Department Store Marketing Comparison
1. I have chosen to discuss and compare the department store industry. I have chosen this industry because I live in Southern California where the retail sector is a major part of business.
Shopping malls are prevalent everywhere. I have seen and experienced all the differences among class and status. With a wide variety of demographics in Southern California, there are a number of shops and stores to choose from. Department stores range from discount warehouses such as Wal-Mart, mid-range stores such as JC Penney, and high-end stores like Nordstrom.
I am going to discuss the department store industry specifically for Wal-Mart, JC Penny, and Nordstrom. Coming from a middle-class family, I have experienced shops at all ends of the department store spectrum. When it comes to the amount of department stores located throughout the United States, businesses are placed accordingly. High-end stores are placed in wealthy areas; where as low-end stores are placed in a suitable region. The amounts of department stores, specifically for each status, are generally appropriate as well. 2. GeographicDemographicPsychographicBenefits Sought
JC PenneyJC Penney’s are located in most major shopping malls in a variety of communities. JC Penney has over 1,100 locations around the United StatesJC Penney tends to focus on the female demographic. More specifically mothers and middle-age womenTries to sell quality items at a low cost. Their new slogan is “fair and square pricing. ” They try to emphasize that their prices are fair at market values. JC Penney is telling customers that they can benefit from their low prices. Don’t go to Nordstrom where everything is expensive or Wal-Mart where the quality is low Wal-MartWal-Marts are often located in low-income areas.
Wal-Mart has over 7,000 locations in 15 countries. Wal-Mart targets people of all ages to shop at their stores. They offer children’s, women’s, and men’s clothing. Usually, families shop at Wal-Mart. The average annual income for a Wal-Mart shopper is $35,000-$45,000. Many minorities, as well as white decent are what make up the ethnicity of shoppers. Wal-Mart’s main goal is to provide a wide variety of discount priced items for their customers. Their slogans have included “Always low prices. Always. ” and “Save money. Live better. ” Rock bottom pricing and price match guarantees are the norm. Wal-Mart is here consumers go for the absolute lowest prices. If a price isn’t as low as another location, Wal-Mart will match it. NordstromNordstrom stores are much less common than Wal-Mart and JC Penney stores. They are placed in areas where the company knows there are enough individuals that want high end items. Nordstrom caters to the professional who is looking for higher end clothing that is made of quality materials. Nordstrom emphasizes quality and customer service. They pride themselves on offering the “best customer service of any retailer in America. Nordstrom offers quality items at a decent price.
Customers don’t go to Nordstrom for rock-bottom pricing. They go for personal selling and upscale items. These three companies have very different approaches to retail. Wal-Mart is the one-stop shop that people go to for the lowest prices. JC Penney offers quality products at a low price. They usually have similar styles as places like Nordstrom but with lesser-known brands. Nordstrom carries high-end products and they stress customer service and quality. They each take up their own segment of the retail business. 3. Marketing Mix: The Four P’s ProductThe product is seen as satisfying what a consumer needs.
It is a tangible good or intangible service. Intangible services are industries such as tourism. Tangible products are cars, razors, etc. PriceThe amount a customer pays for the product. Price determines a company’s profit and has an impact on marketing strategy. Marketers must be aware of the perceived value of a product when setting prices. PromotionThis represents the methods of communication that a marketer uses to provide information about their products. Promotion consists of advertising, public relations, etc. PlaceProviding the product at a place that is convenient for consumers. Place is the distribution aspect.
JC Penney: Product: Like its two competitors, JC Penney offers a variety of tangible goods for sale. JC Penney caters to its customers with higher end products at an affordable price. It is similar to Nordstrom’s in the types of goods offered. It differs from Wal-Mart because it has less variety. JC Penney offers clothing, bed and bath products, home items, clothing accessories, and patio furniture. Clothing is the main area of production for JC Penney and accounts for more than 50% of sales. Price: JC Penney has recently decided to move to three kinds of prices: everyday, monthly specials, and clearances.
They came to this strategy through a variety of studies. First, using past sales data, the company looked at consumers’ actual purchasing behavior, and came up with what it terms “Fair and Square” pricing, which means shoppers can expect lower prices in stores at all times. To reach this conclusion, research showed 72% of JC Penney’s revenue came from selling items priced at least 50% off. Thus, in the example cited in most recent news stories about the “Fair and Square” strategy, a T-shirt that had retailed for US$14 but typically sold — after markdowns — at US$6, would now be priced at a US$7 every day.
