1. How does Nordstrom use demand forecasting to minimize leftover inventory?
2. What benchmarks could Nordstrom use to assess the success of its web-based inventory integration?
3. How might Nordstrom apply the concept of participatory planning to product purchasing? What groups should be involved?
4. FURTHER RESEARCH Imagine you have been asked to develop a long-range plan to extend Nordstrom’s inventory management overhaul into the future. What changes, revisions, or updates would you plan for the company? What stretch goals come to mind?
Assist planning more profitable and productive sale prices. According to retail analyst Patricia Edwards, this helps Nordstrom calculate what will sell better at a 25% discount instead of a profit-gouging 35% discount, and forecast which single items should be marked down.
And if a style gets stale, the company can ship it off to its Nordstrom Rack outlet stores. Th is kind of demand planning is part of Nordstrom’s long-term investment in effi ciency. “If we can identify what is not performing and move it out to bring in fresh merchandise,” says Pete Nordstrom, “that’s a decision we want to make.”
Total inventory should slide according to overall demand, and by recent accounts, Nordstrom has this mastered. It shrank its recent year-end inventory per square foot 12%, nearly lockstep with a 12.5% decline in fourth-quarter sales.
Perpetual Inventory
It’s an axiom of sales: When a customer wants to spend money with you, make it as easy as possible. Nordstrom associates had this down to a science for in-stock items. But until recently, if the customer wanted another color, size, or model, employees didn’t have the tools to see what choices were available at neighboring stores.
A customer who fell in love with a pair of candy red Prada pumps one day might return twenty-four hours later to fi nd her Nordstrom store out of her size. While inventory naturally fl uctuates, Nordstrom associates couldn’t easily locate a pair in another store or verify when they’d return to stock. And in an era of booming online sales, Nordstrom realized they were likely to lose such a customer faster than you could say, “I’ll just Google that.”
Th at changed in 2009, when Nordstrom integrated the inventory of each of its stores into its website. After an immense overhaul of the chain’s inventory management processes, customers at their laptops and associates behind sales counters see the same thing—the entire inventory of Nordstrom’s 115 stores presented as one selection, which the company refers to as perpetual inventory. Th e upgrade was an immediate hit. As of launch day, Nordstrom found that the percentage of customers who purchased products after searching the website for an …………………
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