Taylor Tenca



Bringing Customers Back to Retail StoresBy: Taylor TencaTopic Introduction The future looks bright for online shoppers, but what would the future look like if customers stopped shopping at retail stores? Customers have already stopped shopping in retail stores because of online shopping. It seems easier and more convenient to most customers, however online shopping is causing a change in the retail industry. Stores are shutting down, people are losing jobs, and shopping becoming no longer about the experience or customer relationship, it has become about one person and technology. The future of the shopping experience looks very dull compared to what shopping used to be. Shopping used to be a way of going out with friends or family, interacting with sales associates to find what you came in searching for. Imagine what shopping would be like as online sales continues to grow. Stores will continue to shut down, this leading to millions of people at lost with jobs. The retail industry would be crashing as a whole because the more people shop online the more decline there is in department store sales. What customers don’t realize is that in store shopping has more benefits than online shopping. Retail shopping is worth the experience. The problem is finding a way to bring customers back to retail stores. If stores want to bring customers back they need to continue working on customer relationship training, improve or adapt more in store promotions, show customers the benefits of shopping in stores, and remind customers what would happen to the future of retail if stores worldwide continue to close at the rate they are closing. Why Should People CareCustomers need to be reminded of the benefits they receive while shopping in retail stores. In store buying is about getting what you need, adding on wants, going out with friends or family, and connecting with a sales associate. Sales associates take pride in the store they work for because they understand the importance behind the buying methods in retail shopping. It is important to buy from a retailer because they buy directly from wholesalers, then sell in stores directly to customers. The clothing bought from the wholesaler has been selectively picked based on location, need, and current style of the direct retail store that purchases these items. It takes in depth research for retailers to determine what they want to purchase from wholesalers. This research determines if the customers will like the product and if the retail store will make a profit. When customers shop online, they are looking at a variety of options; no one is selectively picking out items based on location, need, or desire. The options on the Internet are endless, but the newest trends, weather, or customer want isn’t always clearly stated on the Internet. This is when retailers have an advantage over wholesalers; retailers can decide what specific products they want in the stores compared to wholesalers online. When shopping online customers miss out on the newest trends or the “fall must haves”, shoppers can try on the items in stores and leave that day with the outfit they wanted in hand. Online shopping limits the ability to try on clothing as well as leaving with the purchase at hand. This industry started hundreds of years ago with customer desire, customization and need first in mind. History and Background The history of retail began in the mid-19th century. Europe is where it all began, places like Italy and France are known for being home to the fashion industry. Today we still get the latest trends from European countries. Customer relationships began in the mid-19th century; clothing was homemade for customers that desired a need for fashion. The dressmakers and tailors customized the clothes to fit the customer exactly how they wanted it too. The dressmakers and tailors would visit the elite class during this time to fit queens or kings in the best-fabricated clothing they could get. This was an ongoing, process for the dressmakers and tailors because sewing machines hadn’t yet been invented. Clothing making didn’t become easier until the 20th century because technology was changing. The sewing machine was invented in 1846 and this made life easier on designers. The sewing machine changed the retail industry because clothing was being designed at a much faster rate. (Forsdyke,Graham.HistoryoftheSewingMachine). When technology evolves, so does this industry. This is why the industry is evolving to online usage; people are using more and more new uses of technology daily. Two brick and mortar stores that have become well known in the fashion industry are Nordstrom and Macy’s. Both of these stores have had to deal with the growth and impact online shopping has. One store has managed to retain customer retention while the other has dealt with the impact of online shopping in current stores. These popular opened in the 1900s, both stores started out small but grew drastically because of there customer experience, quality items, and up to date trends. Nordstrom and Macy’s are located in malls across the United States. But sadly Macy’s has had to shut down stores because the e-commerce market is affecting them. (Nordstrom.web) (Eby,Sanger.Macys) Since this first mall opened up in 1956, millions of malls have opened across the United States. The retail industry currently holds the greatest amount of job positions in the United States. Macy’s holds roughly 157,900 employee jobs while Nordstrom holds 72,500. Macy’s has opened roughly 425 stores across the country, but this year Macy’s will be closing about 100 stores nationwide. This