DQ 1-2

DQ 1

Branding Nordstrom

After reading the article “Conservative Nordstrom to sell trendy Topshop fashions,” respond to the following:

• How does this partnership fit into Nordstrom’s current brand management strategy? Will it appeal to its target markets? How will it allow Nordstrom to differentiate itself from the competition?
• Is this a risky move for Nordstrom considering the downward sales trends for Topshop in the UK?

                Required article

Conservative Nordstrom to sell trendy Topshop fashions; British chain to introduce its clothing at 14 stores in U.S. in September

International Herald Tribune

Byline: STEPHANIE CLIFFORD

NEW YORK -- Nordstrom, the conservative Seattle department store chain, is bringing in Topshop, the British fast-fashion chain with rock 'n' roll flair.

Topshop, along with the men's brand Topman, will be introduced in Nordstrom in September and sold through Nordstrom.com, the companies said Thursday. Topshop, which incorporates trends from the runway and from street fashion into its clothing in a matter of weeks, will add some speed to Nordstrom, which has so far lacked such a quick-turnaround brand.

"This will be a new customer for them, and a new customer for us," said Philip Green, the owner of Topshop, in an interview Thursday at Topshop's New York store, one of three stores it has in the United States.

Department stores want to bring in young shoppers, and partnerships like this is a popular way to do it. J.C. Penney has carried clothes from the fast-fashion brand Mango, under its MNG by Mango line, for a couple of years. On Tuesday, Neiman Marcus and Target announced they would jointly be carrying Christmastime collections from 24 designers including Carolina Herrera and Derek Lam.

Nordstrom will add Topshop to 14 of its 231 stores in September. The company said the 14 stores covered a range of geographies, sizes and shopper demographics, so Nordstrom could get a sense of what worked where; from there, the plan is to roll out Topshop and Topman to most of its stores.

"Fast fashion implies cheap, and that's not what we're after," said Pete Nordstrom, president of merchandising for Nordstrom. "It wasn't about how we sell a bunch of really cheap T-shirts. It's about how we deliver credible new fashion to the customer."

The Nordstrom offering will be a smaller selection of what is also available at Topshop proper, though some styles and patterns will be exclusive to Nordstrom. Kate Phelan, Topshop's creative director, showed off some fall clothing that Nordstrom will be able to pick from, like a women's leather jacket with faux-shearling trim and buckles at the neck, a men's peacoat in a Navajo pattern, and a women's cable-knit sweater in ombre gray. Nordstrom will also carry Topshop and Topman accessories, including shoes, bags, makeup and grooming products.

Ms. Phelan said that although she expected the Nordstrom shoppers to be more conservative, Topshop would still offer a wide range of styles for them. "We make them feel it's very easy to understand how to mix a combat jacket with a lace skirt," she said.

The merchandise will be delivered weekly, which, Mr. Green said, will bring customers into Nordstrom stores frequently. "That speed is appealing," Mr. Nordstrom said.

The department store is allocating about 2,500 square feet, or 230 square meters, for the women's Topshop merchandise, and 1,500 square feet for the men's. Mr. Nordstrom said the mannequins and signs would be similar to those in a Topshop store, though Nordstrom's would not set off the merchandise with walls.

While Topshops usually blare music, Nordstrom is known for its tinkling pianos. Mr. Nordstrom said that, at least for now, "it's going to live amongst what we do," meaning a D.J. probably won't be setting up a station in the Topshop section anytime soon.

Topshop is not sold at any U.S. department stores, though it is available in Canada at The Bay. At its own stores, its U.S. division is a tiny part of the business. Topshop has three stores in America, and plans to open a fourth in Los Angeles in spring 2013. It has 319 stores in Britain and about 140 elsewhere; the non-U.S. stores are largely franchised, though the U.S. stores are wholly owned.

The parent company's business has recently slipped, though, as demand in Britain has lessened. Arcadia Group, Topshop's parent company, which also owns several other retail brands, reported in November that its annual profit had fallen 38 percent and sales at stores open at least a year in Britain fell 1.8 percent.

Mr. Green said Thursday that the U.S. business was healthy, and that in a five-year period, Topshop wanted a $1 billion business in America. Currently, he said, the New York store, Topshop's oldest in the United States - it opened in 2009 - has sales of between $40 and $50 million. He said the Nordstrom deal does not affect Topshop's plans to open standalone stores in the United States, with new outlets under consideration in New York and Miami.

Sales in the New York store in the first six months of this year rose 20 percent over a year earlier, he said.

He said he expected the Nordstrom shops to help him figure out what to carry at other U.S. locations.

"Obviously, there's places in America we've never been - we need an editor to give us a little bit of direction," Mr. Green said.

Popping a piece of gum into his mouth from a tiny plastic bag filled with them, Mr. Green said that Topshop sold "unusual units of a style," which would help Nordstrom with volume.

"The units are crazy," he said.

Still, he said the business was swinging heavily toward fashion, rather than plain T-shirts. "What I call basics, nobody wants to be in that business anymore; we used to sell one million T-shirt vests," he said, using the British term for a tank top, "in a season, and now it's 150,000."

The Topshop-Nordstrom courtship started when Pete Nordstrom got Mr. Green's phone number from his brother, and placed a call in late February to see if he were interested in a deal. Mr. Green said he had been approached by a number of retailers about adding Topshop merchandise, but he said he was not interested in being in a mass-market store - Topshop rarely discounts - and he did not want to be in a store where he'd be competing with other quick-turnaround brands.

Mr. Green was in Las Vegas when he got Mr. Nordstrom's call, preparing for the March opening of the Topshop store there. There was a Nordstrom in the same mall where Topshop was opening, and Mr. Green told Mr. Nordstrom he'd call him back. He bustled down to the Nordstrom, where he checked out the merchandise, then dragged the general manager and men's and women's merchandise directors back to Topshop so they could see what his brand was about.

"I said, now you can call your boss and tell him if it's any good," Mr. Green said.

Mr. Nordstrom flew down from Seattle soon after to meet with Mr. Green in Las Vegas. They toured each other's stores, then sat down over tea and cheesecake at a Nordstrom cafe to make a deal.

DQ 2

Marketing Segmentation

What are the different levels of market segmentation? Synthesize the segmentation strategies that manufacturers of personal computers should implement to attract both the Gen Y and baby boomer generation to increase their purchases of computers. Are there some examples of companies that have already done a good job of marketing across generations?  Respond to at least 3 of your classmates.