As retailers look for ways to boost sales with their most loyal customers, Nordstrom is finding that supplementing its digital loyalty program with in-person events is driving engagement.
On a call with analysts Thursday (May 30) discussing the company’s first quarter fiscal 2024 financial results, the luxury department store chain noted that its loyalty members have responded well to on-site events, boosting visits to the retailer and improving brand perception.
“Our Nordy Club loyalty program events and offerings have been well received by customers,” CEO Erik Nordstrom said. “During the first quarter, sales to Nordy Club members grew at both banners with loyalty sales reaching nearly 70 percent of our total sales.”
Pete Nordstrom, the retailer’s president, added that in-store events such as those associated with the “Make Room for Shoes” campaign as well as various on-site beauty activations, such as “happy hour beauty parties” and “fragrance week” have resonated well with shoppers. He added that these events have a personalized component, positively impacting consumers’ enthusiasm to shop with the retailer.
These initiatives highlight consumers’ increasing preference for more experiential stores. While online shopping offers convenience, many consumers still crave the tactile and interactive experiences that only physical stores can provide.
“[Events are] just a consistent way of how we approach the business, and that’s encouraging and empowering people at the store level, in particular, to create reasons for customers to come in to do something new,” Pete Nordstrom said.
Additionally, the high level of loyalty program engagement underscores a broader trend: consumers are increasingly valuing personalized shopping experiences and exclusive benefits.
Nordstrom’s digital sales continued to show sequential improvement for the fourth consecutive quarter, accounting for 34% of total sales.
The retailer’s efforts to enhance its digital platform, including improvements in search and discovery, faster shipping and the launch of a digital marketplace, indicate the retailer responding to consumers’ evolving demand for omnichannel options. The digital marketplace, in particular, offers a broader array of products and brands, catering to the consumer’s desire for variety and convenience.
The PYMNTS Intelligence study “2024 Global Digital Shopping Index: U.S. Edition,” a collaboration with Visa Acceptance Solutions, found that 56% of consumers engage digitally at some point in their shopping journey, whether they shop online and receive the item remotely, make an eCommerce purchase for in-store pickup or use digital technologies to assist the in-store journey.
Nordstrom’s net sales grew by more than 5% year-over-year, with Nordstrom Rack contributing double-digit growth.
The main Nordstrom banner stores also showed positive performance, reflecting the company’s effective customer strategy and inventory management. The Nordstrom Rack segment recorded a significant 14% increase in net sales and an 8% rise in comparable sales, driven by strategic merchandise investments and strong customer response.
With strong growth metrics, the Rack segment remains a key growth driver. The company plans to open 22 new Rack stores this year, nine of which have already commenced operations.
“Our new stores are performing well as we’ve improved our planning with better data and insights as well as a team fully dedicated to new store openings,” Erik Nordstrom said. “New Rack stores continue to be a growth driver and excellent investment for us, as they deliver well in excess of their cost of capital within a relatively short payback period.”