is because of the change in the shopping landscape according to Matt Egan on Business Insider. Online shopping is turning into a global problem because retail stores are closing thus causing people to lose jobs. This is how much of an impact online shopping has had on this industry. The chart below represents the department store Macy’s stock numbers. The store has fallen 47% in sales since opening, the numbers are continuing to drop daily. Chart of Macy’s Decline in Sales (Matt,Egan.BusinessInsider) Macy’s is being affected by the online growth, it is struggling to differentiate from other retail stores, and it is now being thought of as the next Sears, according to Business Insider article Matt Egan. Nordstrom has managed to continue to grow; they will open up new stores and plans on opening a Nordstrom Tower in New York City in 2018. This store has learned to deal with online shopping and has managed to retain customers. Nordstrom currently has 334 stores open in the United States, Puerto Rico and since 2016 opened stores in Canada. (Nordstrom.web) Somehow the “Nordstrom Way” has managed to overcome some of the in store suppression from online retail growth. These stores weren’t impacted until the online shopping network began. Online shopping began roughly around the 1990s and has bloomed ever since. Online buyers purchase items directly from the wholesaler. Wholesale involves buying in bulk from the manufacturer (Difference, Between). Wholesalers don’t often buy based on quality they buy based on quantity, meaning how much they can get multiple items and how much profit they make when selling these items. This is what online retailers use when buying products. They purchase items directly from the wholesaler because it saves the purchaser money in the long run. Shopping in stores has its advantage because stores buy specific products that fit the stores needs, the shoppers’ wants, and location desire. Online shopping may be saving wholesalers money, but it isn’t saving customer’s money or time in many cases. When customers shop online they often have to pay for shipping charges and wait about five days before their items arrive at their house. In many cases items are backordered or lost in the mail. Online shopping has become so likeable because people admire it for its easy “click away” experience. This industry has grown 14.6 % from 2014 to 2015; researchers say it will continue to rise. The net sales of online shopping has brought in $341.7 billion during the year 2015, this is according to Internet Retailer’s article written by Stefany Zaroban. (Zaroban,Stefany.IntenetRetailer) Not only does online shopping effect the whole economy, but it affects the future of the fashion industry as a whole. As stores shut down, people lose jobs, businesses lose money, and major retail buildings are left at standstill, deserted. This is one reason people should go back into retail stores. Customers that purchase items online should think about the amount of jobs that have lost from the rise in website sales. Customers should continue shopping in stores because stores have in store perks, online pick up directly in the store options, and customers can deal directly with a sales associate. Bringing people back to clothing retail stores isn’t something that can happen over night, people need to be retaught the numerous benefits that are presented to them directly in front line stores. The customer satisfaction, care, product fitting, and sizing that started in the 19th century needs to be taught again. Stores should to reteach employees the importance of customer relationships. Retail stores should improve in store promotions, sales, upgrade or install online pick up within stores, and make the whole shopping experience enjoyable for customers again. If these changes aren’t made to drive customers back into retail stores the economy will be drastically impacted. The Future of In Store Retail The future of in store retail shopping looks very dull. The growth of online retailers is so easy because it can reach anyone with Internet. Traditional in store retail stores can’t compete on this level, they are only able to reach a certain amount of customers. Retail malls used to be the major drive to bring in customers however with the decline in customer traffic in stores, these malls are sadly closing. Downtown retail stores are also closing and about 12% of them are vacant. (Worstall,Tim.Forbes) Chicago is known for the magnificent mile, a high end shopping experience with hundreds of stores. Imagine walking down the magnificent mile only seeing vacant stores and employed workers because of this. Since 2006 nearly 15 percent of stores are 10 to 40 percent vacant. This is representing more than 30 million square feet. In reality about 10% or so of all retail stores are empty or closed nationwide. (Worstall,Tim.Forbes) According to the U.S. Department of Labor in 2020 the a million B2B sales reps will lose their jobs to e-commerce. This is broken down into four categories of B2B sales reps. Order takers, they process orders that customers take, explainers provide buyers with more information about products, navigators help buyers understand what the companies need to purchase and consultants, they have extensive knowledge about the buyers company. (Paul. InternetRetailer). These jobs were once very important to retail stores because it determined how products were brought into the stores and chosen. These jobs are still important today, people however value online shopping because of how accessible it is; shopping in stores doesn’t seem easy to many customers anymore. Retailers need