Nordstrom hurt by weak low-income demand

Cost-conscious shoppers continue to shy away from Nordstrom, with the luxury retailer still feeling the effects of paycheck savings in the form of lower sales.

“Nordstrom Rack sales were down 2% from a year ago as we continue to see slower demand, particularly within our lower-income customer groups,” the CEO said. Erik Nordstrom to investors on a conference call Tuesday, November 22 evening.

This trend has led the company to reduce in-store order fulfillment Rack and increase the minimum order amount to receive free in-store shipping, Nordstrom said.

“These actions reduced our order cancellations, simplified rack operations and improved profitability, but negatively impacted Rack revenue growth by approximately 200 basis points,” the CEO said.

The company also saw a 16% decline in digital sales, which it attributed to its anniversary sale – its biggest sales event – moving into the second quarter, as well as reduced execution. in-store orders for Nordstrom Rack digital controls during the third quarter and at the end of its Trunk Club.

The report marks the second consecutive quarter in which Nordstrom has cited a drop in enthusiasm from its low-income shoppers as the reason for the drop in sales. While the company’s net sales rose 12% year over year in its second quarter, they began to slow in June, particularly among lower-income customers.

Those customers, the company said, typically buy from Nordstrom Rack rather than the flagship store.

Nordstrom’s report comes just ahead of a holiday shopping season in which it and other retailers could find themselves squeezed by customers who can’t or won’t spend, as PYMNTS noted earlier this month. -this.

Our latest Consumer Sentiment Survey found that two-thirds of consumers say they are “very” or “extremely concerned” about the outlook for the coming months.

Get the report: Consumer Inflation Sentiment: The Long-Run Consumer Spending Shadow of Inflation

Eighty percent said inflation makes them worried about the future. And 45% of consumers told PYMNTS that the daily struggle to keep up with bills has clouded their view of the future.

For many consumers, that future will contain a recession, which 62% of those surveyed by PYMNTS expect to see. Meanwhile, around 6 in 10 consumers said their income had at best stayed the same, compared to price increases, or at worst had fallen.

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