9/18/13

Nordstrom emphasizes the younger customer as it sets a goal of $6 billion in web sales by 2020

The upscale chain is on track to reach that mark by 2020, says CEO Blake Nordstrom.

Stefany Moore , Associate Director of Research

High-end department store Nordstrom Inc. is on track to bring in $6 billion a year in online sales by 2020, its CEO Blake Nordstrom told a group of investors last week.

“We aspire to be a top performer online,” Nordstrom said at the Goldman Sachs Global Retailing Conference. “We don’t know how high is high. We’re working to enhance the online experience and let the customer choose how they shop with us.”

The merchant, No. 28 in the Internet Retailer Top 500 Guide, brought in $1.3 billion in e-commerce revenue in 2012, so reaching the $6 billion mark would require it to grow 21% per year on average for the next eight years. Since 2008, Nordstrom has been growing its web business 27% per year. In 2012, it increased e-commerce sales 42.4% to $1.3 billion from $913.0 million.

That robust growth is making web sales an ever-larger portion of the retailer’s overall sales, Nordstrom told conference attendees. “We’re showing a little bit of softness in our stores.”

 About 75% of its current revenue comes from its 117 full-line stores, and the other 25% comes from a combination of the Nordstrom e-commerce business, Nordstrom Rack discount stores and sales from HauteLook.com, a flash-sale fashion and home décor site Nordstrom acquired in early 2011 for $270 million. In a few years, that percentage will be 50-50, he says.

The company’s success, Nordstrom said, will depend in part on how well it appeals to the younger customer. The HauteLook side of Nordstrom’s business, which has a younger customer base, has been very successful, he added. “When we purchased them they had three or four million members. Today they have 14 million. With HauteLook, that customer definitely trends younger.”

The addition of HauteLook has been a boon for the company, as it has met or exceeded its budgets since being a part of Nordstrom, and the business has recently moved into profitability, Nordstrom added. “Rack has been historically our acquisition channel for the younger customer and now with HauteLook we have another one,” he said. “We’re going after the younger, aspirational customer without alienating the core customer that is paying the rent.”

Nordstrom told conference attendees that its customers who shop in more than one of its four business segments—Nordstrom’s stores, Nordstrom.com, Rack stores and HauteLook.com—spend three to four times as much as customers who shop in just one channel.

Internet Retailer research staff discussed the growing influence of the younger demographic of online shoppers in a recent webinar entitled Secrets of the Top 500 Revealed: Strategies of the Leading Online Retailers. Click here to view the webcast for free.

Topics:

Blake Nordstrom, E-commerce and customer demographics, HauteLook.com, Nordstrom Inc., Nordstrom Rack, Top 500, Top 500 Guide

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