THE NORDSTROM WAY

Inside America’s #1 Customer

Service Company
ROBERT SPECTOR & PATRICK McCARTHY

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 The Nordstrom Way - Page 1

MAIN IDEA
The Nordstrom Way is to focus solely and exclusively on doing whatever it takes to create a satisfied customer.
The underlying philosophy and culture of the Nordstrom Way is disarmingly simple: Use your own initiative to provide customers
with exceptional levels of service. You’ll never be criticized for doing too much for a customer, only for doing too little. If you’re ever
in doubt, err on the side of doing too much rather than too little.
How the company organizes and empowers its employees to use their initiative in practice is impressive. Firstly, the company has
a culture which lauds exceptional acts of customer service and stresses employees are free to use their initiative at all times and
in all situations -- to act as if they were entrepreneurs in business for themselves. But equally importantly, the company then delivers
on that basic premise by supporting its employees in the decisions they make.
The result is employees find innovative and appropriate ways to provide customers with knock-out levels of service. Customers
love it, employees thrive on the responsibility and flexibility of their job and sales soar.
And paradoxically, the Nordstrom Way illustrates the direct link which many companies fail to realize -- specifically that the more
front-line employees are trusted and empowered, the stronger the long-term relationship that can be built between a company and
its customers. When a company gets the mix right (like Nordstrom has), it creates a sustainable competitive advantage that endures
and flourishes.
The Nordstrom Way is the gold standard of customer service.

1. America’s #1 in Customer Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2

Nordstrom is the gold standard of customer service -- the measuring stick by which other companies (in
a variety of industries) measure themselves.
What’s interesting about that fact, however, is that Nordstroms is not just one company -- it is actually
structured as an army of self-motivated, self-empowered men and women who use their own initiative to
create satisfied customers using the Nordstrom model of customer service.

2. How It All Began . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3

3. The Essence of the Nordstrom Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4

Everything that has evolved into the Nordstrom approach to business has one simple objective -- to free
employees to treat customers the way they like to be treated. The company’s entire organizational
structure is designed to provide the flexibility needed for employees to achieve that objective.

4. How Nordstrom Creates A Compelling Place To Visit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 5

Nordstrom’s objective is always to create a memorable experience whenever a customer visits one of its
stores. To this end, what’s in the store is considered to be another facet of the way Nordstrom provides
superior customer service.

5. A Company of Independent Entrepreneurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6

The salespeople who thrive under the Nordstrom system are those who have an entreprenuerial mindset,
who are motivated self-starters and who love the flexibility that comes from being dedicated to doing
whatever it takes to create a satisfied customer.

6. The Art of Selling The Nordstrom Way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 7

Outstanding customer service is the key to sales at Nordstrom. The company is aggressive -- it wants to
sell everybody. Nordstrom sales associates work hard at not losing potential sales, applying practice,
experience and commitment.

7. The Future of Nordstrom Style Customer Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8

Despite the fact the retail industry is facing major challenges bought about by new technology, the
Nordstrom of the future will still be based on one essential premise:Giving great customer service.
 The Nordstrom Way - Page 2

