Nicole Barker

Are we losing our brand? Just ask Nordstrom, Sierra Trading Post and Sports Authority

The ghosts of the past, present and future have made an appearance in retail over the past month. Loyalty programs, discounts, and online competition have shaken large retailers. As casino marketers, we know a thing or two about loyalty programs, discounts, and competition.

Reminiscing about a past without coupons, and an uncertain future
Do you remember the days before Free Play Coupons? Do you remember generations of customers who frequented your “store” just because you were you? Do you remember the crush that an uncertain economy had on revenue?

Nordstrom, a high-end fashion retailer, is licking its wounds from a second quarter of unrealized growth expectations. Their outlet stores continue to do well, but their inventory is gumming up cash flow, and their customer is not as loyal as she once was.

Several paths diverge in a wood.

Nordstrom looks to leverage loyalty. Recently, the company announced that it would open its loyalty program to all customers, beyond just their Nordstrom credit and debit cardholders. More customers can gain access to exclusive events and spend-for-cash options called “Nordstrom Notes.”

Another path emerges, one that challenges the Nordstrom brand and culture. Analysts discuss the power of Macy’s and Kohl’s as competitors, both known for deep discounting.

What would you tell Nordstrom in the coming months?

We know what couponing can do. We know how points-to-cash can cause confusion. We have traveled down this road and suffered from expressing loyalty in transactional terms. How do you build and sustain loyalty without buying back the business?

Does the present herald a mass exodus or new age of understanding?
In May of 2016, the President of Sierra Trading Post wrote a letter directly to his customers:

“Over the last several years, much of our marketing has been driven by coupons and promotions. The reality is, this isn’t sustainable. We need to simplify your shopping experience and manage our business smarter. These changes will not happen overnight, but we have already lowered prices to ensure every customer saves without having to rely on short-term promotions…”

“…In the future, you’ll see fewer discounts, but the value of our product will remain what you expect from Sierra Trading Post. In fact, the value and the savings we pass on to you will not only improve, as we work to buy smarter and to offer a fresher, more exciting selection.”

Wow.

That’s a ballsy move.

Are you penning a letter to limit Free Play and to commit to delivering a better guest experience this summer?

Sierra Trading Post exists within a family of companies owned by The TJX Companies, Inc. This is a retailing cohort that knows discounting: T.J. Maxx, Marshalls, and HomeGoods to name a few.

The emails and catalogs keep coming. The layered coupons do not.

My waders arrive next week.

Anxious portent about a broken future
The stadium will not close, but the sponsor’s stores that bear its name will. Sports Authority, the Denver-based sporting goods retailer, will close all 460 of its stores by the end of August. The bankruptcy process is cruel to all involved. Starting May 20th, the emails started arriving daily with more ominous news. First, a few stores would close. Then, the loyalty program issued its last round of rebates. The rebate redemption dates expired before the posted deadline. The discounts cut deeper and deeper. And now the vultures circle and all sales are final.

In operation since 1928, Sports Authority was the first and last place to check for seasonal items to prepare for soccer season or grab your gear for skiing. According to the Denver Post on May 24, 2016…

“The debt load proved too much for Sports Authority, which also faced a slew of challenges including an economic downturn, the rise of online and specialty retailers and changing consumer behaviors. Management said the company’s ability to adapt was hindered by a store base consisting of a hodgepodge of too-close-together stores ranging widely in size and feel.”

Do you hear echoes of all three scenarios in your world?

We have some soul searching to do.

Are we losing our brand to runaway loyalty programs that over-commit and under-deliver?

Are we setting the table for our customers to game our programs more than they enjoy our games?

Are we so set on growth that we forget to concentrate on doing really well with the business at hand?

We live in the past, the present, and the future with the decisions that we make for ourselves, our business, and our customers.

I have great hope for Nordstrom’s brand integrity. I admire Ken Walter, the President of Sierra Trading Post, for being honest and straightforward with his customers. I ache for Sports Authority for failing to be all things to all people.

Which ghost do you fear the most?

Nicole Barker