Nordstrom is investing in new digital tools through two tech startup acquisitions that will help the company better engage with consumers and bridge gaps in communication across both digital platforms and brick-and-mortar stores.
The acquisitions looked specifically to platforms specializing in personalization and customization. It includes tech startup BevyUp that enables sales associates to communicate with shoppers beyond the store, and exchange style tips and personal recommendations by sending messages within the platform. (Nordstrom plans to roll out a mobile app that will integrate the technology.) The other company, MessageYes, will allow Nordstrom employees to send personalized text messages to shoppers using both standard messaging services and the new Nordstrom app. Customers can opt in by providing their phone numbers to receive customized messages that will include links to product pages designed to promote sales.
The announcement comes just a few weeks after Nordstrom reported lackluster earnings that fell below investor expectations, with net income in the fourth quarter of 2017 reaching $151 million, down from $201 million in the same period in 2016, a 25 percent decrease.
“The retail environment is changing faster than ever, but the value of service, speed, convenience and newness remain constant,” Brian Gill, technology senior vice president at Nordstrom, said in a statement. “To continue to be successful into the future, we need to invest in technologies that will enable us to deliver on those qualities and better serve customers in a digitally connected world.”
Despite its overall sales woes, Nordstrom is seeing the most success on its e-commerce platforms, a major motivation behind recent acquisitions, according to Tom O’Keefe, CEO of commerce platform 4-Tell. For example, comparable sales at Nordstrom.com increased by 12.4 percent, compared to a drop in 1.7 percent in physical retail stores in the fourth quarter of 2017. Similarly, sales on the brand’s discount sites NordstromRack.com and Hautelook.com increased by a collective 23.7 percent, versus a 0.9 percent decline across Nordstrom Rack brick-and-mortar locations. (Hautelook does not sell via brick-and-mortar.)
O’Keefe said investing in digital services like BevyUp and MessageYes will help the brand build momentum across its digital platforms, while developing a vital competitive advantage above other major department stores.
“It signals they’re taking advantage of owning tech over places like Saks and Neiman Marcus, which have yet to make these types of investments,” he said. “The store of the future is both digital and [physical], and smart retailers are consolidating those strategies into one experience, rather than operating with the traditional silos of physical versus digital where the consumer sits in the middle.”
For Nordstrom, the intention is to better translate its reputation as a leader in customer service and loyalty to its e-commerce platforms. Digital tools such as BevyUp and MessageYes can help the brand more efficiently meet consumers on desktop and mobile, by providing streamlined platforms that better drive conversions.
At the same time, Nordstrom’s push into mobile messaging and commerce may point to deliberate targeting of a younger, more digitally native consumer demographic, said Pete Killian, partner at Vivaldi. Appealing to millennial and Gen Z shoppers can also be seen in efforts like the announcement of its forthcoming private-label brand, Something Navy, a collection made in partnership with lifestyle influencer Arielle Charnas.
“These acquisitions can help Nordstrom crack the code on mobile’s fashion challenge: service and browsing, a perfect fit for Nordstrom’s brand heritage,” Killian said. “In store, their service model sets the standard. Out of the store – on e-commerce and mobile specifically – their service and experience is below emerging competitors.’”
Echoing Killian, O’Keefe said that while Nordstrom’s physical retail customer experience is above par, bringing on BevyUp and MessageYes will help the brand reach the same level of service it provides in store. What will be particularly important, he said, is using personalized styling and custom messaging to increase loyalty.
“The key is to bring data to life through recommendations and personalization,” he said. “Consumers, particularly shoppers who shop with a brand repeatedly, offer a lot of signals about what they like and don’t like. All of that today can be used to help retailers work more closely with the customer.”