1. What is Nordstrom’s segmentation strategy? Who does it serve?

2. Using the Porter model, which generic business level strategy is Nordstrom pursuing?

Nordstrom is one of American’s­ most successful fashion retailers. John Nordstrom, a Swedish immigrant, established the company in 1901 with a single shoe store in Seattle. Right from the start, Nordstrom’s approach to business was to provide exceptional customer service, selection, quality, and value. This approach is still the hallmark of Nordstrom today. The modern Nordstrom is a fashion specialty chain with some 240 stores in 31 states. Nordstrom generated almost $12.5 billion of sales in 2014 and makes consistently higher-than-average returns on invested capital. Its return on invested capital (ROIC) has consistently been in the mid-teens to low 20s, and was 16.3% in 2014, a strong performance for a retailer. Nordstrom is a niche company. It focuses on a relatively affluent customer base that is looking for affordable luxury. The stores themselves are located in upscale areas, and have expensive fittings and fixtures that convey an impression of luxury. The stores are inviting and easy to browse in. Touches such as live music being played on a grand piano help create an appealing atmosphere. The merchandise is high quality and fashionable. What really differentiates the company from many of its rivals, however, is Nordstrom’s legendary excellence in customer service.