If you belong to the States, chances are you are already a customer of this brand. Nordstrom has been around for a long time and many people love its products. In the following Nordstrom SWOT analysis, we will try to understand how this brand has been able to not only survive but also thrive in such a competitive market for so long.
For those of you who have not heard of the company, it was started by John W. Nordstrom and Carl F. Wallin all the way back in 1901! The company was initially started as a shoe store but slowly and gradually it has grown to become a luxury department chain of stores. The company was started in Seattle, Washington.
The product lines offered by the company include clothing, footwear, handbags, jewelry, handbags, cosmetics, fragrances, furnishings, and wedding accessories. Other than the USA, Nordstrom is found in Canada and they also expanded into Puerto Rico but closed that operation in 2020.
Talking about their success, the company has been able to secure excellent places amongst some of the best businesses in the world. In 2018 they were ranked as the 183rd company in the States to be on the Fortune 500 list by virtue of their revenue. In 2019, the company enjoyed its 25th year being mentioned on the Fortune 500 list.
It is interesting, to say the least, that a company has been around for more than a century and is still so relevant! The SWOT analysis will tell us more about how well the company actually is performing underneath the glamour.
This will also help you in understanding how a SWOT analysis is conducted for a company such as Nordstrom. Before we start, let’s talk a bit about what the SWOT is. It consists of two categories of factors, internal and external. So the SWOT acronym which stands for strengths, weaknesses, opportunities and threats basically further is classified into the said two categories.
Strengths and weaknesses are internal factors and opportunities and threats are external factors. Internal factors can be controlled, initiated, and even influenced by the internal players of the company whereas external factors are rather unprecedented and cannot really be anticipated at times. They are spontaneous and out of the control of the internal environment of the company.
This can better be explained using an example. If Nordstrom has a huge customer base and consequently market share, this is a huge strength for the company because it is owing to the hard work they do. So this strength is purely an internal factor.
On the other hand, if Nordstrom has a lot of strong competitors, this is a threat because competition cannot be controlled in any shape or form by the company. This is how threats are classified as external factors affecting the company.
Now that you know a bit more about the SWOT matrix, we can move on ahead and start working on the analysis for Nordstrom.
What are some of the biggest strengths of Nordstrom?
These are the factors that have enabled such a historic brand to stay afloat in the market. If we start talking about each strength of this brand over the years, this entire analysis will be about that only then. So to keep things convenient, we will only mention the most relevant ones.
Although this company is classified as a luxury store with expensive goods being offered, they did diversify and include other business options including a much more affordable line by the name of Nordstrom Rack.
They also acquired Haute Look which was a retailer in LA offering much more affordable varieties of designer goods. They also offer a subscription-based service by the name of Trunk Club amongst other lines. So this diversified portfolio has managed to keep the brand very competitive in the market.
The brand has been very smart with its business partnerships over the years. They have kept their strategy revolving around smaller brands that have their own target niches, so they can stem into different markets instead of competing on a broader level.
Some of their partnerships include brands Top Shop, Allbirds, Greats, Reformation, Stella, Dot, and Glossier. The business has improved a lot ever since they started working with these companies.
The company has an amazing and very rare policy for its stature; every item purchased has the option of being returned without any questions being asked.
Can you imagine some of the other retailers being the same? We surely can’t!
When people think of luxury goods, more specifically a variety of luxury goods, they think of Nordstrom. This is a very big strength for the company because a strong brand name translates directly to better business and repute amongst the masses.
The company was one of the first in the United States to have adopted a revolutionary digital technology to improve customer experience. They have a store in New York that offers a virtual trial room allowing people to see online what the clothes look like before actually purchasing them.
The company has been able to do very well with its corporate social responsibility. Recently in 2020, the company paid $5 million to NYC as investments and community grants. They also have supported NGOs in Puerto Rico, the USA, and Canada.
What are some of the biggest weaknesses of Nordstrom?
Alas, no matter how successful any brand is, it cannot escape the wrath of weaknesses. Nordstrom has also been susceptible to weaknesses over the years. In the following portion, we will address the most relevant ones out of them all.