to care about bringing customers back because if this averaged outcome holds true, in 2020 millions will be at loss of jobs. It helps the economy operate when stores are open and running, it allows jobs to continue to grow when in store traffic operates. “More U.S. jobs directly or indirectly relate to consumer spending than to all other sectors of the economy combined” (MonthlyLaborReview). When customers shop online it costs companies less because they are buying directly from the wholesaler. Customers spend more money when shopping in stores because they are buying items that they may have not seen when shopping online, along with in store purchases as a whole help the economy drive in money as opposed to online purchases. Pros of The Future of RetailBringing people back into retail stores isn’t only good for the economy but it is has good health benefits as well. People who shop online typically are sitting down, and purchasing items at a click of a button. Retailers should promote the health benefits of shopping in stores to also bring customers back. Retail therapy is beneficial to your health. (Bortz,Daniel. Money.US.News) When customers need something to take their minds off of something shopping is often the first thing people think of. Retail therapy allows customers to feel more confident and happy. This happens when customers enter retail stores, a feeling of comfort often hits these customers. According to Dr. Yarrow from Psychology Today, she states that 62% of shoppers buy things to cheer up and 28% buy as a form of celebration. (Yarrow. PsychToday). When people shop in retail stores they are often shopping with a family member, significant other or friend. In most cases people are shopping to purchase gifts or treat themselves. Retailers should promote healthy life styles and happiness when customers enter a retail store and leave with something they desired. Bringing in customers to stores may also be as easy as telling customers that dressing for success is proven to work. Stores can host dress for success fashion events in stores to drive customers in, this event will focus on the outcomes of retail therapy and confidence that comes from within a person when they look nice. Stores should adapt more promotional events to drive in more customer revenue. In Store Coupons and PromotionsHaving promotional events and anniversary sales is something that can save stores from online sales as well. Nordstrom is a store that has managed to create an in store sale for customers, and this sale has worked keep there retail stores alive. Nordstrom first started this sale when they realized that this store wasn’t getting enough customers during the dry summer months. This is where the anniversary sale was put into place. The sale is set during the summer months; it usually begins towards the end of July and goes until the middle of August. This isn’t a normal sale with coupons or used for discounts on already sold merchandise. The anniversary sale at Nordstrom sells the newest fall and winter merchandise before it hits any other stores. This merchandise is discounted store wide 40% off. Customers enjoy this sale because the items haven’t been on the floor at all and these new trends are marked off. The sale works in a course of weeks over the summer with some criteria. When the sale first beginning Nordstrom sets aside the new fall and winter merchandise for Nordstrom cardholder members only. These cardholders are the only ones who have a first look at the sale. This is why Nordstrom has managed to outshine other companies like Macys or Sears. This sale is unique to cardholders, and if someone is a Nordstrom Card holder they are very loyal to the company. The sale itself not only promotes Nordstrom but it gains customers attention because of the new merchandise and incentive to become a Nordstrom Card holder. The sale becomes open to the public a week after it has been open to card holders, many times the top fall or winter items will be sold out. This selling strategy is very clever because it makes customers want to go into this retail store and shop the newest products. Stores such as Macys or Sears haven’t adapted this type of promotional event. These stores use basic selling strategies that sometimes work, such as coupons or in store sales on old merchandise. Retaining customers and bringing customers into retail stores is what stores main goal should be. Other storewide events and promotions that could bring customers in could be private party events, major life event promotions, family day out events, and coupon usage. Pros of Coupons and PromotionsMany retailors today use coupons to help promote from within the store. Some store coupons are only valid when customers shop inside stores. This is another way to drive customers into retail stores. Many stores today have coupons that are valid during a specific season or store event. Kohl’s a major department store uses technology to drive in customers, the shopper’s smartphones hold coupons for in store use. “Kohl’s, for example, is testing real-time, personalized offers in five of its stores. Shoppers who walk into one of those stores can opt in for offers via their smartphones.?So if a shopper lingers in the shoe department, for example, they’ll receive a coupon based on “the shoes they looked at online but never bought,” Rometty said” (Forbes, Thau Barbara). This is helping Kohl’s in store sales because it is proven that customers are more likely to respond to an offer when it’s right in front of them rather than purchasing online at home. This technology advice is genius because when shoppers browse online