1. Key Thoughts
America’s #1 in Customer Service
‘‘What separates Nordstrom from its competitors is its army of
highly motivated self-empowered people who have an
Main Idea entreprenurial spirit, who feel that they’re in this to better
Nordstrom is the gold standard of customer service -- the themselves and to feel good about themselves, to make more
measuring stick by which other companies (in a variety of money and to be successful.’’
industries) measure themselves. -- Bruce Nordstrom
What’s interesting about that fact, however, is that Nordstrom’s ‘‘Nordstrom’s sales people have the opportunity to be successful
is not just one company -- it is actually structured as an army of because Nordstrom gives its employees the freedom to make
self-motivated, self-empowered men and women who use their decisions. And Nordstrom management is willing to live with
own initiative to create satisfied customers using the Nordstrom those decisions. Everything else flows from that premise.’’
model of customer service. -- Robert Spector & Patrick McCarthy
Supporting Ideas
‘‘Nordstrom gives all of their employees the charge to service the
The foundation of the Nordstrom model for delivering customer
customer and the authority to do it. The evidence is clear. You
service are:
look like a far better manager and supervisor when you give
1. Empowered employees. power to the people, because it energizes them; you get their
Many companies give lip service to this idea, but employees ideas and not just your own, so you have a much broader base
don’t have real authority to do anything too meaningful. of ideas from which to draw when you are making decisions.’’
Nordstrom is the exact opposite -- employees are fully and -- Donald E. Petersen, retired chairman, Ford Motor Company
completely authorized to do whatever is required to create a
‘‘Giving away responsibility and authority is the ultimate
satisfied customer, and the company will live with it.
expression of leadership. At Nordstrom, we create an
2. Employees who act like business owners. environment for empowerment. We assemble a team and allow
Since each employee has wide discretion to take the them to fail, but obviously, we’re there for them when they need
initiative, talking to an employee is just like working with the us.’’
owner of a small business. They can take the initiative and -- Jammie Baugh, general manager,
act without impediments to create added value for the Southern Californian Region
customer.
‘‘The thing that makes Nordstrom’s emphasis on service so
3. A supportive management structure. appealing is not the fuzzy warmth of personal pampering.
To create a fertile sales environment, the company carried Customers go there because terrific service makes Nordstrom
full inventories, with a wide and deep selection of sizes, so incredibly convenient. Nordstrom helps consumers save
materials and so on. That breadth of selection represents the time.’’
company’s investment in customer service. -- Edward H. Meyer, Direct Marketing Magazine
4. A mystique for heroic acts. ‘‘People who don’t want to sell will never make it in our system
Nordstrom employees are idolized for delivering outstanding because if you don’t understand how important that is, and if you
customer service -- for performing acts for customers that don’t understand how important the relationship with the
are ‘‘above and beyond the call of duty’’. By idolizing customer is, you just won’t do well here.’’
exceptional acts of service, the company encourages -- Martha Wikstrom, general manager, Capital Region
employees to go out and deliver the same exceptional
degree of service. ‘‘Management is afraid to give frontline employees the power and
authority to make a difference. They are afraid someone will
To reinforce this foundation, new employees attend a one day
screw up, which will make them look bad. We all know mistakes
orientation course. They are given a gray card (which is the entire
will be made, and that every now and then there will be a bad
Nordstrom Employee Handbook) which reads:
apple. But that shouldn’t deter a company from following a
process of continuing to improve how it functions. The leadership
Welcome to Nordstrom has to make it clear that empowering workers is part of the ethic
We’re glad to have you with our Company. and approach of the organization. Ed Deming said that
customers would get better products and services when workers
Our number one goal is to provide were encouraged to use their minds -- as well as their hands --
outstanding customer service. on the job. At Ford, it was wonderful to watch how energized
Set both your personal and professional goals high. people became when you empower them. It became obvious to
We have great faith in your ability to achieve them. me, as I got more acquainted with the Nordstrom stores, that this
Nordstrom Rules: was their magic. Until another store gets brave enough to go as
Rule #1: Use your good judgment in all situations. far as Nordstrom does in that respect, I say there is no one that
There will be no additional rules. equals the Nordstrom approach to customer service.’’
-- Donald E. Petersen, retired chairman, Ford Motor Company
Please feel free to ask your department manager,
store manager or division general manager
any question at any time.
 The Nordstrom Way - Page 3

