The Case for Nordstrom: Setting Expectations and the Perils of Dissapointment

Let me begin with a confession. I'm a big fan of Nordstrom (JWN). I've shopped at their stores from New York to Chicago, from California to Nevada, and of course at their first store on 6th and Pine in Seattle. Let's just say that Brent and Justin in Personal Styling know me by name and I can order without a menu at their cafe....try the strawberry almond chicken salad...but I'm worried. I'm worried because they might disappoint. 

As Nordstrom gets set to open its Canadian flagship store in Vancouver, its chief competitors are quietly making changes to their operations; Holt Renfrew has acquired more space to expand and will open an in-store cafe, Harry Rosen is undergoing renovations to modernize its space, while the Hudson Bay company makes plans to debut its Saks 5th Avenue brand.

While this might seem like a local story about a successful fashion retailer entering a new market, it's not. It's a story that tells a cautionary tale for every business, regardless of industry or size. It's a story about setting realistic expectations for your customers. Whether you're a one-person startup working to introduce a new technology product, an established industrial business manufacturing widgets, a political leader giving a state of the city address, or a fashion retailer selling to consumers; this is a story that applies to you. 

Regardless of what you do, the products, services or ideas you sell, your customers always have a choice. One of the primary reasons people buy from you is based on their expectations of what they think you'll deliver. They count on you to live up to that expectation, fairly set or not.

The more we communicate by design, the better able we are to ensure the message is what we intend. When we fail to do this adequately, or worse yet leave it to chance, we inevitably disappoint. 

Just ask Apple (APPL) who watched it's stock price tumble 8% after the company reported it sold fewer iPhones than expected in the previous three months. 

"The company sold just 47.5 million iPhones....while that's up a stunning 59% from a year ago, the number of iPhones sold last quarter is still fewer than the 49 million analysts had forecast...." 

The concern for Nordstrom is that consumers have heard so many great things about the company they might have unrealistic expectations. Like Apple, no matter how good they are, or how great their store in Vancouver is, if consumers have expectations that are unrealistic, Nordstrom could disappoint and drive consumers to its competitors. 

What's reassuring is that Nordstrom didn't become as successful as they are by chance, just read The Nordstrom Way and you'll understand. The sophistication of their plan is stunningly simple. They empower their employees to "Use good judgement in all situations", and then support them with systems and training to set them up for success at building long-term relationships with their customers. They aren't going though all of that work just to sell you a single pair of socks. They want you to come back next month when you buy that pair of shoes to match the socks, and next season to buy that suit to go with those shoes, and so on. It's about the relationship.

What Nordstrom, like anyone else needing to establish realistic expectations needs to do is follow this five point plan:

1. Communications: The message needs to be simple, clear and coordinated in a consistent way across all channels. It must be truthful and convey genuine sincerity. Employees will need to be trained to understand and take ownership of the message when they deliver it. For all intents and purposes, they are the enterprise to the customer. Think Harry Truman's immortal words. "The buck stops here". Communications might be conveyed with words, but more often than not, they're conveyed through our actions. Employees need to be empowered if they're expected to take action.
2. Employee empowerment: If employees are going to take ownership of any given situation, and display genuine empathy, they need to be empowered to do what they believe is right. This is predicated on trust; trust between the enterprise its employees. If they believe it's something beyond what they believe they can address adequately, or it's a recurring issue they believe is systemic, they need to have a process in place that allows them to escalate the issue. Maybe for validation that they're making the right decision, or maybe because something is broken and needs to be fixed.
3. Processes and systems: Processes and policies are designed to make the enterprise easy to do business with, while being consistent across all channels of delivery. An example is the employee who recognizes a recurring, systemic issue and escalates it. That employee needs to be able to trust there is a process in place to address that issue so that it won't continue to cause problems; for them and their customers. When employees are empowered, they need to be set up for success. They need to be able to trust that their actions are connected into a system that drives intended results. 
4. Employee engagement: Employees need to have a clear and visible vision they can believe in. Something that excites and inspires them. A vision they want to support and work hard for because they aspire to be part of that vision. Across every level of the enterprise, the vision is clear and consistent. 
5. Embed continuous improvement in the culture: Nothing stays the same. Stakeholder expectations change, products change, technology changes, everything eventually changes. When an organization embeds continuous improvement into the culture, they make it easy for employees to be successful because the systems are designed for success, and are continuously refined. Moreover, employees are involved in that change and have a voice in how it evolves. They'll take this responsibility very seriously and provide far more insight because this involvement is pervasive across the organization.

Provided they stay focused, and can translate this into the culture at the Vancouver store, Nordstrom will succeed, raising the bar for everyone in the retail space.  And this will be good news for consumers. The competition will force everyone to get better, or get left behind. 

Now in all fairness, Nordstrom does have some previous experience introducing stores into new Canadian markets: Calgary and Ottawa. Provided they use the lessons learned through these experiences, they can leverage this data to improve where they might need to, or persevere and continue doing what's worked well for them. Following a Lean Startup approach.

And that might be the final lesson: use the information gained from what you've learned, pivot and change when improvement is needed, or persevere and continue doing what works. 

And seriously, try the salad.