they often don’t buy items because they don’t know if they will fit or look the same in person. This clever technology device Kohl’s created will help bring customers into the store to try on the item as well as buy the item in the store. Macy’s also uses coupons from within the store during holiday events, such as black Friday sales, and promotional offers in the store. In fall of 2015 Macy’s set out an experiment to change its clearance policies. The department store tested 40 stores around the country. The test results found that when customers were shopping at Macy’s they typically went to one clearance section for men and one for women. However, Macy’s has many clearance sections offered around the store. Macy’s also found that customers preferred clearance price tags that reflected the final sales price. After doing some more research Macy’s determined how to get customers to view more than one type of merchandise by rolling out a “Last Act” clearance section in stores nationwide. (Eby,Sanger.Macys) This section will be in one area, this makes it easier for customers to view more, and opposed to the one clearance section they were viewing before. The “Last Act” will be designated with a banner and clearance items will have prominent tags that allows the items to stand out. Macy’s has been cutting jobs because of the decline in sales and will cut 4,000 jobs in January and closing stores nationwide. But the department store itself believes that more store wide promotions, coupon usage, and “last call” events will help bring in cliental. Macy’s still is one of the best preforming stocks, they just need to adapt to changes in this industry (WGN, CNN WIRE). The last call clothing items are also marked down to the price customers will pay plus taxes. Coupons will not work on these items, this is another way Macy’s has figured out how to drive in store sales. This is a way to make shopping easier for customers. Before when customers could use coupons on discounted items there was a lot of math, according to Macy’s spokesperson. The clearance items price is simple and clear to customers. Coupons that Macy’s sends out via email, text message, or snail mail is used for items in the store with no discount already. This allows customers to still get a discount on current merchandise, rather than waiting for the merchandise to be put in the “last call” section of the store. Macy’s and Nordstrom shoppers are loyal customers and devoted in purchasing items from these retailors. Both stores have store credit cards. Nordstrom uses the store credit card to its advantage buy hosting a yearly anniversary sale. The Nordstrom credit card also offers free tailoring in the store, and is based on a point system. Nordstrom card holders get more perks when they spend more. The store offers a triple point day for shoppers once a year, and instead of these shoppers getting the normal discount when they use their card they receive more points. At Nordstrom when shoppers buy items on their credit card they receive points for however much they spend. For every $100 dollars spent at Nordstrom while using a Nordstrom card, members get $20 back in the mail in a form of a coupon, called a Nordstrom Note. During the triple point values triple, which makes Nordstrom cardholders spend more on this triple point day they chose. The card all-together allows customers early access to the anniversary sale, VIP in store events, private holiday shopping party events and Nordstrom Notes. (Nordstrom.web) This is how Nordstrom has managed to gain and retain customers. More than 50% of the customers that shop at Nordstrom have a Nordstrom card. Macy’s also uses credit card to receive discounts and store promotions. The Macy’s credit card offers travel benefits, different levels based on annual household income, as well as surprise savings at the register when customers check out and shopping rewards. Both credit card forms from Macy’s and Nordstrom allow the stores to retain current customers and introduce new customers. Negatives of Coupons and PromotionsMany customers shy away from the use of credit cards in retail stores. Some customers don’t have enough store credit to open up a card, others don’t shop at the store often enough to enjoy the perks of the credit card. This is why some people often deny the option of opening up an in store promotional card. If customers don’t believe they will receive the benefits when shopping they won’t open a card. Other customers have coupons that they forgot they have that expire over time. This is what usually happens to those customers who shop at Kohl’s or Macys. These customers bring in the coupons and want to purchase an item of interest to find out that the coupon has expired. However the expiration date of the promotions and coupons in stores is often waved to satisfy customer needs. Stores would rather make a sale than have a customer leave empty handed. Conclusion of Coupons and PromotionsAll store credit cards offer a type of benefit, but overall the more shoppers spend the more they save. Stores need to change shopping experiences to retain and bring back customers. Macy’s did this in 2015 by introducing the “last call” event and Nordstrom does it by hosting events such as the Anniversary Sale at Nordstrom in July. Online Pick-Up in Retail StoresThe new convenient way to bring customers back in retail stores is intended for online shoppers. These shoppers want items right away, they don’t want to wait for shipping. Popular name brand stores such as Apple, Best Buy, CVS, The Container Store, Dollar Tree, and retail stores such as Gap, Banana Republic, JCPenny, Nordstrom, Macy’s