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How Nordstrom Became an Innovating Genius
By: Maryann Fabian
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From apps to social media and geo-tracking to snapping up tech startups, here’s a look at how a 112-year-old department store became one of America’s most experimental and most connected companies.

In 2012, U.S. News awarded Nordstrom with that “most connected” title and it hasn’t looked back since. The company was said to have invested $140 million in ecommerce and tech strategy last year. It had already added complimentary WiFi and then began to use the access to track customers’ behavior throughout the store. ROI reinvented. It distributed iPod Touch devices and iPads to its salespeople so they could look up items and ring up purchases on the spot. For fiscal 2013, Nordstrom’s capital expenditures will be in the range of $750 to $790 million with 25 percent going to technology investments, mobile, and ecommerce. Blake Nordstrom said, “Some of these investments yield immediate benefits, while others will benefit the future.”

The venture-capitalist side of Nordstrom likes to invest in startups, including Bonobos, an online menswear site; HauteLook, a discounted “flash sale” site; Sole Society, a footwear site; and Peek, a kids’ clothing site. In February, Etsy reported on its new relationship with Nordstrom, where Etsy vendors get to sell their products in the home store. In June, Nordstrom invested in the two-year-old gift-giving site Wantful with all of 14 employees. It plans to offer a “Nordstrom Gift Collection” with the start-up that’s been called “a go-to hub for small-batch, artfully curated pressies dreamed up by local and global craftsmen.” Businessweek claims the collaboration will give Nordstrom “access to savvy data collection, highly curated product lines, original content and the rest of the Web mojo behind today’s successful retail startups.”

Nordstrom also blows away the competition on Pinterest. It has 4.5 million followers compared to Macy’s 47,000. In fact, if you added up Macy’s, Barney’s, Kohl’s and J.C. Penney’s followers together, it still wouldn’t come close. Nordstrom decided to use its Pinterest power to its advantage by merching its stores. As spokesman Colin Johnson explains, ”We wanted to integrate the feedback that we’re getting from our Pinterest community.” The company uses it to “find out what’s exciting for our customers-and what’s inspiring them.” So Nordstrom created an app that lets employees on the sales floor view the most pinned items and check the stock at their location. Matches are then labeled with a Pinterest logo in store.

The program is being implemented in 13 locations. It gives the store and shoppers alike a look at what’s trending. Granted, an item that’s a favorite pin may not be relevant at every location, like swimwear in Alaska, for example. But Nordstrom’s staff is smart enough to figure it out.

The key to Nordstrom’s success has to be its innovation lab, a self-described “team of techies, designers, entrepreneurs, statisticians, researchers, and artists, all trying to discover the future of retail.” With the company's full support behind it, the team is able to move pretty quickly. The lab posted a video on Vimeo showing how it concepted, tested, and built an iPad app in a week. As retail expert Patty Edwards said, “They are constantly pushing the envelope.”

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About the Author
Maryann Fabian is a copywriter who has crafted the voice of some of this country's best brands.
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