Part two of “Fair and Square” means monthly deals, and in the T-shirt example, the garment would now be marked US$6. The final piece of “Fair and Square” is called “best price,” which happens on the first and third Fridays of the month. Said T-shirt would now be marked $4, to clear out seasonal colors and bring in new merchandise. Basically, JC Penney focuses on “sale” items. They use sales to manipulate prices. A “sale” is really what price the marketer decides to sell an item for to continue making a profit. These sales are based upon how well certain items sell and their perceived “market values. Promotion: JC Penney focuses its advertisements around the four seasons and its holidays. For example, Thanksgiving, Christmas, Easter, etc are when JC Penney promotes its items through television and print advertisements. JC Penney is also making a push towards “smart advertising. ” Their promotions now appear in digital magazines, websites, mobile phone apps, etc. Place: JC Penney has more than 1,100 locations across the United States. Many of these locations are at large shopping malls where people go to buy clothes. There is easy access to JC Penney’s product.
In addition to the stores, most of JC Penney’s clothing can be purchased from the official website. This gives customers two ways to purchase items on sale at JCP. Wal- Mart: Product: Wal-Mart markets itself as a store where one can walk in and literally purchase anything they need. They offer clothes, sporting goods, food, jewelry, electronics, patio furniture, toys, home improvement, music and movies, automobile parts, etc. The idea is for Wal-Mart to be a one-stop shop for anything a family needs. Price: Wal-Mart’s motto is “always low prices. ” They aim to sell their products at a lower price than nearly every competitor.
They usually stock lower quality versions of items at the cheapest price and they even offer a price-match guarantee. If another store is selling the same item for cheaper than Wal-Mart says they will match it. A new part of this guarantee is that customer’s do not have to have the information on hand. They merely need to ask for a price match and the associates should know through prior research. Wal-Mart also does not focus as much on sales but rather on “everyday” low prices. Promotion: Wal-Mart television advertisements focus on their price match guarantees and everyday low prices.
A new Wal-Mart ad campaign bears the slogan “Low Prices. Every Day. On Everything” and features five 30-second commercials, including ads featuring an Easter egg hunt and a customer asking for a price match. The changes are bringing back local food favorites and national brands in household basics and general merchandise like consumer electronics. Some changes are tailored to local markets. In Phoenix, for example, shoppers will find pool supplies and lawn and garden items year-round. Place: Wal-Mart has 8,500 stores in 55 countries. It is the most recognizable one-stop shop in the world.
Wal-Mart is present in many places around the United States that do not have other major retail outlets. For many communities, Wal-Mart is the place to go to find everything one needs to live. Nordstrom: Product: Nordstrom is a large department store that focuses on upscale items. They carry items from mostly luxury clothing companies such as Hugo Boss, Chanel, etc. Initially a shoe retailer, the company today also sells clothing, accessories, handbags, jewelry, cosmetics, fragrances, and in some locations, home furnishings. Price: Nordstrom’s customers care less about price and more about quality.
The goods offered are not a bargain. They are meant for those in need of upscale items. Luxury products are defined in part by their price. Nordstrom is seeking to appeal to those people that want department store prices but not necessarily large sales and discounts. Promotion: Nordstrom’s does not use a low price tag to attract customers; instead they use quality. While it is pricier to shop for clothes and home decor at Nordstrom’s; most designer labels prove to be of better quality, uniqueness, and durability. Many of Nordstrom’s television ad campaigns focus on “re-defining” one.
Their marketing strategy focuses on how people can approve their lives with quality clothing and accessories. Place: Nordstrom has 225 stores operating in 29 states. Nordstrom is much less ubiquitous than Wal-Mart and JC Penney. They are located mostly in shopping malls but the company makes sure to build their stores only where there are enough people that can afford luxury items. 4. JC Penney: The JC Penney website has a clean and easy layout. The top of the site has a search bar and then a number of tabs representing each department available to browse through.
The website also uses color-coding. Anything representing the values and sales for May is written in purple. There are products on the front page with prices listed underneath. These prices are each in a purple box to show that the sale price is for May. There is one large picture that dominates the home page. It has the letters MOM with “it’s mother’s may” written above it. As I said before, JC Penney focuses its advertising on holidays. The site is user-friendly. Everything is easy to read and it is not too cluttered. The site has areas to find a store and a “best prices” section.
