"Focus on Relevance Drives Nordstrom's Commitment to Direct-to-Consumer Labels"

"Focus on Relevance Drives Nordstrom's Commitment to Direct-to-Consumer Labels"

Nordstrom Embraces Digital-First Brands to Attract Younger Consumers

In a bid to appeal to a younger demographic and broaden its customer base, Nordstrom has been forging partnerships with digitally native brands. This strategy, which integrates digital innovation with immersive in-store events, has been instrumental in Nordstrom's evolution.

The journey began in 2012 when Nordstrom made a $16.4 million minority investment into DTC menswear brand Bonobos. This was the first time Bonobos would be sold in a physical setting outside its New York showroom-style store. Since then, Nordstrom has inked partnerships with a host of digitally native brands, including Away, Thinx, Kim Kardashian West's shapewear brand Skims, Everlane, Reformation, and Casper.

One of the most notable collaborations was Glossier's launch of its perfume, Glossier You, at Nordstrom in late 2019. Boy Smells, another partner, teamed up with Nordstrom to sell its Cologne de Parfum collection, featuring both masculine and feminine olfactive notes, exclusively from April 8 to September 2021. These exclusive partnerships generate interest among consumers and create a sense of scarcity for the brands' products.

The high advertising and marketing costs associated with acquiring customers online have pushed many DTC brands offline through temporary pop-ups, permanent locations, or partnerships with traditional retailers like Nordstrom. This strategy allows these brands to reach a wider audience while also benefiting from Nordstrom's well-established retail network.

Nordstrom offers placement among a highly curated selection of products to digitally native brands, enhancing its product curation — a core part of their business model — by increasing product differentiation and allowing the company to engage customers across different generations effectively.

The primary customer of Nordstrom falls within the Gen X or baby boomer demographics. However, by embracing an omnichannel retail experience, Nordstrom has been successful in attracting younger consumers. The company has developed technology-enhanced shopping tools, such as Wish Lists, online stylist chat, curbside pickup, and personalized recommendations, to meet the shopping preferences of younger, digitally savvy customers.

In-store activations and events like Glam Up Days and Beauty Bash provide experiential moments that build community and customer engagement beyond digital platforms. These events, coupled with the exclusive products offered through partnerships with digitally native brands, have helped Nordstrom maintain its relevance in the ever-evolving retail landscape.

The strategy seems to be paying off. During its all-important holiday quarter in 2020, e-commerce sales represented the majority of Nordstrom's sales. Despite a 20% year-over-year net sales decline to $3.6 billion during the holiday quarter, Nordstrom's focus on digital innovation and partnerships with digitally native brands has helped the company navigate the challenges posed by the pandemic.

Nordstrom's foot traffic to full-line stores plunged 98.3% and 93.3% year over year in April and May 2020, respectively. However, the company's commitment to its omnichannel strategy has helped it bounce back, with exclusive partnerships and in-store events playing a significant role in this recovery.

One such partnership is with Rent the Runway, which includes serving as order pickup and drop-off locations for Rent the Runway customers. Another notable collaboration is Warby Parker's launch of four sunglass styles exclusively sold in Nordstrom as part of a partnership in 2015.

Matthew Herman, the creator and co-founder of Boy Smells, believes that Nordstrom shares similar values of diversity and inclusion. Having Boy Smells' product sold within Nordstrom means providing a more inclusive selection of products to consumers, a testament to Nordstrom's commitment to catering to a diverse customer base.

In conclusion, Nordstrom's strategy of attracting younger consumers involves developing an omnichannel shopping experience, leveraging technology-enhanced shopping tools, hosting events that build community and experiential engagement, curating differentiated products, and partnering with digitally native brands to offer exclusive, trend-forward items. These efforts have helped Nordstrom remain competitive in the retail industry and continue to resonate with consumers across different generations.

[1] Source: Forbes [2] Source: Glossy

1. Nordstrom's embrace of digital-first brands is a strategic move to attract a younger demographic and broaden its customer base, as seen through partnerships with Away, Thinx, Skims, Everlane, Reformation, Casper, and more.
2. These exclusive partnerships, like Glossier's launch of Glossier You and Boy Smells' Cologne de Parfum collection, generate interest among consumers and create a sense of scarcity for the brands' products.
3. High advertising and marketing costs have led many DTC brands to ally with traditional retailers like Nordstrom, benefiting from their well-established retail network as well as the reaching a wider audience.
4. Nordstrom offers digitally native brands a highly curated selection of products, enhancing its product curation and allowing for engagement with customers across generations.
5. Tech-driven shopping tools like Wish Lists, online stylist chat, curbside pickup, and personalized recommendations cater to the shopping preferences of younger, digitally savvy customers.
6. In-store activations and events, such as Glam Up Days, Beauty Bash, and Rent the Runway partnerships, offer experiential moments that build community and customer engagement beyond digital platforms.
7. During the pandemic, Nordstrom's focus on digital innovation and partnerships with digitally native brands helped the company navigate challenges, as e-commerce sales represented the majority of sales during the holiday quarter in 2020.
8. Collaborations with Rent the Runway and Warby Parker exemplify Nordstrom's commitment to an omnichannel strategy, its determination to cater to a diverse customer base, and its place as a strong competitor in the ever-evolving retail industry.

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