Nordstrom 2006 Annual Report Download - page 13

As 2007 progresses, we grow more excited about what lies ahead for the future of our company. The milestone year of 2006 by
no means signifies a ceiling in terms of growth. We believe we are uniquely positioned to grow the value of our business through
some highly focused initiatives, which are: advancing current merchandise strategies within our existing product categories,
improving the shopping experience across all channels and continuing to increase our presence where our customers shop.
Every merchandise strategy begins with our customers and what they want. In the last few years, we’ve taken great strides in
better understanding our customer. We’ve found that there’s a great deal of opportunity to grow our sales in existing stores
simply by earning a greater share of our customers’ business across multiple product categories. Our new systems and
merchandising disciplines have helped us begin to tap into that business by enhancing our ability to keep inventories fresh and
turn them more rapidly. Customers are responding to this “newness” across all merchandise categories, leading to impressive
results in areas such as men’s, accessories, shoes and cosmetics, and improved performance in women’s apparel. A consistently
strong performer in 2006 was our designer business and we’ll continue to expand the selection of designer merchandise
at Nordstrom. Our overall goal is to give the customer a compelling reason to buy something new.
Second, we need to be where our customers are shopping — whether that’s online or in stores. We’ve found that customers who
start shopping online typically gravitate to our stores and those customers who shop both online and in our full-line stores
purchase more merchandise. By giving customers the power to choose, and by offering a similar shopping experience in store
and online, we’re providing a level of service increasingly relevant to today’s shoppers.
One example of continuing to improve the experience across channels is the upcoming expansion of our Fulfillment
and Contact Center in Cedar Rapids, Iowa. This facility will give our team more capability to serve customers who want
to purchase items over the phone, online, or in any of our stores. Another investment that will help us serve our
customer better is technology that will enable our salespeople to have a single view of total company inventory.
This system enhancement, scheduled for completion in early 2008, will further expedite the search
and fulfillment process for customer requests.
Finally, given the industry consolidation impacting many of our competitors, we see tremendous potential to gain
market share and grow our business. Fortunately, we are in an advantageous position to reach new customers
through building stores and enhancing our current ones. We’ve recently launched a $2.8 billion capital plan,
with 80% of the dollars allocated to ”customer-facing“ issues like new stores, remodels and
relocations. The good news is that we have the resources to fund this plan, and it’s the highest value
use of our capital.