Yes, granted that the brand is targeted toward affluent customers who are easily able to afford high-end products, it still becomes very difficult to stay ahead in terms of the market share when the majority of the population cannot buy these goods.
Being a luxury brand has its downsides as well because the market becomes very constricted.
Although the portfolio they have is good in terms of what they offer, it is also true that they give mostly similar products; clothes, shoes, accessories, household items, etc.
They should introduce lines of completely differentiated products which don’t fall into the same categories. This will help them enter newer markets and will also keep the sales steady when business in one sector is a bit slow.
Lack of Globalisation
As we already know, the company has only been in three countries out of which it closed its operations in one; Puerto Rico.
Although the States and Canada are excellent markets in terms of the population and buying power of the people, they still are missing out on a huge customer base in emerging economies.
Imagine how much their business would boom should they enter economies like China and India. Even if they want to start by expanding into developed economies, they have so many options. They should be working on eliminating this weakness as soon as possible.
What are some of the biggest opportunities the brand can make use of?
As long as a business is able to recognize the different opportunities that present themselves in a timely manner, they really have nothing to worry about for too long. Here are some of the most relevant opportunities for the company to make use of.
One of their weaknesses can actually very easily be eliminated if they make strategic choices of entering new markets in different countries. If they do make the choice, it will only help in making their profits better.
There are endless choices for the brand to consider. Keeping in mind how old they are and how long they have been in the market, sooner or later there will be new entrants that will take their place and there won’t be much room for global expansion.
Stronger Online Presence
As most of the world has become more accustomed to online shopping especially after the pandemic of Covid-19 hit the world, the brand can focus on improving their digital landscape.
They mainly focus on the physical stores and not on their online stores. If they work a bit more closely on this side, there is no telling the reach they can have, even global without having to develop physical stores in various locations.
Another weakness that they have can be eliminated if they choose to invest in completely different products and markets.
This will help the company not only expand around various regions, but they will also be able to stay afloat should things become difficult in one sector; put eggs in different baskets.
What are some of the biggest threats that are looming over Nordstrom?
These are the factors that the company should steer clear of. They need to be very cautious of these threats so they can make better choices. Here are some of the biggest threats facing the company as of now.
They have many strong competitors in the market including Neiman Marcus, Bloomingdales, Saks fifth avenue, Macy’s, JCPenney, TJ Maxx, and Kohl.
Out of all of these Bloomingdales is perhaps their biggest competitor, especially in fashion retail. Having this many competitors means a constant battle for the market share. To stay ahead of the competition the brand must amplify and build on the strengths using whatever viable opportunity they find.
Can you name anything that is not available through Amazon? We surely can’t. Stores like Nordstrom are always under threat because of such online retailers because dupes and variants are always available online.
People save the trip to the store and they also find a good variety on Amazon so this hurts the company’s business prospects.
Like almost all other businesses, this company was taken severely back when the disease took the world by storm. In fact, Covid-19 was the biggest reason why they had to close their stores in Puerto Rico as business declined severely.
In fact, in 2020 they had to ultimately close down sixteen of their stores permanently because of the losses they faced during Covid-19.
Expensive luxury brands are usually affected by the danger of counterfeit products. It is sad how there are so many knock-offs that can affect the perception of their brand quality in people’s minds who don’t always know how to distinguish between real and fake products.
Nordstrom SWOT Analysis: Final Word
If you have completed your way right to this point, congratulations are in order. You now know so much more about this archaic brand that has so impressively managed to stay in the market.
In this analysis, we have seen how the various factors of the SWOT template have an effect on the company. It can be safely said that despite having its presence limited to only two countries, they have an impressive amount of strengths.
They do have some weaknesses but the good news is that these weaknesses can very easily be mitigated should they make good use of the opportunities presented to them. The threats they have are serious but at the same time, they aren’t completely unique or specific to them.
Many companies and brands are susceptible to these unavoidable threats; it all depends on how they tackle them really. Overall it is safe to conclude that the company has done very well and has a seemingly bright future as well. We are excited to see where they go! If you want to understand the SWOT more closely, you should study more examples so you can have a much clearer idea of the concept.