Types of Corporate Diversification
The unique thing about Nordstrom is the way in which they view their own operations. It has been reported that the company views its operations in terms of full-line and off-price brands, rather than by offline or online channels, which emphasizes the importance of its brick-and-mortar stores for overall sales. The company takes the position that it is the combination of both their physical and digital assets that give Nordstrom its competitive advantage.
So for now, let’s turn to look at Nordstrom’s corporate diversification strategy. A firm implements a corporate diversification strategy when it brings in multiple businesses within its boundaries. Firms vary, though, in the extent to which they diversify the mix of businesses they pursue. Diversification strategies can range from what is known as limited corporate diversification to related, as well as unrelated strategies.
Related Corporate Diversification
A firm implements a strategy of related corporate diversification when a firm begins to engage in businesses in more than one market or industry and moves away from being a single-business or dominant-business firm. When a firm’s multiple lines of business are linked but revenues are no longer dominated by more than 70% of a single market, then the firm has implemented a corporate strategy of related diversification.
Nordstrom attributes a good deal of its success to investments in its retail proposition and diversification into off-price and the development of an omnichannel plan. Furthermore, Nordstrom’s own labels are one major factor in aiding customer retention because it allows customers to focus on uniqueness and differentiation which is so popular in the fashion industry anyway. This type of strategy implemented by Nordstrom is one known as “related constrained”. A related constrained diversification strategy is one where all markets in which a firm operates share a significant number of inputs, production technologies, distribution channels, similar customers, and so forth. Therefore, Nordstrom meets this definition of operating under a related constrained diversification strategy because its other businesses-Nordstrom Rack, HauteLook, TrunkClub and Jeffrey are all operating together and sharing the same production technologies, distribution channels, and similar customers that are loyal to the Nordstrom name.
Source: https://www.retaildive.com/news/nordstrom-stands-out-among-faltering-department-stores/449149/
Styled Strategy 