Dive Brief:
- Nordstrom ceased the build-out and planning of a leased omnichannel center in the Pacific Northwest, the company announced in a Q2 earnings call.
- The company has improved its operations and found it can serve customers more efficiently with its existing supply chain network while avoiding the added costs of building out the facility, CEO Erik Nordstrom said on the call.
- Some improvements the company previously touted included a 5% increase in click-to-delivery speed and lower fulfillment costs, according to a Q1 earnings call.
Dive Insight:
Nordstrom identified supply chain optimization as a top priority back in Q4 of 2022. Now, the retailer is seeing improvement along its supply chain, causing it to move away from its Pacific Northwest omnichannel plans.
“Logistics networks have recovered from the supply chain challenges that began during the pandemic, and we’ve improved our supply chain operations over the last few years,” Nordstrom said.
In addition to previously noted enhancements, the retailer is seeing faster processing times for its inbound merchandise enabling faster returns, the CEO said.
The company also said it is rolling out RFID tags across its fleet. Nordstrom is starting to “get the benefits that that insight gives us,” CFO Cathy Smith said on Q2 earnings call. The inventory accuracy provided by the technology also enhances the customer experience, Smith added.
Even with recent improvements, Nordstrom is still making supply chain enhancement a priority. The company announced it plans to relocate operations from its fulfillment center in San Bernardino, California, to its omnichannel center in Riverside, California, during a Q4 2023 earnings call. The transition will help the company further leverage the Riverside facility’s warehouse automation.
“We’ll continue to look to leverage our existing supply chain network, always balancing the best customer experience we can with speed and cost,” Smith said.
As it shifts its supply chain strategy, Nordstrom’s board of directors is currently considering a $3.8 billion offer from CEO Erik Nordstrom, President Peter Nordstrom and Mexican retail company El Puerto de Liverpool to buy the company.