mind why shoppers choose online vs. in-store shopping. Do you think the type of technology investments Nordstrom is making will allow it to compete effectively against online retailers?

As the firm is cutting down on its capital expenditures, should it invest heavily in existing technology or in the stores themselves? What are the benefits and risks of either focus?

Are investors too impatient in wanting returns from these investments? Would Nordstrom be better off if it were owned by private investors, rather than as a publicly traded firm since this would lessen the pressure the firm would face for short term profitability?

ISSUE FOR DEBATE The department store industry is experiencing tough times. Bon Ton Stores, a chain that ran several store brands, including Bon Ton, Younkers, Carson's, and others, went bankrupt in 2018. Several other chains, including Scars and C Penney, struggle to pull customers in The challenges these firms face include dwindling mall customer traffic, a declining middle class customer base, and the threat of online retailing Nordstrom is striving to avoid this retail storm. The Seattle-based chain is known for its high level of customer service. As a result, its customers are notoriously loyal, with 65 per cent saying they'd recommend the chain to friends, compared to 41 percent for Macy's shoppers based on a survey by Prosper Insights and Analytics. Still, Nordstrom is strup gling to grow. Sales at their full service stores declined from 2014 to 2018. Overall corpo rate sales increases are being driven by Nordstrom's discount stores, Nordstrom Rack which now accounts for over a third of all of Nordstrom's sales. The challenge for Nord- strom is to meet the ever evolving expectations of customers while maintaining its service level. As PwC analyst Steve Barr said. "How are they going to drive traffic to the stores! That's their battle now." Nordstrom's recipe is to integrate technology and innovative operations with its service culture. They have made very practical changes to their store layouts, such as self-service bins where customers can drop off returns and drive through pick up lanes for online orders. They've also added high-tech gadgets to their stores, such as a system that project life-sized avatars of customers wearing custom-made clothes they are considering order- ing. They have also expanded the technology the firm uses to connect with customers. This includes in-store technology that allows salespeople to complete customer sales using hand-held devices, an app that allows customers to scan a QR code for a product they see in a store to order a size or color that is not in stock, and another app that allows personal shoppers to notify loyal customers of new products they may be interested in. They are also testing out a new store concept, called Nordstrom's Local, a small footprint store the size of a convenience store, which carries no merchandise. It serves as a location for customers to try on and pick up products they ordered online. However, all of these invest- ments have limited the investment the chain could make in store improvements. As a result, some customers have commented that the interior of some of Nordstrom's stores are looking worn and dated. While Nordstrom believes all of its technology investments will pay off in the long-run, the chain is feeling increasing pressure from investors to generate greater profits. Firm prof its declined by nearly 40 percent from 2015 to 2018, and its stock price fell by nearly 50 percent from early 2015 to early 2019. Under pressure from investors, the firm cut back on its capital spending from the high level it has spent in the last few years, about 7 percent of sales, back to its historic average of 4 percent of sales. Discussion Questions 1. Keeping in mind why shoppers choose online vs. in store shopping, do you think the type of technology investments Nordstrom is making will allow it to compete effectively againston- line retailers? 2. As the firm is cutting down on its capital expenditures, should it invest heavily in existing technology or in the stores themselves? What are the benefits and risks of either focus? 3. Are investors too impatient in wanting returns from these investments? Would Nordstrom be better off if it were owned by private investors, rather than as a publicly-traded firm since this would lessen the pressure the firm would face for short-term profitability! Sources: WahhaP. 2018. Inside Nordstrom's Laboratory, F. 1940: Beth Arden e-commerce technology companies in Manches Long An Nading stones in 2019. fol.com January 25 p CHAPTER 5 BUSI ISSUE FOR DEBATE The department store industry is experiencing tough times. Bon Ton Stores, a chain that ran several store brands, including Bon Ton, Younkers, Carson's, and others, went bankrupt in 2018. Several other chains, including Scars and C Penney, struggle to pull customers in The challenges these firms face include dwindling mall customer traffic, a declining middle class customer base, and the threat of online retailing Nordstrom is striving to avoid this retail storm. The Seattle-based chain is known for its high level of customer service. As a result, its customers are notoriously loyal, with 65 per cent saying they'd recommend the chain to friends, compared to 41 percent for Macy's shoppers based on a survey by Prosper Insights and Analytics. Still, Nordstrom is strup gling to grow. Sales at their full service stores declined from 2014 to 2018. Overall corpo rate sales increases are being driven by Nordstrom's discount stores, Nordstrom Rack which now accounts for over a third of all of Nordstrom's sales. The challenge for Nord- strom is to meet the ever evolving expectations of customers while maintaining its service level. As PwC analyst Steve Barr said. "How are they going to drive traffic to the stores! That's their battle now." Nordstrom's recipe is to integrate technology and innovative operations with its service culture. They have made very practical changes to their store layouts, such as self-service bins where customers can drop off returns and drive through pick up lanes for online orders. They've also added high-tech gadgets to their stores, such as a system that project life-sized avatars of customers wearing custom-made clothes they are considering order- ing. They have also expanded the technology the firm uses to connect with customers. This includes in-store technology that allows salespeople to complete customer sales using hand-held devices, an app that allows customers to scan a QR code for a product they see in a store to order a size or color that is not in stock, and another app that allows personal shoppers to notify loyal customers of new products they may be interested in. They are also testing out a new store concept, called Nordstrom's Local, a small footprint store the size of a convenience store, which carries no merchandise. It serves as a location for customers to try on and pick up products they ordered online. However, all of these invest- ments have limited the investment the chain could make in store improvements. As a result, some customers have commented that the interior of some of Nordstrom's stores are looking worn and dated. While Nordstrom believes all of its technology investments will pay off in the long-run, the chain is feeling increasing pressure from investors to generate greater profits. Firm prof its declined by nearly 40 percent from 2015 to 2018, and its stock price fell by nearly 50 percent from early 2015 to early 2019. Under pressure from investors, the firm cut back on its capital spending from the high level it has spent in the last few years, about 7 percent of sales, back to its historic average of 4 percent of sales. Discussion Questions 1. Keeping in mind why shoppers choose online vs. in store shopping, do you think the type of technology investments Nordstrom is making will allow it to compete effectively againston- line retailers? 2. As the firm is cutting down on its capital expenditures, should it invest heavily in existing technology or in the stores themselves? What are the benefits and risks of either focus? 3. Are investors too impatient in wanting returns from these investments? Would Nordstrom be better off if it were owned by private investors, rather than as a publicly-traded firm since this would lessen the pressure the firm would face for short-term profitability! Sources: WahhaP. 2018. Inside Nordstrom's Laboratory, F. 1940: Beth Arden e-commerce technology companies in Manches Long An Nading stones in 2019. fol.com January 25 p CHAPTER 5 BUSI