In microeconomics, supply and demand factors are studied to establish economic trends. However, with changed factors, resulting effects can be derived from the established trends. In terms of microeconomic supply factors, the competitive landscape of the United Kingdom, which Nordstrom is entering, will be examined. Furthermore, in terms of microeconomic demand factors, Nordstrom’s target market and pricing strategy will be evaluated. By examining these supply and demand factors together, the elasticity of the price for Nordstrom products can be determined. With the United Kingdom holding factors that strongly promote foreign investment, such as low tax rates and low tariff rates, the competitive landscape for retailers is high. Specifically, luxury retailers, as they have grown 24.8% from 2013 to 2018, whereas, other retail segments on average grew 11.9%. Furthermore, 65% of retailers plan to expand into the United Kingdom in the next three years. The growth in the luxury retailers and firms seeking to expand to the United Kingdom is due to the increase of tourism traffic seeking bargains. Additionally, London is the fashion capital of the world followed by the following four top …show more content…
retail cities in the world, Glasgow, Birmingham, Manchester, and Liverpool, all of which are in the United Kingdom. Therefore, the luxury retail market within the United Kingdom is extremely competitive. Yet, Nordstrom has the opportunity to enter the market, and firmly establish their competitive advantage of being consumer focused. The additional competitive advantage Nordstrom holds is their ability to enter the market with the future in mind, with an omnichannel approach, and small store concept as e-commerce sales continue to soar. In essence, Nordstrom is one step ahead of the competition that presently has to make the transition to technology adoption, while being locked into long-term large brick-and-mortar leases. In terms of Nordstrom’s target market, it is females aged 18-49; more specifically female Millennials aged 18-36 belonging to the middle and upper class. Thus, explaining why 30% of Nordstrom consumers have no higher education, 20% have some college education, and 19% having graduated college. However, it is apparent that these consumers come from money, rather than earning it. Thus, to appeal to Millennials who are not as price sensitive as most yet, seek value in their purchases, it is imperative that impeccable customer service is delivered to provide added value, as they have an abundance of alternative outlets to obtain goods. Additionally, convenience should be afforded to their Millennial target market through the e-commerce platform, to create an omnichannel approach and derive loyalty. In the United Kingdom expansion, it is imperative these elements be delivered exceptionally to capture Millennial consumers early on. With regard to Nordstrom’s pricing strategy, they offer a range of products at a variety of price points.
However, are constrained by suppliers, specifically high-end suppliers, on pricing. Therefore, they are unable to offer storewide coupons for discounts however; short-term promotional offers approved by suppliers are available. Nordstrom, acknowledging that their Millennial target market as consumers are well informed due to the internet, and have an abundance of alternatives, strive to provide a value added experience to differentiate themselves from competition. Thus, Nordstrom executes this value added experience by providing a relaxed and accommodating return policy, a price match program, sale adjustments, everyday free shipping, and the convenience of an omnichannel
approach. Overall, considering the United Kingdom’s highly competitive luxury retail landscape, Nordstrom’s target market of Millennials who seek value, and suppliers firmly setting the price of their goods, makes for a unique supply and demand scenario. Ultimately, the price elasticity of Nordstrom products is high, as demand for their goods will decline with price increases. This is so, as the value added by Nordstrom through their competitive advantage of customer focused service, would no longer be enough to capture their target market of value seeking, well informed, Millennial consumers. Therefore, in this expansion, price minimums set by suppliers should be offered to consumers, rather than the price maximums, due to consumer sensitivity.
Target and Nordstrom’s are set up mainly as department stores in which product lines are organized in departments to be occupied by specific buyers and sellers. While Nordstrom is arguably the premier retailer of a wide variety of clothing, shoes, and accessories that land on the high end of what most would call “affordable,” Target would be considered the store for people who are middle class. The legendary “half-yearly” sales for men, and the additional markdowns that usually follow a sale section that is usually decently well stocked. The designer brand list has wild range in-house brands like Gucci, Prada, and the plain old Nordstrom line offer more than a few items with incredible looks and high quality for very reasonable prices. Its website is clean and easy
According to Kantar Retail, most of Target’s shoppers are younger on average than its rivals, and more educated. That means it has to consistently offer something different and appealing; it emphasizes more on the latest-trend apparel, eye-catching home décor and exclusive designer merchandise than its competitors. This results in a willingness to pay a bit more for items by customers who are willing to pay a bit more. Moreover, this successful
Kohl’s also boasts a loyal customer base and strong brand equity. These strengths are critical to offset their weaknesses. Flaws include an imbalance on sales for men’s products and a lacking online presence. (Kohl's Corporation, n.d.) Another way that Kohl’s is actively counterbalancing their negatives is by capitalizing on opportunities. Kohl’s has found that their beauty sections are an immense source of opportunity. As a result, the company is expanding those departments in an effort to capture those sales that would otherwise go elsewhere. (Wahba, 2014) Finally, Kohl’s keeps the knowledge of their threats at the forefront of their decision-making. They understand that their coupon system can be abused and cause profit losses. They also recognize that price wars in their industry can also be very damaging. As a result, they are working towards more secure methods of offering savings and strategically making efforts to remain the leader for price setting. (Wahba,
First, Nordstrom is unique through its excelling customer service. As a full-service retailer, Nordstrom assists customers in every phase of the shopping process. Because they carry more specialty goods, customers will need and want more assistance leading to increased value of customer service. One of their policies is that they will accept any merchandise that people bring back without asking any questions. As a result, people feel more confident about purchasing products from there, since they can buy something with the comfort and knowledge that Nordstrom has an excellent return
Nordstrom can continue providing their exceptional online experience and client focused approach using their online system by offering an unmatched online experience that copies their in-store customer service. This would allow Nordstrom to raise its revenue considerably as well as further improving their brand image. I will also discuss specific ways of successful execution, and the steps required to provide Nordstrom a stunning picture of how to execute strategy.
