Nordstrom Turns to Electronic-Gifting Service Amid Shift Online

(Bloomberg) -- Nordstrom Inc., fighting to stay relevant with consumers who are shifting their spending online, is letting shoppers digitally send each other presents this holiday season.

The upscale retailer has partnered with CashStar Inc., which provides the software that retailers use for physical and digital gift cards, to let customers e-mail specific items from the retailer’s website to people on their holiday lists. Recipients can accept the items that appear in their inboxes and have them shipped to their doors, exchange the merchandise for something else or accept the value as a gift card.

“As far as gifting goes, there’s this balance of convenience and thoughtfulness, and we’re going to continue to strive to help the customer navigate that,” Sean Burrow, director of gift card at Seattle-based Nordstrom, said in an interview.

Nordstrom is testing the e-gifting platform on its full-line website, Burrow said. While gift-card sales surge during the holiday season, the retailer expects the feature to be useful year-round. Nordstrom’s gift-card sales are increasing across all channels and have been exceeding the company’s overall growth rate, Burrow said.

Nordstrom is betting the new option will set it apart from mall-based rivals and help it win over last-minute shoppers who are looking for convenience. Gift cards topped the list of most-requested items by consumers for the 10th year in a row, according to the National Retail Federation. Still, almost half of buyers said they were reluctant or unwilling to buy gift cards because they’d rather wrap up something more personal, according to surveys by Portland, Maine-based CashStar.

E-Commerce Push

Fighting declining mall traffic, Nordstrom has added new e-commerce options to reach customers where they browse. E-commerce accounts for more than 20 percent of sales, up from 8 percent five years ago, the company said earlier this year. In 2011, Nordstrom bought flash-sale website Haute Look, and in 2014, it acquired the online styling service Trunk Club. Those investments, coupled with the additional related marketing and fulfillment costs, have caused expenses to outpace sales, Chief Financial Officer Mike Koppel said on an earnings call in February.

“We know our customers are shopping for gifts online, and we’re focused on providing them an easy experience there,” Burrow said. “What we’re trying to do for the customers is make it an easy place to shop, whether they’re doing that online or in stores. ”

CashStar plans to offer e-gifts through other retail partners. One benefit they’re touting to retailers is a chance to reduce returns. About 15 percent of total holiday sales, or $90 billion in goods, were returned last year, according to the NRF. In addition to losing a sale, returns create headaches and expenses for retailers that have to process those goods and determine which can be resold -- often at a discounted price. 

E-gifts eliminate that inventory risk for retailers and the chance recipients will get the wrong product or feel they received something impersonal, CashStar Chief Executive Officer Ben Kaplan said in an interview.

“While we can power a gift-card experience, we want to deliver a great experience for the gift giver, a great experience to the gift recipient, and a great value to the retailer,” Kaplan said.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net. To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Kevin Orland, Lisa Wolfson