and Sears have adapted the shop online pick up in store method. Survey of Stores People order online and pick up in store(Demery,Paul.InternetShopping)Pros of Online Pick-Up in Retail Stores Online pick up in stores allows the customers that prefer shopping online to pick up the items they viewed online directly from a store near them. This is how this method of shopping works, first customers when shopping online chose a location by entering their zip code to filer their shopping selections and categories. The next thing online shoppers do is browse the options given to them and they can pick items and add them to their online shopping cart. Once they have finished shopping they can complete the checkout by paying for the items online, and picking the nearest store to pick up these items at. When customers get to the store they bought items from they go to the nearest service bar, present their ID and credit card used at checkout and get the items directly that day. At some locations customers can also call the store customer service phone number and have someone walk out the items directly to their car. The perk of online shipping pick up in stores is customers don’t have to wait for their order to get shipped, they have no online shipping cost, and they can try items on in the store directly. Trying on the items in the store is something that benefits customers because they can get a new size, color, or alteration the day they made the purchase. This allows for an easier shopping experience for customers because they don’t have to deal with returns, exchanges and out of stock items. A survey conducted August 2016 found out why customers prefer shopping online and picking up in stores. Reasons To Shop Online and Pick up in Stores(Demery,Paul.InternetShopping)Negatives of Online Pick-Up in Retail Stores Customers that shop online often shops for convince. These customers don’t like the hassle of shopping in stores. The inconvenience of picking up items in stores could be based on the location of these specific customer or the customers need. Often times the customer is shopping online because the store has no more stock of the product they need, or the product is only offered online. If this happens to the customer they should call the nearest store and see what the retailer can do. In almost all cases when shoppers want something sooner and without shipping charges going directly into the retail store is best. This way a customer can wave shipping fees and sometimes get the item quicker than needed. For customers that enjoy shopping online, going in store is where customers receive quick, direct responses. Conclusion of Pick-Up in Retail StoresWhat customers don’t know is that picking up in stores is benefiting the in store retailer more than they are aware. When customers order these online items they may have narrowed the search engine to one specific item, one color, and one type of style. When customers pick up items in stores they often browse the store and look at items they may have not viewed online. Last minute items can also be purchased at this time for customer convince. For example a customer may purchase a dress online and try on the dress at Nordstrom when they go in and pick up the dress. When the customer tries this dress on at Nordstrom the sales associate will typically accessorize the dress with jewelry, undergarments, shoes, and offer a second dress to view. When this happens the customer can visualize what the dress is supposed to look like when she is the dressing room. It has been proven that people buy outfits rather than single items. When the sales person creates this ideal look the women will most likely chose the shoes and jewel to complete her look in the dress. However some customers don’t need to accessorize or add extras to the items they purchase but they may need alterations. At Nordstrom this women who tried on her dress may need a hemming or zipper alteration, in this case she is receiving the in store service she wouldn’t have viewed online. The sole purpose of online pick up in stores is to get people to try on items, get items in a timely way, and add on items in the store they may have not viewed online. This method of bringing customers back into retail stores is brilliant because it gets customers into the store, dealing with sales associates face to face. The Shopping Experience Shopping used to be about, the experience of shopping, customer satisfaction, and the sales associate. Customers prefer shopping online as opposed to in stores because customers are often turned away from sales associates. Sales associates are often thought of as slimy, non-caring people who sell customers items to sell and not because they care. However this is not the case in many situations. Sales associates want customers back into stores to help the department store itself and give customers the shopping experience they are missing out on when shopping online. One of the reason’s Nordstrom’s has managed to stay away from store closings and job losses because they have excellent customer experience. Their customer experience is what drives customers into Nordstrom. This stems from the sales associates and direct shopping experience customers experience at Nordstrom. Companies that are losing in store business should retrain employees on customer experience and expectations. Pros of the Shopping Experience Nordstrom is known for its hands on sales associates, dressing room experience, easy return offer, and overall experience. Nordstrom is known for hiring the best of the best. According to Forbes article “What Any Business Can