We don't know if Mike Koppel, chief financial officer of Nordstrom, was a Boy Scout in a past life but he is certainly big on being prepared.
According to a Dow Jones Newswire report, Mr. Koppel told attendees of a Bank of America Merrill Lynch consumer conference that his company was actively engaged in "scenario planning" to develop "contingency plans in case things get much worse."
Nordstrom, whom Mr. Koppel likened to a cross between a department store and specialty retailer, has made a number of adjustments already, including bringing in and promoting lower price point items, tightening standards for holders of its credit card and pulling back on expansion.
The move to some lower-price items was, according to Mr. Koppel, "some short-term aligning of our merchandising mix... more consistent with what the customer is looking for today."
Nordstrom took this action after a holiday season in which it repeatedly engaged in markdowns to move merchandise. According to a Seattle Times report, Nordstrom "had 10 times more markdowns" this past holiday season than the year before. In moving to merchandise with lower prices, Nordstrom is hoping to avoid resorting to markdowns to turn its inventory.
While it faces challenges, as do other retailers, with their own credit card business, Nordstrom is not looking to sell. "We believe it continues to be an important strategic component of how we build relationships with our customer," Mr. Koppel said.
Discussion Questions: What do you think of the steps Nordstrom has taken such as slowing expansion, bringing in lower-priced merchandise and tightening standards for its credit cards as a means to stay strong in the current business environment? Does it risk its image by stocking and promoting lower-price merchandise? What are your thoughts on its use of scenario planning to ready itself for the future?