2. ---- 1973. Despite a severe recession in Washington State,

How It All Began Nordstrom spends $7 million remodeling its 245,000 sq. ft.
flagship store in downtown Seattle. The company again
The Nordstrom Time Line changes its name to Nordstrom, Incorporated.
---- 1901. The first Wallin & Nordstrom store opens. The founders, ---- 1975. Lloyd Nordstrom heads up a group of investors who
John Nordstrom and Carl Wallin, start to build a business acquire an expansion National Football league team
based on the premise the ‘‘customer is always right’’. First day franchise for Seattle for $16 million, of which the Nordstrom
sales: $12.50. family contributed $8 million.
---- 1905. Annual sales now $47,000. ---- 1977. Sales now approach $250 million -- making Nordstrom
the 3rd largest quality apparel specialty retailer behind Saks
---- 1923. Second Wallin & Nordstrom store opens. 12 employees Fifth Avenue and Lord & Taylor.
in total (for both stores).
---- 1978. Nordstrom opens 124,000 sq. ft. store in Costa Mesa,
---- 1928. John Nordstrom’s sons, Everett (25 years old) and California. This store quickly becomes the highest volume
Elmer (24 years old) buy out their father’s shareholding for store in the Nordstrom group, encouraging Nordstrom to open
$120,000. more stores in California. (By the mid-1990s, Nordstrom
---- 1929. Everett and Elmer buy out Carl Wallin and refurbish the would have 26 full Nordstroms and 5 Nordstrom Rack stores
two stores. They put up a prominent sign: ‘‘If we sell you well, in California, generating in excess of $1 billion in annual
tell others. If not, tell us.’’ Stores now renamed Nordstrom’s. sales).
---- 1931. Everett and Elmer almost close their business due to ---- 1994. Total Nordstrom sales now exceed $3.89 billion, an
the Great Depression, but manage to survive. 8.5-percent increase over the previous year. Net earnings
---- 1932. Lloyd joins brothers Everett and Elmer in the business. were $202.9 million (a 44.5-percent increase over the
He offers to buy a 1/3 interest, but the business had no net previous year), which equates to $2.47 per share.
worth as a result of the Depression. Each brother focuses on ---- 1995. Nordstrom now operates 59 large specialty stores in
a different area: Washington, Oregon, California, Utah, Alaska, Virginia, New
Everett -- the financial specialist Jersey, Illinois, Maryland and Minnesota, 5 smaller specialty
Elmer -- the operations specialist stores, 13 Rack stores and 11 leased shoe departments in
Lloyd -- the marketing specialist Hawaii.
---- 1938. Main store moves to a larger location and the company
is officially incorporated. The three brothers rotate the titles of
president, vice-president and secretary/treasurer every two
years. Key Thoughts
---- 1941 - 1945. The three brothers buy up all available shoes ‘‘You will never be criticized for doing too much for a customer,
from domestic U.S. manufacturers, and pay extra for large you will only be criticized for doing too little. If you’re ever in doubt
sizes to be made. By the end of the war, Nordstrom was as to what to do in a situation, always make a decision that favors
recognized as one of the country’s largest shoe retailers. the customer before the company.’’
---- 1950s. Expansion -- the brothers opened two new stores, -- Bob Middlemas, manager, Oak Brook Mall
remodeled their existing stores and leased department store ‘‘What I’m most proud of is that we have sustained and enlarged
shoe operations in 9 locations. the culture that drives our company. I hope this doesn’t sound
---- 1960s. Everett’s son (Bruce A.), Elmer’s two sons (James F. empty, but our service and the resulting reputation are better
and John N.) and Lloyd’s son-in-law (John A. McMillan) are today than what they were when I was twenty-one years old.
appointed as vice-presidents of the company. To create That says it all as far as I’m concerned. Does that mean we don’t
opportunities for them, a Seattle apparel retail store (Best’s get complaints when we do dumb things? No.’’
Apparel) is acquired, and the company is renamed Nordstrom -- Bruce Nordstrom
Best.
‘‘We keep improving our ability to translate what we are as a
---- 1965. Nordstrom opened its first combination apparel and
company with the people that we bring into other new markets.
shoe store in a new shopping Mall.
We can communicate who and what we are, and what we want
---- 1968. With the three second generation Nordstroms to be; and then attract the kind of people that want to be on the
approaching retirement age, they contemplate selling the team, to play retail the way we want to play it -- as a profession
company. They are offered $24 million by Broadway-Hale, but that people can be really proud of.’’
the third generation Nordstroms instead suggest they take the -- Jack McMillan
company public. Despite some misgivings, the second
generation Nordstroms agree to the idea. ‘‘When we go into a city as a big corporation, we want to be their
hometown store. Our directives don’t come from Seattle,
---- 1969. Nordstrom’s gross sales now reach $60 million per year.
Washington; our directives come from the customers who live in
---- 1970. Operating management assumed by: that community. So, our efforts need to be towards those people.
Bruce (37) -- women’s shoes, finance and investors People are looking less to big parties and more to individual
John (34) -- mean’s wear and store planning efforts that mean something.’’
Jim (31) -- sportswear, juniors and children’s wear -- Martha Wikstrom, Capital Region general manager
Jack McMillan (39) -- women’s ready-to-wear
 The Nordstrom Way - Page 4

3. 6. Employee compensation is sales commission based.

