Nordstrom Rack President: Why Digital Is the Key to Dominating the Off-Price Market

It’s no secret that department stores are cranking up the volume on digital innovation to fuel future growth in their industry. And Nordstrom, which has been one of the more aggressive in the online space over the years, has set big goals for its full-price division, as well as its off-price Nordstrom Rack group.

Earlier this year, leaders at the Seattle-based retail company said they aim to boost Rack’s incremental revenues to $2 billion through a series of moves that include capitalizing on omnichannel capabilities.

In a talk today as part of the NRF Retail Converge conference, Nordstrom Rack president Geevy Thomas further emphasized the importance of digital in the hyper-competitive off-price channel. “All of our competitors are opening stores at a really aggressive rate. But we’re the only retailer that has a full digital complement, as well as omnichannel capabilities and the store platform,” he said.

Indeed, in terms of number of stores, Nordstrom Rack is dwarfed by competitors like Burlington and TJX. The former had roughly 745 locations as of last month and has set a goal to reach 1,000, while the latter boasts more than 2,400 doors between its TJ Maxx and Marshalls banners. By contrast, Geevy said, the Rack has 243 stores in the U.S.

“We’re not on every corner at this point, but we are in everybody’s phone and we are on everybody’s couch when they’re sitting there with an iPad or at their work desk,” he said.

Geevy said the retailer has taken several steps already to heighten its digital prowess, including creating a shared inventory that allows brick-and-mortar stores to fulfill online orders. It introduced a ship-to-store option and began inviting customers to drop off returns — from either the Rack or Nordstrom.com websites — in Rack locations. “We also turned on what we call ‘next day focus,’ so any item ordered within a market can be delivered to a Rack store to pick up the next day,” he said. “All of these efforts are ways in which we’re trying to come closer to our customers.”

Additionally, Geevy noted that the website for the off-price chain is being upgraded and transitioning to the Nordstrom.com platform — a move that is slated to be complete in time for the annual anniversary sale next month.

“We believe that by leveraging the kind of breadth that the online business gives us to kind of widen our aperture on price and the ability to bring easy returns to stores — in fact 83% of our online returns come back to Rack stores — it’s the combination of all those things that is going to enable us to get to that next $2 billion,” the executive said.

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