Macroeconomics Term Paper
Jonathan Mendoza
May 10, 2016
Introduction:
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Nordstrom was founded in 1901 and is currently headquartered in Seattle, Washington.
The company began from a small shoe boutique to now, the leading fashion specialty retailer.
Nordstrom positions themselves as an upscale specialty retailer offering great quality in
everything for the whole family. This includes furniture, infants, kids, men’s, women’s designer
wear, handbags, jewelry, and a Pop-In shop every month. The Pop-in shop features 12 new
companies or brands every month, for example one month may be Sugar Paper or the other
month may be Nike. Nordstrom serves a large number of 121 full line stores in both the U.S and
in Canada, 197 Nordstrom Rack locations, 5 Trunk Club Clubhouses (personal styling service),
and one clearance store. They are very well known for having a relentless drive for customer
service. Nordstrom takes pride in not only delivering the best shopping experience but also
inspiring clients and new customers to possess style rather than simply a place to capture
wardrobe pieces.
Seventy-one years after the first opening of Nordstrom’s shoe boutique they became
public and decided to rename themselves as Nordstrom, Inc. During the time span, the once
independent shoe store expanded their wings, offering women’s clothing by purchasing Seattle-
based Best Apparel in 1963. A few years later, Nordstrom purchased another fashion retailer,
adding a selection of men’s, women’s, kids, apparel and shoes. By 1973 Nordstrom surpassed an
annual sales of $100 million and became recognized as the largest volume fashion specialty store
in the West Coast. Nordstrom continues their extraordinary success by partnering with luxurious
upscale European collections including Faconnable and Jeffery. Focusing on their customers
lifestyles and new updates, online shopping became a new platform for Nordstrom clients which
started in 1998. Furthermore, just recently in 2011 Nordstrom acquired a Los Angeles based
Hautelook and became the leading U.S. retailer for selling renowned British brands.
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As of today, Nordstrom reached a new record of net sales. A total of 2.6% overall
increase, from $13.1 billion in 2014 to $14.2 billion in 2015 fiscal year. However, there has been
a recent movement with Nordstrom, a huge increase in new openings of Rack discounted priced
stores. Because of this growth in operating more discounted retailers, Nordstrom stock prices fell
at a percent of 36.4 in 2015 vs. 2014 stock prices. This may be the cause of previous economic
problems. However, Nordstrom’s increase in net sales proves that they have been steady in the
economy after slightly dropping in 2011. Every fiscal year they increase an average growth of
1.8%. Unfortunately, it is not enough to hold them in economy scale in terms of credit.
According to Standard & Poor’s credit analyst, “U.S retail sales rose 0.2% in January, after
growing the same rate in December 2015. This was slightly below Standard & Poor’s Ratings
Services expectation of 0.3% growth for one month.” (Hong 2016)
Consumer Confidence:
There was a trend at the end of 2015 and beginning of 2016 where consumer confidence
was at a peak, reaching a number of 81 to a 96.1 in terms of confidence levels. However, within
the past two months consumer confidence had declined moderately. The index now stands at
94.2 down from 96.1 The graph below shows the confidence levels either increasing and
declining over the past year by month. To capture confidence levels, Confidence-board.org
focuses on three areas; how consumers view prospects for their own financial situation, how they
view prospects for the general economy over the near term, and how they view prospects for the
economy over the long term. Each question is displayed to 5,000 U.S households in a survey of
50 questions which tracks a different aspect of consumer attitudes and expectations.
(Confidence-board.org, 2016)
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In addition, analyst at Tradingeconomics.com indicate that the numbers have been the lowest
since September of 2014. They also warn that inflation rate for the next year is seen at a seven
month high. (“Tradingeconomics,” 2016)
There has been a consensus that the economy is still recovering from a perilous state.
However, with the unemployment rate decreasing over the past 5 months, consumer confidence