The Essence of the Nordstrom Culture That way, employees are paid according to their abilities. The
company also supplements this commission based
Main Idea compensation plan by providing a retirement-plan which is
Everything that has evolved into the Nordstrom approach to based on a profit-sharing revenue arrangement -- providing
business has one simple objective -- to free employees to treat motivation and encouraging loyalty.
customers the way they like to be treated. The company’s entire 7. Employees set regular, ongoing goals.
organizational structure is designed to provide the flexibility The practice of setting goals is the glue for the Nordstrom
needed for employees to achieve that objective. culture. Sales associates, buyers and managers set daily,
Supporting Ideas monthly and yearly goals. Comparisons with results
Like other successful companies, Nordstrom has a strong achieved a year ago are closely monitored. There is a great
internal company culture and set of values. Key elements of the amount of peer pressure to set goals that are higher than
Nordstrom culture include: fellow employees -- and then to find ways to achieve those
goals.
1. An inverted pyramid company structure.
8. Tangible recognition and praise is given.
At Nordstrom, everyone in the company works to support the
sales staff. Therefore, the company’s organizational The best sales associates are designated as ‘‘Pacesetters’’
structure can be represented as: by meeting or surpassing their goals -- for which they receive
a certificate, an event in their honor, a 33-percent discount
credit card for purchases and business cards emblazoned
Customers with their Pacesetter designation.
Customer Service All Stars are also selected each month
Sales and Support People based on sales volume, customer service and teamwork.
They receive a 33-percent store discount card and other
Department Managers benefits.
Store Managers, Buyers, 9. Heroics
Regional Managers, Employees who deliver outstanding customer service above
General Managers and beyond normal expectations can be elected to the
Board weekly ‘‘V.I.P. Club’’ or the ‘‘Employee of the Month’’. That
of way, a description of what they did will be prepared and
Directors circulated as an excellent example of the Nordstrom
approach to customer service in action.
10. Ownership
Began in 1952, Nordstrom has an excellent employee
2. An unconditional money-back guarantee. profit-sharing retirement plan which vests progressively over
the employee’s first seven years of service. In 1994, for
Nordstrom’s has an impressive return policy. Every sales example, 22-percent of the company’s earnings (about $44
person is authorized to refund the purchase price, no million) was contributed to this plan by the company.
questions asked -- even if its clear the customer is being less Long-term employees can retire with profit-sharing totals in
than honest. The Nordstrom philosophy is that it’s unfair to the high six figures.
penalize the 98-percent of people who are honest just
because 2-percent of the people take advantage of the In addition, employees can also contribute from 1-percent to
policy. 10-percent of their annual compensation into a tax-deferred
investment retirement account with matching contributions
3. No barriers. by the company on part of their contributions.
A person on the sales floor can sell merchandise from any Key Thoughts
department in the store. that frees them to focus on meeting
the needs of the customer, rather than restricting them to just ‘‘People will work hard when they are given the freedom to do
the department in which they are based. the job the way they think it should be done, when they treat
4. Promote from within. customers the way they like to be treated. When you take away
their incentive and start giving them rules, boom, you’ve killed
All managers at Nordstrom start on the sales floor, so they
their creativity.’’
understand what serving the customer entails firsthand. The
-- Jim Nordstrom
company does not hire managers from other sources -- they
have to start as sales associates. ‘‘Ownership is the most powerful incentive for business change.
5. Buying is decentralized. Corporations achieve better performance over the longer term
when employees share the risks and rewards of ownership. This
Each region has a buyer who orders merchandise for just a
is accountability from the inside out, and it works. Ownership
small group of stores. That gives them the flexibility to buy
focuses attention on the good of the organization like nothing
stock that reflects local lifestyles and tastes. In addition,
else can.’’
buyers are given advice by department managers and sales
-- Henry R. Kravis and George R. Roberts,
associates -- who have a shared feeling of ownership for their
investment bankers
own business unit.
 The Nordstrom Way - Page 5

