DISCUSSION

Why Did Nordstrom Close Trunk Club? 2 Surprising Reasons For Failure

June 7, 2022Written by Tom Ryan

Nordstrom recently disclosed that it has shuttered Trunk Club, but has no plans to deemphasize personalized styling. “I want to be clear,” said Erik Nordstrom, CEO, on Nordstrom’s first-quarter analyst call. “This move reflects our belief and commitment to styling, and we are dedicated to growing and investing in these services. We have a range of styling services from low-touch outfit inspiration through our digital channels to a high-touch and personalized relationship with a stylist, all of which achieved high customer satisfaction scores. We are directing our investment toward these programs to ensure that we are well-positioned to serve customer needs and drive growth.” Mr. Nordstrom added that customers spend seven times more and report higher levels of satisfaction when engaging with a stylist, either in-store or online. Mr. Nordstrom added, “While we still see the highest number of customers engaged with our in-person styling, we are seeing rapid growth within our digital services. We continue to leverage data science and advance our digital tools, including virtual Style Boards, to empower our stylists with highly relevant recommendations for their customers.” Nordstrom acquired Trunk Club in 2014 for $350 million as apparel subscription box services were gaining traction. Trunk Club users filled out a styling quiz to help stylists come up with 10 to 12 items to send to their homes. Users had five days to try and send back items they didn't want. A $25 styling fee could be used as a purchase credit. Competitors include Stitch Fix, Wantable, Le Tote and Dailylook.

Two Main Reasons For Cancellation

By 2016, Nordstrom took a write-down on Trunk Club due to lowered profitability expectations. In 2020, the retailer closed six Trunk Club styling clubhouses and folded them into nearby Nordstrom locations. Broader concerns about apparel subscription services arose beginning around 2018 when Stitch Fix’s active client growth began slowing. Styling services are still receiving investments. In January, Saks unveiled Saks Stylist, a complementary personal stylist online service in partnership with Wishi, a styling app. In March, Macy’s introduced an “Own Your Style” online platform that includes data-driven recommendations and advice from Macy’s Style Crew, the retailer’s internal group of paid influencers.

Nordstrom Trunk Club Replacement?

The loss of Nordstrom's Trunk Club means that services sending out personalized clothing style kits might need to reconsider the disadvantage when compared to the power of human interaction. As CEO Erik Nordstrom explained, personalized stylists are most effective when their services are conducted either in-store or online. If the main element missing from the Trunk Club is the human element, then the main premise can be boiled down to two separate services; a subscription or a loot box, and a "try before you buy" purchase. In this scenario, subscription and loot box services are enjoyed by consumers because of the exclusive product, thematic items, and other perks they agree to when signing up and paying. The surprise element is also part of the fun when opening most subscription boxes. With the Trunk Club, the customer is still given the opportunity to make the final decision about the clothes they receive. These packaged clothes are determined by algorithms that take into account style questionnaires, past purchases, returns, feedback, and a stylist's recommendations, but again, without any interaction. Unlike a true subscription service, they can easily change their mind and return their package. Each time this happens, it's a huge loss of time, money, and resources. It's a game of catch-up that can never be won. In this regard, the Trunk Club functions more like a "try before you buy" agreement, and e-tailers like Amazon Wardrobe are offering this perk with an increasing amount of their clothes. This is similar to Trunk Club but in a reverse way. With Amazon Wardrobe, customers are prompted to take a chance and buy an article of clothing they are not completely sure about or are more comfortable trying on or seeing in person before making up their minds. This works out better because there's already interest in the purchase, and in addition, customers might end up keeping their item if they decide it's not worth the extra hassle of returning it. This begs the question; it is better to set up a customized shopping interface for customers so that a Trunk Club experience is more of a customized page/HUD that is able to show suggestions based on the aforementioned criteria? After that, customers are able to "try before they buy" anything that's recommended to them. Regardless, style personalization is here to stay and it's increasingly important to factor in the elements of human interaction along with trends, pop culture, history, and social media influencers.

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