Member Exclusive   //   September 25, 2019

Legacy retailers are creating roles to unify e-commerce and physical stores

Nordstrom’s new COO could be a strategic bellwether.

The legacy retailer last week announced plans to promote Ken Worzel to chief operating officer. Before, Worzel had led the company’s digital strategy. Now, wrote Nordstrom in its press release, “Worzel is responsible for overseeing and bringing together Nordstrom’s digital and physical assets to create an end-to-end experience for customers across full-price and off-price.”

This is the first time Nordstrom has hired a COO, and it may be an indicator for future roles other retailers hire for. While the company has been trying to reenergize its core businesses, its executive structure has very much reflected that of a legacy business. The Nordstrom family has long been at the top of the business, and the roles have been fragmented by channel and department. This move, the retailer explained, “will allow the company to better serve customers across its touchpoints through a more holistic view of how they choose to shop and engage with Nordstrom.”

Nordstrom’s last earnings report points to its need to unify strategies. The company missed overall revenue expectations — bringing in $3.87 billion, as opposed to the $3.93 billion Wall Street estimated. At the same time, however, digital sales rose 7% — and represented over a quarter of the business’s overall sales.

The retailer has repeatedly maintained that its goal is to streamline its overall business and coalesce its strategies. This has long been a talking point for ailing businesses trying to bring about new growth. “What retailers have traditionally done,” said Neil Saunders, the managing director of GlobalData Retail, “is have a very siloed view of different parts of the business.” Often, teams are constrained to themselves, with a VP answering only to the CEO.

Look at a business like JC Penney, which has seven people on its executive team — one overseeing stores, another digital, another doing merchandising, and so on. This structure worked when the majority of business was conducted over one channel — namely in brick and mortar locations. “That made sense in the past,” Saunders said, “but it doesn’t really make sense anymore.”

The problem, Saunders explained, is that legacy businesses like Nordstrom are being forced to rethink their overall strategy. Consumers don’t see a meaningful difference between shopping online or in store, which means that digital and physical objectives need to be aligned. “It doesn’t matter if it’s online or in store — they are dealing with one brand. They want things to be very unified,” he said.

What’s more, one department may not be fully taking into account the entire picture. For example, a head of stores may be inclined to close a location because of poor store traffic. But someone on the digital team may have data that shows that the store helps drive online traffic.

Thus, the need for someone at the top who can handle all of these threads and braid them together becomes even more important as these retailers try to stay afloat. “Someone in retail in the organization needs to take a view across the business to make sure that it works properly and make sure there are decision being made that are logical,” said Saunders.

“If you look at Nordstrom’s longterm vision,” said Camilla Yanushevsky, equity research analyst at CFRA, “their vision is to lead by digital — just like the rest.” Currently, retailers — especially older ones feeling the competitive crunch of players like Amazon — are on the hunt for new strategic leadership. There’s been an increased talent grab among companies; PVH, for example, hired Ralph Lauren’s former CEO as its first-ever president, whose mandate was to strategically lead the company’s fashion brands.

While these roles can take on a number of names, the tying bind is that they are breaking down older silos. “You need a role that sits across all that,” said Saunders.

“For those day-to-day operations,” he went on, “you do need someone who brings it all together.”