Nordstrom has long been a retail bellwether. And in recent months, it’s made plenty of savvy business moves to navigate through the tough terrain: the department store invested more heavily in digital, as well as in buy-online-pickup-in-store and curbside pickup initiatives.
But that wasn’t enough.
The Seattle-based chain posted a disappointing second quarter, with full-price sales dropping 6.5%. And that has many market watchers wondering what’s in store for the rest of retail.
While retailers already have enough challenges to thwart from competitive giants like Amazon and changing consumer shopping habits, pressures are intensifying now that the U.S.-China trade war is escalating day by day.
President Donald Trump on Friday struck back at China for its retaliatory tariffs on U.S. imports and urged American business to pull back from the country. That sent the major stock markets down again, this time 623 points.
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The back-and-forth threats have some retailers worried. Earlier in the week, Ross Stores, which posted positive earnings for the second quarter, saw shares dip after its CEO warned about the trade war’s impact. In fact, the company lowered its guidance for the year because of the looming tariffs.
Here, FN rounds up five of the week’s most-compelling stories that you need to read.
While Nordstrom is hardly the only retailer weathering challenges in 2019, its disappointing Q2 results (full-price sales slid 6.5%, following last quarter’s 5.1% year-on-year decline) are concerning given how much it seemed to be setting itself up for success. Nordstrom generates nearly a third of its revenue through digital sales, and it’s been quick to invest in buy-online-pickup-in-store and curbside pickup.
Retail is leaving people behind — namely those who haven’t evolved their skills. But leaders who are thriving are tech savvy, know how to mine data for decisions and create strong customer experiences. “The industry has had to move away from being merchant, product, trend and fashion driven to now requiring a deeper understanding of customers based on data,” said Kathy Ventura of Caldwell.
Shares for Ross Stores fell 2% in after-hours trading Thursday despite a positive Q2 earnings report, as the retailer braces for the impact of President Trump’s tariffs on China. After saying profits rose 6% to $413 million, the company noted the trade war’s potential hit on business, with its CEO attributing a decision to lower the firm’s earnings guidance to the upcoming 10% tariffs on goods sourced from China.
Not all retailers are lamenting Amazon. Kohl’s Q2 earnings surpassed analysts’ expectations, thanks to solid back-to-school shopping and its expanded partnership with the digital behemoth. Kohl’s last month expanded its Amazon service, now allowing customers to return their Amazon purchases in more than 1,150 store locations. It predicts more foot traffic (and, hopefully, sales) to come from the program.
Gen Z may be the future, but baby boomers are still very much the present. The generation that attended the Woodstock festival 50 years ago still makes up a large swath of the population. And they are poised to continue their preeminence even as they get older and retire, thanks to better health than previous aging groups and an affluence and purchasing power that stands above and beyond younger consumers.