On the upper right there are four logos: a cell phone, envelope, facebook, and twitter. JC Penney is keeping up with the times by including other types of websites and embracing social media. Wal-Mart: The Wal-Mart website is more cluttered than the JC Penney one. On the top there are 5 buttons that read: Value of the day, local ad, store finder, registry, and gift cards. To the right of this is an area to log into a Wal-Mart account and track your orders. On the left of the page is a column showing the major departments available on walmart. com. Under this are two more columns showing savings as well as new products.
In the middle of the page there are color advertisements very similar to what one would find in print circulation ads from the mail. There are “specials” all over the front page. Under the advertisements there are two rows titled “more great ways to save” and “shop Wal-Mart best sellers. ” The Wal-Mart website is cluttered and it is difficult to find what you’re looking for. There is an overload of information. Nordstrom: Nordstrom has the most simple website of the three. The top has tabs for Women, Men, Juniors, and Kids as well as all the brands offered at the store. There is also a sale tab.
After hovering over each tab a pop-up appears. Under the of tabs is a large advertisement called the “perfect 10. ” It is a list of Nordstrom’s 10 warm-weather essentials. Nordstrom’s seasonal advertising is apparent. They are in the midst of promoting the Summer line of clothing. Under the advertisements are links to connect the Nordstrom facebook and twitter pages. There is also a handy store and event locator at the top of the page. The website follows a mostly black and white theme with the only color being on the clothing pictured. This makes the clothing pop on the page and offers good contrast. . JC Penney has positioned itself as a mid to high-end retailer with excellent sale prices. Wal-Mart is positioned as the one-stop shop with the lowest prices of any retailed. Nordstrom is the high-end retailer that pushes the quality of its clothing over cheap prices. Survey: 5 Questions, 20 people surveyed. Where are you most likely to shop: JC Penney, Wal-Mart, Nordstrom •JCP: 11 people, Wal-Mart: 3 people, Nordstrom: 6 people Which has the best prices: JC Penney, Wal-Mart, Nordstrom •JCP: 5 people, Wal-Mart: 13 people, Nordstrom: 2 people Which has the best quality: JC Penney, Wal-Mart, Nordstrom JCP: 6 people, Wal-Mart: 1 person, Nordstrom: 13 people Which has the best products: JC Penney, Wal-Mart, Nordstrom •JCP 8 people, Wal-Mart: 3 people, Nordstrom: 9 people Which is the best at advertising: JC Penney, Wal-Mart, Nordstrom •JCP: 9 people, Wal-Mart: 7 people, Nordstrom: 4 people In the college student demographic, most people are likely to shop at JC Penney. I conclude that this is because JC Penney positions itself as offering “stylish” clothing at good prices. Wal-Mart is seen as the bargain bin and Nordstrom is too expensive for most students.
It is evidenced through this survey that each company has a very differentiated place in the consumers’ minds. Wal-mart is seen as the price leader, Nordstrom’s as quality, and JC Penney as good quality at a low price. The consumer impressions of each company match how each of the competitors have positioned themselves in the marketplace. 6. SWOT AnalysisWal-Mart StrengthsWal-Mart’s strengths are centered on its “always low prices” motto. Wal-Mart positions itself as having the lowest prices of any competitor. They even guarantee to match any competitor’s price.
The survey shows that people are getting this message and know that Wal-Mart is the cheapest. WeaknessesWal-Mart has a problem when it comes to the perception of the quality of their products. People see Wal-Mart as cheap but low quality. Good in the short-run but not long-lasting. OpportunitiesTo improve performance, Wal-Mart could create an advertising campaign to show how they have low prices AND quality products. They could possible create departments with higher-end goods. ThreatsCompetitors such as Costco and other one-stop shows are external elements that could threaten Wal-Mart.
Other companies can also attack the quality of products and the methods Wal-Mart uses to get these prices. 7. Wal-Mart has new CRM strategies in place for the new decade. Wal-Mart president Lee Scott Jr. has addressed how he is trying to make Wal-Mart the “company of the future. ” They are seeking to gain new clients while still keeping old ones. Wal-Mart’s CRM strategy stresses “corporate responsibility” and its five factors: ethical consumerism, risk management, transparency, accountability, and responsibility. Scott had detailed his company’s approach to the social component of retail.
Executives, he said, meet regularly with a panel of 50 young consumers, many of whom have cut their personal spending — at restaurants, movies, or shopping in general — and say they feel good about the money they’re saving. That sentiment, Scott noted, will likely remain with this generation of consumers even after the economy bounces back, a factor that retailers have to be cognizant of. Despite the consumer preference for multiple touch points, each shopper still expects recognition as a single individual, which means retailers must create a seamless multichannel experience.