4. Key Thoughts
How Nordstrom Creates A Compelling Place To Visit
‘‘The ideal Nordstrom shopping experience is where men and
women are invited not only to buy the merchandise but also to
Main Idea relax and linger, their Nordstrom credit card at the ready.’’
Nordstrom’s objective is always to create a memorable -- Robert Spector & Patrick McCarthy
experience whenever a customer visits one of its stores. To this
end, what’s in the store is considered to be another facet of the ‘‘In the 1970s, shopping was entertainment. In the 1980s, it was
way Nordstrom provides superior customer service. the quest for trendy merchandise. In the 1990s, it’s a mission:
find it, buy it and get out.’’
Supporting Ideas -- Laura Petrucci, Marketing Corporation of America
The key elements which combine to create a memorable
shopping experience at Nordstrom are: ‘‘We foolishly treat the consumer’s time as a cost-free good in
the same careless way that we sued to treat our precious air and
1. Sphere of Influence.
water. This omission is costly.’’
Before consumers enter the store, Nordstrom focuses on -- Professor Theodore Kemper
providing adequate parking. The company also provides
valet parking during busy sales times. ‘‘The whole point of everything we do is to make the customer
happy for the long haul. If people are satisfied and excited about
2. Convenience, ease and openness.
the experience of shopping at Nordstrom, they will come back.
Nordstrom works on the concept it has 15 seconds to get And if you haven’t created that atmosphere, they won’t come
people enthused when they enter the store. Therefore, the back. It’s just that simple.’’
store layout features wide aisles so people can circulate -- David Lindsey, vice president, store planning
freely, and goods arranged by lifestyle so that entire
wardrobes can be assembled quickly and conveniently -- ‘‘When customers first come into the store, we’ve got about
with the assistance of sales associates who stay with them fifteen seconds to get them excited about it. First, are they able
right through the entire store. to meander through the store without impediments, such as
Nordstrom stores are usually set out in a circular design, with narrow aisles? When they’re walking down an isle and another
the escalator well as the hub. There are no dividing walls customer is coming the other way, do they have enough room
between the various departments, so customers have an to pass? If the answer is no, all of a sudden, they’re distracted.
unobstructed view of the entire store. Every department has Instead of looking at the nice sweater, they’ve got a stroller
warm and cosey furnishings, making it a comfortable place banging them in the ankles. When they think about our store,
to shop. they don’t think of jostling and banging, they think of it as a
pleasant experience. What’s that worth?’’
As a result, about 50-percent of the total floor space is -- John Nordstrom
dedicated to selling for a Nordstrom store -- compared to
about 70-percent in stores like Macy’s. Offsetting that, ‘‘All of these images, collectively, convey the persona of our store
however, is the fact Nordstrom packs selling space with more and what we are trying to be. We believe in portraying an inviting
inventory per square foot than other retailers. image of timelessness, comfort and warmth. Because we are
3. A focus on every aspect of customer comfort. designing for a much longer time curve, our stores have an
updated, traditional look, just like our clothing. When you put on
Nordstrom considers it is the attention to detail that adds an updated traditional suit, it should be immediately comfortable;
value to the consumer shopping experience. For example, you should look and feel good -- today and tomorrow. You have
in a Nordstrom footware department, there are plush a favorite suit or tie. We want to be your favorite store.’’
upholstered sofas and chairs. The chairs are custom made -- David Linsey, vice-president of store design
to withstand the wear and tear of every day use. These chairs
have legs and arms that are a little taller than average -- so ‘‘Nordstrom has some of the most modern stores in the country
that customers won’t have to worry about whether they’ll because its most dramatic expansion came in the late 1970s and
have difficulty getting up from the chair. That increases the 1980s when financing was readily available to build new stores
comfort level, and allows customers to focus on the shoes in new malls and very few competitors were matching
rather than the seats. Nordstrom’s spending. From 1978 through 1995, Nordstrom
4. Offering a variety of food and restaurant services. opened forty-six full-line stores in California, the Washington
D.C. area, New Jersey, New York, suburban Chicago, suburban
This has come about in response to changing consumer
Minneapolis and Indianapolis. As the company expanded, so did
tastes -- more consumers today are shopping with children
the size of its stores. In the early 1970s, the average Nordstrom
or doing lunchtime shopping. By offering people the
store area was 60,000 to 70,000 square feet; today it’s about
opportunity to sit down, relax and have something to eat
200,000 square feet.’’
without having to leave the store, the quality of the overall
-- Robert Spector & Patrick McCarthy
shopping experience is magnified and enhanced.
Nordstrom offers Espresso Bars (coffee and pastries), Cafe
Nordstrom (soups, salads and sandwiches), Garden Courts
(full service dining) and the Pub (sandwiches, salads, stouts
and ales). About half Nordstrom stores offer at least two of
these food formats.
 The Nordstrom Way - Page 6