Learn From Nordstrom Customer Service” by Micah Soloman. (Soloman,Michah. Forbes) Nordstrom is a company that any business can learn for because of their customer experience that began in 1901 (Nordstom.web). When customers enter Nordstrom a sales associate often greets them right away. This particular sales associate went through an interview process, training session, and floor practice before he or she was ready to sell directly to the customers. After the customer is greeted the sales associate may ask if you are looking for something specific or if you are just browsing. After this point the sales associate at Nordstrom will often let you browse on your own throughout the store and check on you when you’ve picked out a few items. Once the customer has items in hand the Nordstrom sales associate will then assist the shopper with a fitting room all the way to the check out counter. The fitting experience is something customers often remember from Nordstrom. The sales associate will open a room for the customer shopping, add the clothes they have selected, and add on items to the sale that they believe the customer will like. This happens after the customer and sales associate have made a sincere connection. The customer at Nordstrom in the fitting room is also offered water, different size options, and different clothing items while they try items on. Nordstrom strives for excellent customer experience and has been so successful from word of mouth. Nordstrom lets the customers experience speak for itself.Negatives of the Shopping Experience Today people can research latest styles and trends online. Why would customers what to associate with a sales person directly? Customers who shop online know what they want and don’t want to be bothered by sales associates or in store buy ins. This is why customers are often shying away from the shopping experience. Online are shoppers becoming so acquainted with the comfort of their home, computer, or tablet they shop on and no one to question or bother the shopper when shopping. This is where problems arise, online shoppers are missing out on the experience when they chose to shop online. Example of a good Shopping Experience One example of a great Nordstrom customer experience is the tale of the lost diamond. A woman was shopping at Nordstrom in North Carolina when she realized she lost her diamond from her wedding ring. A worker at Nordstrom noticed what was going on and joined in the search for the diamond ring. After searching floors in the dressing room the workers decided to go through vacuum cleaners from the night prior. They opened up the vacuum cleaners and found the shiny diamond. This is what Nordstrom calls customer experience, they go above and beyond to satisfy customers needs and make an everlasting relationship. Stores should adapt these genuine sales techniques that has made Nordstrom so successful over the years. Customers want to shop at Nordstrom. If employees get retrained to sell, serve, and style customers may want to return to in store shopping once again. Conclusion Shopping used to be a day event for friends and family to get together and experience. Customers however have lost sight of this way of shopping and have turned to online retail. There are many ways to retain customers in stores once again. Retail shopping started as designing clothing for a particular client, tailored to the clients needs. The retail industry has grown vastly since it began, but this industry is slowly shutting down from online sales. Customers value the idea of online sales because it is convenient, at hand, and you can view many stores at one click of a button. What customers need to remember when shopping online is the impact they are making on stores. People that shop online are impacting in store retail stores. They are impacting job losses and store closings. Top retailor stores have closed hundreds of stores due to the drive in online shopping. Aeropostale has closed 154 stores, Sears has closed 78, Sports Authority has closed 460 stores, and Macy’s will close 100 stores by the end of 2016. The numbers have proven to show the impact of online shopping on department stores nationwide. Customers need to once again be aware that online shopping comes with shipping charges, item backorders, delayed in shipping, and searched viewing. In order to bring customers back into retail stores need to focus on driving up sales through in store promotions, customer trainings, online in store pick ups, and make shopping exciting. It has been proven that Nordstrom displays the best customer experience and has been ever growing since the company began in 1901. Companies such as Macys and Kohl’s have lost sight of the big picture and mainly focused on the money side in this business. These companies and other retailers that have closed need to focus on sales training to drive in customers. Word of mouth is what has made Nordstrom so successful. When people receive a great customer relationship they may share it with a friend who will visit Nordstrom and share his or her experience with someone else. Becoming invested in the connecting and caring about the customer needs and wants is why retail first began. It started with fittings, designing, and customizing for one specific customer need. The experience is what keeps customers coming back, promotions, coupons, and credit cards get customers in the door but if they have a bad experience they will most likely turn to on line shopping. The problem isn’t online shopping over; the problem is stores aren’t working on retaining customers. 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