Nordstrom’s [JWN] acquisition today of Trunk Club (a personal shopping service for guys who hate to shop but want to look good) is reported in the business press today with all the right financial reasons: scale, financial strength, distribution efficiencies, etc. Sales may double to $100 million according to its founder, Brian Spaly, the chief executive at Trunk Club.
Nordstrom’s acquisition increases its footprint in the booming [14%, Bain] global luxury menswear market and expands its reach. These are impressive operational wins.
Strategically, the value may be much higher. The Trunk Club acquisition gives Nordstrom an almost turnkey capability for scaling its popular personal stylist service. Imagine what would happen to Nordstrom’s $2.8 billion quarterly sales if all of its customers had access to hundreds of brands, their own personal shopper, the ability to return anything that didn’t fit, and fashion advice—all without having to go to the store. Imagine again what those numbers might be if Nordstrom’s used Trunk Club’s road-tested personal shopping solution to give new customers a taste of the Nordstrom’s brand experience.
In retail, fit matters. Nordstrom is known for having one of the best retail customer experiences in the business. Trunk Club may turn out to be a near-perfect cultural fit. It has a few stores, but most of its sales are done through virtual personal shoppers who are accessible through the company’s website, app, phone, and email. The shoppers know how to answer men’s questions, build their wardrobes, and help them feel confident about spending more on clothes than they are used to. Trunks contain both requested items and surprises from the shopper arrive by FedEx. Kept items are paid for. Returned items are not. Shipping both ways is free. The customer support is an on-brand blend of personal and automated.
Nordstrom’s Trunk Club acquisition achieves a triple bottom-line benefit. Shareholders get a good investment and potential upside around scaling the personal stylist service. Employees get to engage with new partners who share values and appreciate each other’s skills. Finally, customers should benefit from expanded services and an even better experience.
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