Nordstrom 2015 Annual Report Download - page 7

We are continuing our plan to accelerate the number of new Nordstrom Rack store openings. New store openings both at Nordstrom Rack
and in our full-line stores involve certain risks, including the availability of suitable locations, constructing, furnishing and supplying a store in
a timely and cost-effective manner and properly balancing our capital investments between new stores, remodels, technology and
ecommerce. In addition, we may not accurately assess the demographic or retail environment for a particular location and sales at new,
relocated or remodeled stores may not meet our projections, particularly in light of the changing trends between online and brick-and-mortar
shopping channels, which could adversely affect our return on investment. We also intend to open stores in new and international markets,
such as Canada and Manhattan, and expansion will require additional management attention and resources and may distract us from
executing our core operations. In addition, competition from strong local competitors, compliance with foreign and local laws and regulatory
requirements and potentially unfavorable tax consequences may cause our business to be adversely impacted.
As we execute our plans and continue to evolve and transform our strategy, we may not adequately manage the related organizational
changes to align with our strategy or appropriately monitor, report or communicate the changes in an effective manner. In addition, we may
not gather accurate and relevant data or effectively utilize that data, which may impact our strategic planning and decision making.
Our growth strategy as it relates to ecommerce could have adverse impacts on our results of operations if not successfully
executed.
We are continuing our investment in ecommerce as advancements in technology have impacted shopping behaviors of consumers.
Computers, mobile phones, tablets and other devices allow customers to browse and transact anywhere or anytime. Our growth strategies in
this area span the development of applications for electronic devices, improvement of customer-facing technology, timely delivery of products
purchased online, enhancement of inventory management systems, greater and more fluid inventory availability between online and retail
locations, and greater consistency in marketing and pricing strategies. This business model has a high variable cost structure driven by
fulfillment, marketing and technology costs and will continue to require investment in cross-channel operations and supporting technologies.
If we do not implement and expand our ecommerce initiatives successfully or we do not realize our anticipated return on these investments,
our profitability and growth could be adversely affected. In addition, if customers shift to ecommerce more quickly than we anticipate, we may
need to accelerate our ecommerce initiatives and investments and may experience higher costs adversely impacting our profitability.
Our stores located in shopping malls may be adversely affected if the consumer traffic of malls decline.
Many of our stores are located in desirable locations within shopping malls and benefit from the abilities that we and other anchor tenants
have to generate consumer traffic. A substantial decline in mall traffic, the development of new shopping malls, the availability of locations
within existing or new shopping malls, the success of individual shopping malls and the success of other anchor tenants may negatively
impact our ability to maintain or grow our sales in existing stores, as well as our ability to open new stores, which could have an adverse
effect on our financial condition or results of operations.
Improvements to our merchandise buying and fulfillment processes and systems could adversely affect our business if not
successfully executed.
We are making investments to improve our merchandise planning, procurement, allocation and fulfillment capabilities through changes in
personnel, processes, location logistics and technology over a period of several years. If•we encounter challenges associated with change
management, the ability to hire and retain key personnel involved in these efforts, implementation of associated information technology or
adoption of new processes, our ability to continue to successfully execute our strategy or evolve our strategy as the retail environment
changes could be adversely affected. As a result, we may not derive the expected benefits to our sales and profitability, or we may incur
increased costs relative to our current expectations.
If we do not effectively design and implement our strategic and business planning processes to attract, retain, train and develop
talent and future leaders, our business may suffer.
We rely on the experience of our senior management, who have specific knowledge relating to us and our industry that is difficult to replace,
and the talents of our workforce to execute our business strategies and objectives. If unexpected turnover occurs without adequate
succession plans, the loss of the services of any of these individuals, or any resulting negative perceptions of our business, could damage
our reputation and our business.
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