5. ‘‘We can hire nice people and teach them to sell, but we can’t
A Company of Independent Entrepreneurs hire salespeople and teach them to be nice.’’
-- Bruce Nordstrom
Main Idea ‘‘We didn’t used to feel reluctant to hire salespeople who had
The salespeople who thrive under the Nordstrom system are worked elsewhere, but as time went on, we learned that people
those who have an entreprenuerial mindset, who are motivated who haven’t worked for anybody else haven’t learned to say "no"
self-starters and who love the flexibility that comes from being to the customer.’’
dedicated to doing whatever it takes to create a satisfied -- Jim Nordstrom
customer.
‘‘Potential Nordies have to prove to us and to themselves that
Supporting Ideas they really believe in helping others and genuinely like to give
To encourage employees to think and act like entrepreneurs: customer service.’’
1. Hire nice people rather than experienced. -- John Whitacre, co-president
The company hires nice people and teaches them to sell ‘‘Working at Nordstrom means caring about your business every
rather than trying to retrain salespeople taught other minute, every hour, and being excited about what you do.
methods. Nordstrom believes the best people are have been Consistency is very important. Carelessness and laziness are a
trained by their parents while growing up. disease. I feel that I have my own little Chanel store, and I will
2. Maximum flexibility. be there no matter what happens. That’s the consistency.’’
-- Kazumi Ohara, sales associate
The company has little in the way of formal sales training.
that way, people have the freedom to do whatever is ‘‘I want the customer to think of me as being Nordstrom. I believe
appropriate in their own best judgment. the Bellvue Square Savvy Department is my franchise. This
3. A minimum of operating rules. company gives you the freedom to help the customer with
Since the company does not have extensive operating everything. No one tells you that there’s only one way to do your
guidelines or manuals, sales associates are free to focus on business. Nordstrom lets you do whatever it takes to make the
creating a satisfied customer, instead of worrying about customer happy, as long as it’s legal. They are not going to say
whether or not they are inadvertently breaking one rule or "no" to you if the end result is a happy customer.’’
another. -- Patrice Nagasawa
4. High expectations. ‘‘What we resist like crazy is making a rule because one person
Sales associates are judged solely on what they achieve -- made a mistake. then everybody has to live by a rule because
not on how well they adhere to company guidelines. If sales one person did something they shouldn’t have done. Get those
associates don’t meet expectations, their employment is rules out of the way because all you get are people who are
terminated. In that way, a natural selection process occurs, paralyzed. Companies say they are empowering their workers.
where only the fittest survive and flourish. But when you ask to see their employee handbook, they show
you a 400-page manual. Who’s going to do anything if they are
5. Individual creativity is actively encouraged.
afraid they are going to break the rules?’’
Sales associates are consistently encouraged to act like -- Martha Wikstrom, general manager, Capital Region
small business owners, and to apply their creativity to
everything they do. This sense of shared ownership provides ‘‘The company has very high expectations, and if you don’t make
an opportunity for new and productive systems to bubble to it, you’re out of there. People would ask me if it was true that if
the surface -- where any really good ideas can be you didn’t do a good job at Nordstrom you’re gone. I’d say, "Yes,
communicated throughout the entire organization. In this I hope so". This is not civil service. It’s hard work. There are
way, the best sales techniques are constantly being pressures and expectations.’’
integrated into the company’s ongoing operations -- enabling -- Betsy Sanders, former vice-president, California Division
Nordstrom to upgrade and improve its performance on an
‘‘The point is that Nordstrom attracts and rewards a special type
ongoing basis.
of employee, and the rest of us should punch in elsewhere.
Key Thoughts Competitors can be expected to mimic the act (and have been
trying to). Before long, workers will be getting a taste of what
‘‘I think we have some exceptional people and I think we have
many an entrepreneur has learned, that you’re never really
some average people who work at an exceptional level and,
master of your own destiny, but somewhat servile to your
given another set of circumstances, wouldn’t be able to do that.
customer.’’
Our culture supports that.’’
-- The Wall Street Journal
-- Martha Wikstrom, general manager, Capital Region
‘‘Nordstrom sales associates are ordinary people who have
decided to set extraordinary goals. It’s up to the individual. You
can give people all the tools in the world, but only some will take
command. The most successful people may not have all the
qualifications, but they have the enthusiasm and energy and like
coming to work.’’
-- David Butler, shoe salesman, Tacoma store
 The Nordstrom Way - Page 7

