SWOT Analysis of Nordstrom

A SWOT analysis of Nordstrom can enable this company to carve a clear, sustainable niche in its market. SWOT analysis refers to a useful technique that is used to understand the strengths as well as weaknesses of an organization or a person while identifying the opportunities to explore and threats to face.

When and how SWOT analysis of Nordstrom has been useful or important

Nordstrom has always used SWOT analysis in uncovering opportunities that are possible to exploit. This framework has also enabled this company to understand its weaknesses and to eliminate threats that may catch up with it unawares. Additionally, by looking at itself and its competitors via SWOT framework, this company has always crafted strategies that have enabled it to distinguish itself from competitors in order to compete successfully in the market.

Perhaps, it is by using SWOT analysis that Nordstrom has continued to grow since its establishment in 1901 by John W. Nordstrom in Seattle Washing as a small store selling shoes. In 1963, the company ventured into clothing market and it is currently one of the leading fashion retail stores in the U.S. It has more than 49,700 full time employees and it operates indirect selling which includes catalogs and e-commerce as well as credit operation.

Comprehensive SWOT analysis of Nordstrom

Strengths

• Diversity

Since mid 1980s, Nordstrom has been striving to ensure diversity in its workforce. 15.7 percent of the managers of this company were color people in 1988. 23.9 percent of the entire workforce comprised of the color people. Today, the company comprises of 30.5 percent managers as color people and 71.6 percent of the workforce is made of women. This company also has a diversity program for suppliers which provides an opportunity for women and minorities companies to supply it with the products that it needs. Additionally, the company has diversity of operations. It has restaurants, cash operations and spa service. It is by ensuring diversity of employees and operations that Nordstrom has won the support of people from different races and backgrounds in the society.

• Uniqueness

Nordstrom has always striven to achieve uniqueness in its services and products. To achieve this, the company has employed workers from different backgrounds so that they can contribute in the production of products and services that are superior to those of competitors.

• Society support

Nordstrom also participate in the activities of non-governmental organization and Fair Labor Association. It has been active in supporting universities and colleges. This has enabled it to obtain the support of the society and to expand its business more.

Weakness

• Slow growth

The growth of Nordstrom is very slow especially in other continents. This can be attributed to the competition that it faces from similar stores which makes its market share stagnant.

• Huge operational costs

Due to its large employee base, Nordstrom spends a lot of money in paying salaries and wages. This has led to a decrease in the money that is available for investment in new ventures. This has contributed to a slow growth rate as compared to other retailers like Kohl’s.

Opportunities

• Further growth

When compared to other retailers like Dillard’s and J.C Penney, Nordstrom is the sole retailer with operations in Europe. With this strength and consideration of the fact that the company has not explored all markets, Nordstrom has an opportunity for further growth in Europe and other continents.

• Better utilization of technology

Through the use of modern technology, Nordstrom can expand its business and enhance efficiency. In fact, this is one of the key initiatives of this company. An example of this initiative is the cooperation with IONA technologies in building its internet retailing system. This has enabled the company to manage its inventory control while reducing response time for physical distribution management.

Threats

• Intense competition

Being a fashion retailer, Nordstrom faces intense competition from other retailers including J.C Penny, Dillard’s and Home Retail Group among others.

• Economic change

Economic changes are a threat to this company. The effects of economic changes can be seen in different ways including the cost of shipping products which compels it to set higher prices for its products. When the company offers free shipping, its profitability is affected negatively. Additionally, the company is affected by the cost of acquiring clothing merchandises that it sells from other countries due to changes in tariffs that arise from economic changes.

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Sources

https://www.mindtools.com/pages/article/newTMC_05.htm

http://finance.yahoo.com/q/pr?s=jwn

http://about.nordstrom.com/aboutus/diversity/employment.asp

http://library.corporate-ir.net/library/93/932/93295/items/141867/Bear305.pdf