A rising number of consumers are using two or more channels to research, evaluate, purchase, and return products, Janiak said, a phenomenon that has been made possible by the Internet. According to Forrester Research, by 2012, 49 percent of United States retail sales will be online or cross-channel sales. Even today, the importance of the online channel is significant, Janiak said, citing a recent Deloitte survey of retail executives that indicated every dollar of merchandise sold online influences as much as $3 in the store. Wal-Mart is committed to covering the Internet aspect of retail in the future.
They know that mobile phones, tablets, and laptops are the consumer devices of the future. In addition, Walmart. com, the online division of Wal-Mart, has leveraged its consumer tracking tools to work out even more precisely what the value of each of its customers is. “They (Walmart. com) know when they put Valentine’s Day flowers on sale how much it costs to send that message, what percentage of customers end up on that site because of that message, how much money they will spend, and what is the likelihood of that customer coming back and buying other things,” says Wharton marketing professor David Reibstein.
They don’t simply look at one-time purchases, but at all the purchases afterwards, and use that information to calculate the value of spending advertising dollars. “They have that down to a science for almost all of their advertising. ” Wal-Mart is adept at tracking purchasing patterns and catering their advertising to specific consumers. Nordstrom is also adept at customer relationship management. They stress that they are the leaders in customer service excellence. They state “the company with the greatest reputation for customer service in the United States continues to be Nordstrom.
One of Nordstrom’s leaders states: What that takes is courage, dedication, and the fact that customer service isn’t a strategy, but rather a way of life. A couple of years ago a company called me to speak to the organization because [that year] they were focusing on customer service. That [begs] the question: What were you emphasizing last year and what are you going to emphasize next year? At Nordstrom, it’s a realization that they’re not in the apparel business, shoe business, or cosmetic business, they’re in the customer business. JC Penney and its new CEO are also at the forefront of CRM.
He says that “a greater impact may come from information systems the customer rarely sees, such as customer relationship management (CRM) software. “Apple reshaped the retail landscape and combined technology with customer know-how to change the customer experience,” Fader notes. “Now, every retailer wants to do that. Using technology and social media to enhance the shopping experience is all well and good, but there is lower hanging fruit by using technology to better target buyers. ” Nordstrom and JC Penney department stores also have cards such as a “Nordstrom card” that offer sales and deals to those that shop at Nordstrom frequently.
These cards are the company’s way of rewarding those that are frequent purchasers that offer a “lifetime value” to the company. The retailers also offer credit cards to purchase their items that can be paid off with payments instead of all at once. 8. The societal marketing concept holds that a company should make marketing decisions based on what the customer wants. It is closely linked with corporate social responsibility and sustainable development. Companies of the future are focusing on environmental concerns because this is what people care about.
Hybrid cars and alternative fuels are hot topics in the modern political arena and corporations must address this. Wal-Mart has begun a food-labeling program that will add “great for you” to many of its products on the fruit counters. Wal-Mart is trying to stress that its fruits do not include harmful pesticides or fertilizers. Wal-Mart has had environmental problems in the past. They recently had to pay a $1 million dollar fine and develop and environmental management plans because they violated storm water requirements under the Clean Water Act. Wal-Mart has created a plan to cut 2. million metric tons of CO2 emissions by 2013 by making stores more efficient. They have also said that Wal-Mart now reuses or recycles more than 80 percent of the waste produced in its United States operations. Since 2005, the company has reduced greenhouse gases by 12 percent and increased its trucks’ fuel efficiency by 65%. It is evident that Wal-Mart is making a concerted effort to be more environmentally responsible. In terms of charity, the Wal-Mart foundation has worked for global women’s economic empowerment, hunger relief, education, military support, and disaster relief.
They also have many scholarship programs. JC Penney has committed to reduce energy consumption by 20 percent per gross square foot by 2014 by increasing energy-efficiency improvements and implementing conservation practices. In 2009, the retailer prevented about 80 million pounds of greenhouse gas emissions due to its new energy-efficiency measures. The retailer has invested millions of dollars to install advanced metering technology, lighting retrofits, and high-efficiency HVAC systems in its stores. JC Penney was the first retailer to earn the Energy Star Award for sustained energy management.
