Why did Nordstrom close Trunk Club?

Source: Facebook/@TrunkClub
Jun 07, 2022

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.

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.

DISCUSSION QUESTIONS: Is Nordstrom’s closure of Trunk Club more about the challenges of running apparel subscription services or overall demand for online styling advice? Can AI-driven online styling advice rival the benefits of in-store advice?

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"I suspect this has to do with the overall demand for the service and the fact that these services add significant handling expenses and friction to the selling process"

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9 Comments on "Why did Nordstrom close Trunk Club?"

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Gary Sankary

Without having insight into Nordstrom’s planning discussion, I suspect this has to do with the overall demand for the service and the fact that these services add significant handling expenses and friction to the selling process. They’re paying customers to browse assortments and the customer has to repack everything and send back the items they don’t want. Even the easiest return process has a handling process associated with it. I think Nordstrom’s customers and the company are better served by bringing those customers into the store where the experience can be more engaging.

Melissa Minkow

Subscription styling services are tricky because they don’t typically align with consumer insights. Someone who loves fashion probably wants more of a hands-on, in-person experience or wants to take on the styling and shopping by themselves. Meanwhile, someone who isn’t into fashion and doesn’t have the time or desire to shop is a far better audience for a subscription styling service. The brands that have attempted subscription styling are usually also attempting to be fashion-forward, which doesn’t mix well with a consumer who wants to be on autopilot with this type of service. Nordstrom is and always has been for a more fashion-forward consumer, so I don’t think a subscription styling model made sense for its brand positioning. I’m excited about the different direction the retailer will take with personal shopping and styling- that effort makes much more sense for the Nordstrom brand and customer.

Evan Snively

There is something about finding “your style” as dictated by someone else that strikes me a little off – but beyond that, some people like to be really uniform, some people like to be really diverse and by the time AI has time to bucket someone one way or the other, the novelty of the proposition has probably worn out on the customer’s end. Personally, I find apparel subscriptions to be a huge drag on resources from both a sustainability and labor POV.

Jeff Sward

This is simple. The math just does not work. Period. The subscription model for products with a high return rate and outrageously high handling and re-stocking costs just does not compute. I buy dog food with a subscription. 100 percent predictable and zero returns. This is a great lesson about the difference in buying replenishment product with 100 percent knowns versus buying new, unknown, discretionary, emotional product with an abundance of unknowns.

David Spear

Trunk Club was likely a drag on profitability and required too many resources that could have been otherwise allocated to more margin-positive activities. A classic case of understanding opportunity cost. Furthermore, I think Nordstrom’s shoppers are more likely to engage with direct stylists and get real-time opinions on fashion tips.

Brian Delp

The largest hurdle to make this version of a subscription model viable was likely the volume of returns from customers not keeping the items. Although styling advice is a great client feature (AI continues to advancing rapidly), with freight cost I don’t see this as a viable model.

Brian Kelly
6 months 1 day ago

Love the swing of the pendulum. Subscriptions. Online push, a curated box of stuff — less of a brilliant idea than an unguided missile. And with all things online, the cost of doing business was misunderstood.

Craig Sundstrom

I was curious about how RW had reacted to Nordstrom buying “Trunk Club” (8 years ago): was it greeted by plaudits and raves that would now be a source of red faces and “wells…”? Happily no: the actual sale doesn’t seem to have been a discussion topic; so good luck? Perhaps, but a story a from a few years before that contained this cautionary note: In a 2009 RetailWire poll, 47 percent of respondents rated the market opportunity for Trunk Club as “small…”. Sounds like we were right all along.

Brad Halverson

It would make sense Covid and the impact of working remotely threw a wrench into subscription clothing, and now tastes, priorities have changed.

Nordstrom will get the newer movement of personal styling from a distance with AI, but the option of in-person styling by someone who can tailor outfits toward your preferences has been in their wheelhouse for decades. Their sales team has always delivered this well for customers who have wanted more service.

"I suspect this has to do with the overall demand for the service and the fact that these services add significant handling expenses and friction to the selling process"

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