How Nordstrom sees customers’ changing expectations

Retail giant Nordstrom competes against other luxury brands like Bloomingdales and Saks Fifth Avenue. It sells Citizens of Humanity jeans ($238), leather Prada men's sneakers ($420), and Jimmy Choo clutches ($620). It does not sell tires.

So, why would it take the rubber discs from a customer insistent on returning them?

Because that's how far Nordstrom's return policy stretches. When the company opened a store in Alaska, it bought the site from a business that sold tires.

A customer came in to return a pair, saying he'd bought them at that location. "We figured that was true and honored his claim," explained Nordstrom PR rep John Bailey later.

That kind of customer care has netted Nordstrom mad points forever. But in a digital environment, where it's perhaps less clear how to deliver an exceptional returns experience, how does the retailer expect to extend its reputation for sterling customer service?

Jamie Nordstrom, president of Nordstrom Direct, sat down with Pat Connolly, CMO of Williams-Sonoma, at Responsys Interact 2013 last month and had a frank conversation about evolving customer expectations and the challenges retailers face.

Personalized customer service goes multichannel

In the past, personalized customer care was delivered one way only: through human reps. Today it's through multiple channels—digital, in-store, direct mail, said Nordstrom. 

Now it's about a lot of new dimensions, like fulfillment. Who can get it to me the fastest or the easiest? Who has the best online experience? To allow me to shop on my phone the way I want to shop? The customer is not going to give you credit for a not-so-good website just because you have a great store."

One surefire, said Nordstrom, is to sell consistently online and off. For instance, if you send a marketing email and a customer walks into your store with that email in hand and says, "I want the item featured here," then you better have that item in store, he said.

And have the same prices online and off, Nordstrom continued. (There must be enough brands that don't follow that practice that luxury retailers feel compelled to preach such advice on a regular basis per Caroline Rolfe.)

Consumers opt into personalized care

Nordstrom believes consumers are no longer troubled by the amount of data being gathered about them by companies. "They expect us to use it to make their experience more relevant," he said.

In fact, Nordstrom thinks consumers may be willing to offer even more of their data in return for exclusive memberships or loyalty programs, which we're already seeing with Amazon Prime and its 13 million-plus members.

If you join the club, we're going to deliver more relevant experiences to you, and ultimately those are going to be worth more than the miles, the points, or the coupons."

Solving the return conundrum

Both Nordstrom and Connolly also recognized how, in the 80s, consumers considered catalog shopping as distinctly different from shopping in store. They were two separate transactions. You could not return in store what you bought from the catalog nor was inventory necessarily the same for both.

Today those expectations are shifting, and Nordstrom acknowledged that retailers are still bedeviled by the return experience.

The little secret in our industry is that returns are really consistent across companies within different verticals. Some companies get credit for having very liberal return policies; some don't. Yet all our returns are about the about the same. But if you ask customers, they think they're wildly different. Customers really value a great return experience. How you do that in ecommerce is trickier than how you do it in store."

Preserving brick and mortar

All that said, the brick-and-mortar experience is still a priority for retailers even as Big Box construction slows. "We see our stores as billboards for our brands," said Connolly.

More than half of search traffic for the brands beneath the Williams-Sonoma umbrella is organic, and Connolly believes the physical stores play an important influence. In Union Square in San Francisco, 25 million visitors yearly see the Williams-Sonoma store; at the brand's Columbus Circle location in New York, it's 38 million people annually.  

"They might not come in, but there's huge brand value in being there and the physical presence and confidence it brings," said Connolly.

That previously online-only retailers are moving to the street is strong indication of the value of brick-and-mortar,  said Nordstrom, pointing to menswear retailer Bonobos, which has begun opening "guideshops." Said Nordstrom,

Their most engaged customers are going into those stores, and they're developing really great relationships with them. It creates a platform to have a relationship with the customer that's frankly much bigger."