Nordstrom already generates roughly $2.5 billion in annual sales through its namesake website along with those it operates for Nordstrom Rack, Trunk Club and HauteLook. But the company sees more opportunities ahead for its digital efforts and is making big capital investments to help increase that number by another billion dollars or so over the next few years.
Last week, Nordstrom announced plans to allocate five percent of its sales to capital improvements over the next five years.
"Technology is 35 percent of the plan, reflecting an increased shift towards foundational investments. This includes a merchandising solution that enables our growth and a seamless integration across our multiple channels," said CFO Michael Koppel on Nordstrom's recent earnings call with analysts. "It also includes the expansion of our fulfillment network. This not only supports a $2.5 billion online business today that is anticipated to grow by over $1 billion in the next several years but also enables an integrated customer experience across stores and online."
A new distribution center in Pennsylvania is under construction. The facility, which will be dedicated to online orders, is the third of its type for Nordstrom. The DC is being constructed to help expedite shipments to the company's customers, almost half of which are within a two-day shipping distance of the new center. Blake Nordstrom, president of Nordstrom, told analysts that the company's goal is to get 90 percent of its customers in the U.S. within two-day ground shipment range of its fulfillment network.
Other steps Nordstrom is taking to improve its digital performance include expanded selection of products on its sites, facilitating product returns from online orders in the company's stores, and making upgrades in stores that integrate online and offline operations.
Online currently generates roughly 18 percent of Nordstrom's total sales.
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