JC Penney has been a member of the ENERGY STAR program since 1999 and was recognized as an ENERGY STAR Partner of the Year in 2007 and 2008. In addition, when the new ENERGY STAR efficiency benchmark for retail stores was introduced in October 2007, four JC Penney stores in Washington State became the first buildings to earn the Energy Star label for energy efficiency. Currently, 52 JC Penney stores, as well as the home office in Plano, Texas, have qualified for the ENERGY STAR Building Label. The retailer has set a goal to achieve ENERGY STAR certification for at least 200 stores across the country.
Last year, JC Penney began using social media for charitable giving. They released several new digital initiatives. They also announced that since 1999, they have raised more than $100 million in scholarships and grants through its charity JC Penney Afterschool. Nordstrom is also committed to “sustaining the environment. They are working on resource conservation, recycling and waste management, packaging innovations, and organic cotton development. They have used 100% recycled bags and boxes since 2008. Nordstrom has perhaps the more radical approach to charity.
They have opened a store in New York City at which all the profits have been committed to charity. Other than this, Nordstrom has the least about charity out of the three companies. Each of these three companies has been committed to environmental change. They have demonstrated a commitment to reducing waste and pollution. JC Penney is the most environmentally conscious of the three and was awarded an Energy Star. In terms of charity, Wal-Mart has the most charitable donations of the three. Based on these findings all of the companies are focused on the “societal marketing concept. 9. With the economic collapse of 2008, the retail sector was one of the hardest hit. However, JC Penney, Nordstrom, and Wal-Mart have recovered remarkably. All three companies recently produced increased profit margins. Wal-Mart is #2 on the Fortune 500 list and isn’t in any foreseeable danger. I would say that of the three, Nordstrom is most in danger of hitting tough times. Although profits rose, Nordstrom caters to high-end retailers. If there is another economic collapse then Nordstrom may face danger. One retail giant that wasn’t so lucky was Mervyn’s.
At its peak Mervyn’s had nearly 200 stores in 10 states. However in 2008, Mervyn’s began the process of liquidating its entire inventory and all stores were closed. Their liquidation shows the fragile nature of the retail business. If I could choose any product in this industry to close down I might have to go with Wal-Mart. Wal-Mart is known for exploiting poor nations for resources and cheap labor. Additionally, employees get very few benefits and most are on minimum wage. I think they are too focused on low prices at the expense of quality and fair business practices.
They also have a monopoly on the U. S. retail sector. In 2010 they had over $300 billion in sales. The next highest was Kroger at nearly $80 billion. The difference between Wal-Mart and its competitors is staggering. 10. Personal selling involves face-to-face interaction in which a seller persuades the customers to buy products or services. Wal-Mart has over 57,000 suppliers that use personal selling to get their products on Wal-Mart shelves. Wal-Mart has an online step-by-step process to become a supplier to the company.
If Wal-Mart is interested in a supplier then they will try to meet the leaders of the supply business to see if they are capable. Suppliers must then sign a contract with Wal-Mart. The contract, commonly known as the vendor agreement, outlines the mechanics of how the supplier and retailer will work together. The agreement generally addresses sales and delivery timeframe, arbitration, and termination rights, and liability. As a rule, Wal-Mart uses a non-negotiable boilerplate. Charley Moore, CEO and founder of legal service RocketLawyer. om, says this means potential suppliers can study similar contracts online before meeting with the buyer. Wal-Mart generally starts out smaller suppliers in a local market, delivering goods to up to 50 stores, as a test run. If the supplier provides a high-selling product and proves reliable, it might be considered for national distribution. Bruce Zutler, CEO and co-founder of MCI Products Group, a New York-based company that specializes in new product development and overseas sourcing, recommends small suppliers think of the test-run as the time to prove they are capable. If you have a good product and you strengthen their sales, then the buyer will stay with you,” says Zutler. The test run is the time when suppliers must “sell” Wal-Mart on carrying a product. After all these efforts then the product may be picked up nationally and customers can find them at “everyday low prices” around the nation. 11. If I were the CEO of Nordstrom, I would get my best customers to order more by selectively having sales on items that were popular in the past. I would bring these items back in different styles and colors and place a seasonal sale on the items.
This would encourage old customers to reacquire items that they previously liked, but that have acquired wear and tear over the years. I would also offer deals to frequent customers such as “Spend $200 and get 10% off. ” This usually makes people spend more than they are planning on in order to get a deal. In addition to displaying similar clothes to what people ordered, I would follow the Land’s End method and offer matching accessories such as wallets, belts, shoes, watches, etc that go well with items that customers purchased.
