By George Anderson
Three years ago when Blake, Peter and Erik Nordstrom took over management of the department store chain named after their family, there weren't many outside the company who thought they could turn the then struggling retailer around.
One analyst, who advised investors to sell their holdings in Nordstrom Inc., thought the three were too "concerned about the company's vaunted customer-service levels and not concerned enough about profits."
As it turned out, the family emphasis on staying true to the values and practices which made Nordstrom famous was exactly what was needed to generate greater profits.
The Puget Sound Business Journal reports, "While its department-store competitors have mostly struggled this year to post even flat comparable-store sales, Nordstrom's sales at stores open more than a year have been rising steadily since May. The company has bested analyst expectations by a wide margin in the past two quarters, and saw its stock shoot up to more than $35 a share in November after it reported a 147 percent increase in third-quarter income and raised its earnings guidance for the fourth quarter."
Moderator's Comment: What has turned Nordstrom around over the past three years? What will it need to do to continue building on its reversal of fortune?
Customer service is what made the Nordstrom name famous.
Analysts who criticized Nordstrom for sacrificing profits because family management insisted on sticking to the company's culture of service made the mistake of seeing associates as purely an expense.
Poor recruiting and training practices put expensive employees in place. Finding the right people and providing the needed training creates opportunities for building customer loyalty, sales and profits. [George Anderson - Moderator]