6. than could ever be generated on a one-off sale that the customer

The Art of Selling The Nordstrom Way dislikes.
This long-term perspective, combined with a company emphasis
Main Idea on always ‘‘treating people like they’re the most important thing
Outstanding customer service is the key to sales at Nordstrom. in the world’’ clearly and concisely differentiates Nordstrom from
The company is aggressive -- it wants to sell everybody. other retail stores.
Nordstrom sales associates work hard at not losing potential Key Thoughts
sales, applying practice, experience and commitment.
‘‘One of the ongoing cultural truisms, which we have to keep
Supporting Ideas indoctrinating our people in, is that you can’t be snooty to
At Nordstrom, the sales process is considered to be customers. You can’t pick and choose who you’re going to wait
high-contact: customers reacting to the sales associates. To on. You can’t say, "This is our customers and this isn’t our
optimize sales results, the company has developed numerous customer". They’re all our customers, and I mean that sincerely.
tools and techniques, including: Bring them all in. As long as they spend their money with us,
1. Personal customer books. we’re going to treat them the same. The reason why we do so
much business per square foot is that we’re stretching and
In a loose leaf binder, sales associates list every customer’s reaching out all the time.’’
name, telephone number, charge account number, sizes, -- Bruce Nordstrom
personal preferences, previous purchases, vendor
preferences, likes and dislikes, special requirements and ‘‘People often come to Nordstrom thinking this is an easy job.
other characteristics. They don’t realize it’s pretty complex. You have to appreciate
The binder also includes room for daily, weekly and monthly where the customer is coming from. She has a reason to be
calendars, goal lists, daily to-do lists and a phone directory there, and it’s up to you to bring that out and to find out how you
for every department store in every Nordstrom store in the can help her.’’
country. -- Alice Dick
Sales associates organize their entire days around their ‘‘You can have as many customers as you want, but you have
personal customer books -- analyzing who may be in the to take care of each one on an individual basis. Ninety percent
market for new clothes, writing reminder notes to clients and of your new clients come from referrals from current clients who
for generally keeping aware of their specific needs. appreciate the job you’ve done. I don’t want to disappoint them
2. Telephone skills. by giving bad service.’’
-- Patrick McCarthy
Every sales associate uses the telephone intensively to
generate business and improve productivity. It’s not unusual ‘‘In the 1980s, if you did not have a personal clientele, you could
for sales associates to make 40 or more calls each day. depend on walk-in traffic to make your paycheck. It’s not that
Associates use the phone to: way in the 1990s. Because of the economy and the recession,
-- Tell past customers about new items they may like the foot traffic is not the same. My personal clientele is the
-- Follow up on inquiries and other leads primary reason I’ve maintained my business. I’m constantly
-- Advise clients of items on special finding ways to stay in touch with them and get them into the
-- Keep in touch for present needs store. At Christmastime or when a customer’s birthday is coming
-- Strengthen the customer service relationship. up, I send out a note to his wife: "Did you get Jack his present
3. An emphasis on earning customer trust. yet?" But at the same time, I couldn’t do business without new
customers. My goal is to meet three new people a day and make
Many Nordstrom sales associates have such a strong one out of three a personal customer.’’
ongoing association with their clients they are frequently -- Leslie Kaufman
enlisted to make decisions on behalf of those clients. This is
the ultimate in customer service relationships, where the ‘‘Positive thinking comes from following simple steps that
customer views the sales associate as a valuable resource produce results. I work hard at not having to look like I’m working
who fortunately happens to be on someone else’s payroll. hard. That comes from constantly thinking and planning. I am a
4. Thank you notes. much better salesperson now than I was ten to fifteen years ago
because I’m learning better ways to service the customer. When
Nordstrom sales associates are famous for sending short,
Larry Bird played basketball for the Boston Celtics, he looked so
handwritten thank-you notes, thanking customers for their
natural you would think he must have always played with such
business. Again, this deceptively simple practice is designed
skill and confidence. But Larry Bird was once clumsy: he had to
to communicate and reinforce one simple message: that their
work hard to make his play look natural. Larry Bird "sees" the
customers are important and appreciated.
basketball floor: I "see" the sales floor.’’
They also have numerous spin off benefits. Thanks you -- Patrick McCarthy
notes invariably lay the foundation for further business
transactions. Thank-you notes can also be used to generate
referrals and other business opportunities.
Due to the fact sales associates are paid on commission, all of
them take a long-term perspective of the customer relationship.
In particular, most are careful not to oversell on the first visit --
since greater revenues will be generated by repeat purchases
 The Nordstrom Way - Page 8

