October 27th, 2015 ORACLE OPEN WORLD | NORDSTROM
The information in this report is highly confidential and should not be disclosed to persons outside of the Company in order to protect the Company's competitive position. Your copy of this report should be properly handled, should not be copied, and should not be left out in the open where unauthorized individuals could have access to it. In addition, this report contains insider information, and it is a violation of federal law to make use of this "material nonpublic information" in making investment decisions. It is also a violation of federal law for any employee to reveal material nonpublic information to anyone outside of the Company, or to recommend to anyone a transaction in stock of a company about which the employee has material nonpublic information. This practice, known as "tipping", violates federal law, regardless of whether the person providing the information or recommendation derives any benefit from the "tippee's" actions. Please call the Corporate Secretary if you have any questions regarding the Company's Insider Trading Policy.
SAFE HARBOR
3
AGENDA
Company Overview 5-Min
Solution Evolution 5-Min
Canada 5-Min
US Rack Stores 10-Min
Future Phases 5-Min
1
2
3
4
5
4
COMPANY OVERVIEW Nordstrom – Since 1901
• 121 full-line stores (US, CA & PR)
• 194 Rack locations
• 5 Trunk Club clubhouses
• 2 Jeffrey boutiques
• 1 clearance store
• Online in 96 countries
through Nordstrom.com
• Online in 3 countries
through nordstromrack.com &
HauteLook
Commitment to happy, loyal
customers through product
selection and service
Our #1 Goal is to improve
customer service
• Free shipping
• Free returns
• Mobile shopping
• Exciting new retail
partnerships
We offer a fresh, relevant
shopping experience and
inspiring style
5
OUR STRATEGIC JOURNEY – ONE NORDSTROM We have been on a strategic journey to deliver growth expectations and focus on how we “link our boxes” to bring One Nordstrom to life for our customers
2010 2011-2013 2014+ Raising our Ambition
Refocus on Growth
Raised top-line goal 33%
Building out the Boxes Through Strategic Development
Linking the Boxes so Whole > Sum of the Parts
.com
.com
.com
.com
. 2012 Young Customers
Manhattan Canada
2011 Increased store
growth
2011 Build Best-in-Class
Offer
2011 Hautelook
2013 NRack.com
6
SYSTEMS OVER TIME The core of our solutions footprint is a highly integrated and customized RMS9 platform that is no longer scalable or sustainable
Perpetual Inventory Multi-Channel Perpetual Inventory Merch Roadmap
FLS Rack & Private Label
Real Time Inv.
Integr. Buy Plan
Buy Online Pick Up In
Store
Single View of
Inv
Sales & Ret. Align
Extended Online Offering / International
New Selling Formats / Personalization
Direct to Cons.
Business Initiatives
2001 2016 2003 2005 2007 2008 2010 2011
RMS System Complexity Over Time
E-Commerce
Rack
Full Line Stores
% of Sales
7
ENTERPRISE FOUNDATION | SCOPE
8
TECHNOLOGY TO ENABLE FUTURE GROWTH
NMG Business Goals
Acquire and Migrate Customers
Enable Growth
Bring One Nordstrom to Life
Improve Product Relevance
1 Enable Canada Expansion
2
3 Support Rack (Off Price) stores as a separate entity
Sustain Company Growth
Need to Deliver
Current Reality System Capacity
Highly Customized
Business Growth Constrained
Org Effectiveness is Compromised
No system support
4 Maintain upgrade path & leverage our investment
9
77
HOW WE OPERATE
6+ year program, replacing current enterprise foundation
solutions & delivering new systems with capabilities that are
scalable to our company growth
PROGRAM OVERVIEW
10 10
Phase 1: CANADA
SUSTAIN CURRENT SYSTEMS & CHANGE MANAGEMENT
2014 2015 2016 2017 2018
NGEN IMPLEMENTATION PHASES
Stabilize
Stabilize
Stabilize
Phase 5: Full Price
Phase 2: US RACK STORES
Phase 2.1 : Canada Racks
Phase 4: Canada Full Price Instance
Stabilize
Discovery
Discovery Stabilize
TODAY
.com
.com
.
Phase 3: Online Off Price
11
NGEN | PHASE 1: CANADA Canada Opportunity
Benefits & Lessons Learned
Benefits:
• Small Footprint
• Greenfield Implementation
• Core Canada Leadership Business Team
Lessons to Carry Forward:
• Setting fixed end-date forced decision-making rigor agility
• Obtaining Business buy-in was critical to staying the “vanilla” path (would not be viable in the next phase)
• Leveraging Retail Reference Library best practices
• Onsite go live support increased ability to react to issues
• Assessing Skills & Capabilities, fill gaps and build teams for the future
FY14 FY15
Phase 1: Canada Full Price
Solution Footprint
Stabilize
• Price Mgmt.
• SIM
• Merch Foundation (Item, supplier, Purch Order Mgmt.)
• Trade Mgmt. (New)
• Invoice Match (New)
Vancouver
ON TIME & ON BUDGET
12
CANADA | VANCOUVER
13 13
Phase 1: CANADA
SUSTAIN CURRENT SYSTEMS & CHANGE MANAGEMENT
2014 2015 2016 2017 2018
Stabilize
Stabilize
Stabilize
Phase 5: Full Price
Phase 2: US RACK STORES
Phase 2.1 : Canada Racks
Phase 4: Canada Full Price Instance
2019 2020
Stabilize
Discovery
Discovery Stabilize
TODAY
.com
.com
.
Phase 3: Online Off Price
NGEN IMPLEMENTATION PHASES
14
NGEN | PHASE 2: US RACK Off Price Opportunity
Benefits of OP First
Benefits
• Removes Off Price volume from RMS9
• Allows Off Price to continue to scale at projected rates
Key Considerations
• 1st Customer on V14.1 & our first RMS upgrade ever
• Challenges staying vanilla (additional integrations, key functionality & Performance)
• Additional complexities required additional structure and optimized operating models
FY14 FY15 FY16
H1 H2 H1 H2 H1 H2
Store Inventory Management
Merchandise Operations Management
Store Inventory Management
Go Live
V14.1 Upgrade
Conversion & Enhancements
By Store
By Div/Dept.
15
US RACK | LESSONS LEARNED & STATS Lessons Learned
Resources & Services
• Program Mgmt. Office (Arch Review Board / Change Control Board)
• Business & Solution Architecture
• Testing & Platform Architecture • Test & Environment Automation
• Dedicated & Collocated Resources • Change Readiness & Service Introduction
Complexity
• Size & Scope
(upgrade & initiative)
• Implementation Planning
• Level of Integration & Interdependency
• Supporting Organizational Operating Model
Executive Sponsorship
• Champion Change • Remove Roadblocks
Stats
109,000 Days of Effort
13,500+ Employees Impacted across 9 business organizations
300+ team members across business & IT
40+ Systems & 700+ Interfaces Impacted
200+ SMEs Engaged
16 16
Phase 1: CANADA
SUSTAIN CURRENT SYSTEMS & CHANGE MANAGEMENT
2014 2015 2016 2017 2018
Stabilize
Stabilize
Stabilize
Phase 5: Full Price
Phase 2: US RACK STORES
Phase 2.1 : Canada Racks
Phase 4: Canada Full Price Instance
2019 2020
Stabilize
Discovery
Discovery Stabilize
TODAY
.com
.com
.
Phase 3: Online Off Price
NGEN - IMPLEMENTATION PHASES | FUTURE
17
Q&A
18