Nordstrom Innovation Lab: Rethinking How You Shop
Nordstrom’s Innovation Lab, based in Seattle has been tasked with the job of mining data gathered from Facebook, Pinterest, Twitter and its loyalty card to create curated experiences for customers based off of their preferences and in-store shopping activity.
Nordstrom’s Innovation Lab, based in Seattle has been tasked with the job of mining data gathered from Facebook, Pinterest, Twitter and its loyalty card to create curated experiences for customers based off of their preferences and in-store shopping activity. For example, trending and popular products online can be displayed more prominently in-store to encourage purchases. It gives consumers the benefit of convenience and having their voice heard and ensures that the product that they see is more closely linked to what they actually want. The Innovation Lab is also focused on lean start-up fundamentals by quickly testing products and scraping them if thye are not successful. For example, the Innovation Squad began building a sunglass buying iPad app in their flagship Seattle store where they tested different features with customers that included the ability to take pictures and compare side-by-side photos to decide which pair to buy. They spent over a week in the store building the app and testing each additional feature with customers and sales people to continue iterating based upon feedback. However, in the end they decided the app was not as helpful as they wanted and it was never rolled out across stores. Nordstrom’s approach is interesting because it continually pushes for innovation while not becoming wedded to ideas and instead focusing on creating new apps and options that consumers actually love. The concepts of design thinking, ideation, and pivoting quickly are all on display here.
Value Creation
Value is created in this model by providing customers with easier ways to interact with and find products that are meaningful to them. It also adds a convenience factor by creating solutions that do not even require customers to be in store. Consumers can also pick and choose which technological innovations are most helpful to them and can opt in to whichever services they find most compelling.
Value Capture
Nordstrom has been heavily incentivizing consumers to use their Nordstrom credit card so they can better capture who is buying what and in what quantities. They are also able to use technology like WiFi signals to see where people are traveling in the store and how long they are staying. This is a good metric to use as a proxy for what products may be most engaging and which displays may need to be fixed or updated. Another unique value capture play is their texting app, TextStyle. This app allows personal shoppers at Nordstrom to text customers who opt into the program with ideas on what to purchase based on their likes and previous buys. Customers can then purchase the product right then and there by texting back a unique code, thus bypassing lengthy financial input processes since that information is already on file in the store. This allows Nordstrom to capture data from its various technological and personal interactions to up-sell customers and give them opportunities to buy product even when they are not in the store. It will also encourage consumer’s to have higher conversion to purchase ratios because the recommendations are based off of personalized data. Another similar option was PocketStyle where customers could ask personal shoppers questions about anything from makeup tips to fashion dos and don’ts. This is another option that helps consumers find the products they need will also increasing loyalty to the Nordstrom brand due to the personalized aspect of their interaction with store personnel.
TextStyle
PocketStyle
http://blogs.wsj.com/cio/2015/05/28/nordstroms-innovation-revamp-leads-to-e-commerce-texting-app/
https://www.umbel.com/blog/retail/13-retail-companies-already-using-data-revolutionize-shopping-experiences/
How does the wifi technology work? Does a customer need to have the app installed and open for Nordstrom to be able to track their movements in the store?
The underlying question on this for me is where leveraging data and technology is actually creating value to customers? or is this being digital for being digital’s sake? Is it actually keeping its clients coming back ?
hey! thanks for the comment. referencing the value creation section above, i think the value to consumers is having 1) curated experiences that leverages past buying data and social media likes and 2) the convenience afforded to customers not having to enter brick and mortar stores to find clothes and accessories. not every technological innovation is going to be a hit, as is seen with the sunglasses app that was never launched, but I do think Nordstrom is at the forefront of trying to test new innovations to see what consumers like and see where the most potential value is created and captured. i would argue that it keeps clients coming back since the data that Nordstrom is able to collect via these avenues makes it so that any future advice / buying suggestions are based upon a heavily data mined list that makes it so it is more likely that that suggestion is in line with the customer’s preferences. this type of knowledge will keep that customer buying at Nordstrom and at the same time allow Nordstrom to keep collecting valuable data.
I don’t know that Nordstrom has really found the true captured value through their apps as they stand. How is what they are doing in terms of tracking loyalty card purchases and page click views very different than other retailers?
Hi Grace, I don’t agree with the premise that this is the same as other retailers are doing given the fact Nordstrom has created an entire Innovation Lab to use that content to create end products for consumers. It is one thing to track data and completely another to use that to attempt to disrupt how you serve consumers. Using the principles of lean startup technology companies, they are continually testing new applications and features to increase convenience and personalization for consumers. Not all of the technology is eventually rolled out because heavy testing may show it is not a hit with consumers, but the underlying difference is that they are constantly innovating and pivoting to create new consumer experiences. It may still be in the early processes at this juncture, however they have clearly shown a commitment to both collecting ever more data about consumers and using it in a unique way. For example, with TextStyle you are increasing consumer engagement while collecting additional information above and beyond anything you would have been able to collect with simply a loyalty card.
Hi CC,
You bring up a good point. I think Nordstrom (like most traditional retailers) is in a tricky position-since they are not really ‘redesigning’ and ‘innovating’ on the fashion product itself (that is the job of the manufacturer). They have to come up with ways to ‘innovate’ the in-store experience. I like your points about out-of-store experiences, such as TestStyle and PocketStyle. While I could see these potentially helping to create a customer profile and understanding of ‘who’ their customers are, I wonder how successful the tools are? For the example above, such as makeup, I would think that is a pretty personal decision–to match colors to skin tone, etc. It would be very interesting to track returns and customer satisfaction on orders suggested through these new tools.