7. No other retail stores -- and certainly none as large as Nordstrom

The Future of Nordstrom Style Customer Service has grown -- are controlled by the families of the merchants who
founded them. That may yet turn out to be John W. Nordstrom’s
Main Idea greatest achievement.
Despite the fact the retail industry is facing major challenges Key Thoughts
bought about by new technology, the Nordstrom of the future will ‘‘Our commitment is 100-percent to customer service. We are
still be based on one essential premise:Giving great customer not committed to financial markets, we are not committed to real
service. estate markets, we are not committed to a certain amount of
Supporting Ideas profit. We are only committed to customer service. If we make a
Most consumers state they shop at Nordstrom for service and profit, that’s great. But customer service is first. If I’m a
selection rather than in an attempt to find the lowest price. salesperson on the floor and I know that the people who own this
Therefore, the challenge of the future for Nordstrom is to find a place are committed to customer service, then I am free to find
way to deliver great service in nice surroundings, but at a price new ways to give great customer service. I know that I won’t be
that’s not much more than someone working out of an Internet criticized for taking care of a customer. I will only be criticized if
Web site is charging. I don’t take care of a customer.’’
-- John Nordstrom
To achieve that, Nordstrom sells private label merchandise --
which currently accounts for about 20-percent of sales. The ‘‘Now whether Nordstrom’s collaborative management model
company attempts to maintain a reasonable and sustainable can work in the business environment of the twenty-first century
‘‘price/value’’ relationship with its own private label goods -- is an open question, but I think it has a good chance. The signals
making a realistic but not excessive margin. go to support the Nordstrom model -- rather than a hierarchical
Nordstrom is also competing aggressively with discounters by model -- because the world is moving to greater participation,
opening Nordstrom Racks stores (self-service discounters), Last more shared decisions, more decisions at the point of service.
Chance Bargain Shoes and Apparel stores and Nordstrom Workers at all levels of the organization are empowered by both
Factory Direct. The company is also experimenting with online technology and information, all of which means more
sales and has launched a direct sales division to sell through collaboration, all of which means shrinking hierarchies. Which
catalogues in areas of the United States where there is no means the old-fashioned Nordstrom approach to management
Nordstrom stores. may be what the twenty-first century is all about and is what will
be increasingly adopted by a variety of organizations.’’
Even in these new initiatives, the company still stresses
-- Alfred E. Osborne, Nordstrom director and associate
customer service. All direct sales, for instance, come with free
professor of business economics, UCLA
FedEx return labels, so consumers can exchange their goods
quickly without expense. Similarly, Nordstrom’s attempts at ‘‘Retailing is a mature industry. In a mature industry, the
online commerce through interactive television initially have consumer becomes the boss. They will tolerate nothing but
included access to a personal shopping assistant via video excellence -- there will be choices everywhere.’’
conferencing -- providing assistance and personal guidance -- Howard Davidowitz, retail consultant
through the sales process.
‘‘We run the business like our dads did. It’s a different business,
The company is also entering into a number of strategic alliances
but our fundamentals are the same. It’ll be the same next year
and partnerships with manufacturers throughout the world. This
and the year after and the year after. The goal doesn’t get
will differentiate Nordstrom from its competitors, through
changed on people.’’
exclusivity of the product range.
-- Jim Nordstrom
In addition, Nordstrom is reflecting the broader changes taking
place in American society at large. Since 1987, cultural diversity ‘‘Nordstrom and Wal-Mart share the characteristic of building on
has been a priority -- with the result that around 30-percent of what works. They don’t say: "We’ve been in this business for a
employees are people of color. That compares very favorably hundred years and we know better". They ask themselves:
with other competing retailers. "What are we doing now that we could be doing better?" They
Similarly, the company also has become much more sensitive keep reworking it; they stumble and improve, stumble and
to the needs of consumers with disabilities. Sensitivity training improve. At their best, Wal-Mart and Nordstrom never lose the
courses have been run for Nordstrom staff. The store designers awareness that they don’t have all the answers. They know that
have taken the need for wheelchair access into account in the the customer has all the information they need. They know that
design of the stores. The company has also used disabled the salespeople -- the ones who are closest to the customer --
fashion models in catalog photos and general advertising since are truly the most valuable part of the company, so they each
1991 -- generating vast amounts of public attention. have a system that gives salespeople everything they need. And
in return, the salespeople give their managers valuable
Fortunately, Nordstrom is well positioned to be a major player in intelligence on how to make the business successful.’’
the retail shakeout widely anticipated in the near future. In 1994, -- Betsy Sanders, director, Wal-Mart
Nordstrom sales exceeded $3.89 billion, with net earnings of
$202.9 million or $2.47 a share. With such strong cashflow and
low long-term debt, the company is ideally placed to grow
aggressively in the future.
Finally, Nordstrom does have one sustainable competitive © Copyright 1999 All Rights Reserved
advantage over all its competitors. The company continues to ej4.com
be controlled and operated by members of the founder’s family.