A common household name, Nordstroms is known all over the world but their empire is mainly located in America. A sophisticated department store, this well known chain was started over a century ago in a tiny shoe store. Throughout the years this company was passed down through the generations and has evolved into the modern and fashionable company we know it as today.
Nordstrom segments are broken down into preference segments. There are three segments that Nordstrom has containing the following: homogeneous, diffused, and clustered. Homogeneous is a market with no natural segments. Diffused is a market with evenly distributed preferences with no concentration. Finally, a clustered market when natural segments exist and may be effectively targeted. Nordstrom’s segments focus on inside
Exploring the profitability of this industry, domestically retailers are struggling to maintain high profit margins. The solid industry growth expected for the coming years is highly supported by the economic turnaround in 2011, however many small retailers are feeling the pressure of low-cost imports . Reduced imports and the continued shifting of manufacturing operations to low-cost countries, creates a trickle down effect onto the fragmented market of companies, with a mix of small and large participants (see Exhibit 2). Increases in price-setting control of wholesalers, are causing downst...
Target Corporation is the second largest discount store in the United States, just behind Walmart who takes first place. An important part of what makes this store so popular is the supply and demand of certain products they offer and the quality of these products. There are two important variables that affect both supply and demand. The variables that have an impact on supply are the wages that are paid to workers and the price of key inputs. While the variables that have an impact on demand are customer income and the prices charged for goods sold at Target. By having a clear understanding of these variables and how they impact Target, we are able to understand current and future market conditions which can potentially help increase future sales.
With Nordstrom, everything starts with the hiring process. Their hiring strategy is to recruit sales employees who are motivated, but also nice (Spector
Nordstrom’s product offerings are not only of the best quality available, but are also presented in a fashion appealing to customers. The reputation Nordstrom has built in the industry has sustained their success for over a century. Nordstrom’s further expects to enhance their company philosophy in the future by implementing additional differentiation tactics that will continue their market dominance in highly volatile economy.
Now that I have finished my mystery shop experience, I hope to continue to shop at Nordstrom as I feel appreciated. I also hope to see more improvements too! I know that I can count on sales associates at Nordstrom to help me whenever I?m in need of it. I plan to give the Community Spotlight certificate to Lily very soon because I want her to know that I am thankful for her customer
Here I go again preparing to go to the store Stater Bros and checking my shopping list to see what to buy. As I walk through the store to my left, I can see the organic food and wind up at Services Deli while when going to my right. Buying prepared food saves me time cooking at home and the store has exclusive recipes for everyone. “Human begins walk the way they drive, which is to say that Americans tend to keep to the right when they stroll down shopping mall concourses or city sidewalks,” according to Malcolm Gladwell in his article “The Science of Shopping” (1). He explains how consumers’ shopping behaviors are affected by walking from scanning from left to the right and how it is easier for shoppers to do. Charles Duhigg, writer of The Power of Habit, says that “Realization came from a growing awareness of how powerfully habits influence almost every shopping decision. A series of experiments convinced marketers that if they managed to understand a particular shopper’s habits, they could get
This part of the report will highlight the problems within the external environment that affect Marks and Spencer. Before planning and decision making can take place an organisation must be aware of these issues. The key factors that impact upon all organisations are Political, Economic, Social and Technological. These factors are commonly referred to as PEST factors. Political changes like change of government could affect the minimum wage that M&S workers are paid. Economic factors such as inflation could affect the pricing of garments. The Social factors that would need to be taken into account are lifestyle changes and demographics, M&S would need to consider where their target market stood. Technological advances could also affect M&S sales just recently their website has been updated from a corporate site to a new website offering online buying. Globalisation is a huge environmental factor affecting M&S. Globalisation is the increase in cross-border economic, social and technological exchange. For organisations it increases competition and the search for cost advantages.
People are always going to go shopping. A lot of our effort is just: 'How do we make the retail experience a great one? '” - Philip Green