I would place these accessories close by to the clothing in the store so that people would be more likely to associate the accessories with products that they had already purchased. I would also offer incentives to frequent buyers. The more a person buys, the more “special” sales and opportunities they are offered. Nordstrom is one of the most successful retailers in terms of data analysis. They have updated their technology to bring SKU information much faster. The new technology also helps to analyze customer patterns and helped bring Nordstrom out it its slump. 12. The three companies have very different advertising efforts.
JC Penney has released a new ad campaign called “say no to the status quo. ” The ad campaign includes tv and outdoor ads as well as a Facebook page where visitors can scream their frustration at old types of advertisements. My favorite advertisement out of these three companies is the new JCP television ad shows people screaming at sales that ended early. They are overwhelmed at all the different numbers of sales and prices. JC Penney is saying that they are simplifying their sale structures. The campaign paves the way for the company’s new “fair & square” price structure.
The ad is effective in because it has a comedic effect and addresses a legitimate concern for customers that are overwhelmed by the number of sales at retail outlets. Wal-Mart has recently committed to spending more on television advertising. In addition, Wal-Mart added thousands of screens in its retail locations that constantly show advertisements in different areas of the store. Wal-Mart is also trying to focus more on other aspects besides prices. They are beginning to advertise well-known national brands. Nordstrom’s advertising focuses on the quality of their product.
Nordstrom’s strives to meet customer satisfaction through offering an array of products. “Our goal is to offer a well-edited range of products for a variety of lifestyles. “. While they don’t offer common, everyday needs like toiletries, groceries or cat litter; they do offer more upscale products such as apparel and home decor. Nordstrom, like Walmart, offer a private label–but without the notable discount. Nordstrom’s newest advertisement shows a woman opening the door to a man. The man drops his umbrella and looks at the girl in disbelief. The screen then shows the words “reinvent the complement. The advertisement is saying that by wearing Nordstrom clothes, people don’t even need to say anything. You can simply tell you are wearing quality clothing by their reaction to seeing you. 13. Retailers have to deal with a variety of factors in their supply chain management process. JC Penney is committed to offering merchandise and services that reflect the full range of their customers’ lifestyle preferences. To help them deliver on their brand promise of offering style and quality at a smart price, they pursue relationships with minority and women-owned suppliers that help provide for the needs of its diverse customers.
They state that that sustaining a strong supplier base requires building relationships with suppliers they trust. That’s why, for more than 30 years, jcpenney has considered its Supplier Diversity program integral to business success. This program fosters relationships with qualified minority and women-owned suppliers, reflecting the diversity of associates, customers and community. Since its inception, the jcpenney Supplier Diversity Program has realized substantial growth in the purchases of merchandise, goods and services from minority and women-owned suppliers.
JC Penney must deal with a variety of other things in its supply change management program. They have a US logistics operation that focuses on developing environmentally sound packaging, utilizing alternative energy sources and conservation to reduce cost and carbon footprint, and continued expansion of recycling and reuse projects. Wal-Mart is noted for the incredible speed of their supply chain. Wal-Mart’s legendary supply chain technology has allowed them to break the three-day barrier that some economists in the eighties felt was largely unbreakable.
In other words, Wal-Mart is often able to replenish items on the Wal-Mart shelf in less than three days – not from the central warehouse to the shelf, but from the manufacturer to the shelf. With quick and reliable 2-day turn around, Wal-Mart is able to maintain lower levels of inventory and still meet customer demand. These lower inventory levels result in either a reduced floor plan with lower carrying costs and lower interest expense – or a greater diversity of products on the store shelves. Wal-Mart has over 7,000 factories worldwide that supply their products.
Regulating these factories is an enormous practice. In the past, Wal-Mart has come under intense scrutiny because of working conditions in their factories as well as the presence of underage workers. Wal-Mart must deal with these challenges on a regular basis. Nordstrom’s supply chain starts with its vendors that they buy directly from. Once the regional buyers find out what products are needed to reach the target market, they go to the showrooms and order in bulk. The vendors then ship the products to warehouses across the country.
They use a system called Accenture to determine their inventory. The inventory of each store is determined by Accenture, sent to each retail store, and purchased by customers. Accenture figures out which products are needed at each store. Nordstrom also uses the supply chain management software called SynQuest. SynQuest markets itself as a tool that facilitates planning, execution, and control on all orders. SynQuest uses financial optimization and real-time management. As it can be seen, Nordstrom and other companies use cutting-edge software to manage their supply chains.