In its winning pitch, the agency focused on taking a look at how the retailer known for its liberal return policy and live piano performances would position itself for the future.
"The word advertising never came up" during the review, said Mark Goldstein, president of integrated marketing at the agency. "One of the questions we asked was `Why didn't you call McKinsey or the Boston Consulting Group?' "
Nordstrom's response, he said, was that the retailer wanted to "have a strategic consultant that understood a product needed to be delivered at the end, and that product was advertising, signage, store design."
STRATEGY WINS TWICE
It's the second time this year a high-profile agency review was won by a shop focused on marketing strategy. Earlier, Levi Strauss & Co. executives said they selected TBWA Chiat/Day, San Francisco and Venice, Calif., on the basis of strategic thinking.
Traditionally, Nordstrom uses a regional approach to merchandising and marketing; regional buyers select products for individual stores.
Similarly, regional executives have controlled advertising in their markets. Elgin DDB, Seattle, continues as Nordstrom's agency for broadcast creative and media buying for all divisions. Print is handled in-house.
With 95 stores in 22 states, Nordstrom is evolving from a regional chain to a national presence, and refining those systems. The retailer, with stores in about half the nation's 50 major metropolitan markets, plans to be in all those cities at an unspecified date in the near future, said a Nordstrom spokeswoman.
NEW MANAGEMENT SYSTEM
A new management system has been adopted that allows for some consolidation in merchandising.
Those efforts may carry over to marketing as well. "There are some organizational things they need to support their `nationalness,' " said Mr. Goldstein.
One Wall Street analyst indicates Nordstrom is becoming more conscious about store returns, the centerpiece of its customer service acumen imitated by many competitors. The company spokeswoman, however, said there has been no change in Nordstrom's return policy, which is handled on a "case-by-case basis with the ultimate objective of satisfying the customer."
Nordstrom also plans to better size its stores, filling in with smaller units that will produce marketing efficiencies.
The budget for the national branding assignment was not disclosed, but executives at two different agencies involved in the pitch said the assignment was desirable because of the marquee name that would be added to the winning agency's roster.
The company spent $44.3 million in measured media in 1997, according to Competitive Media Reporting, a 20% increase over '96.
"Billings are absolutely irrelevant," said Mr. Goldstein. "It may be about advertising at some point. Anybody looking at this through a traditional lens was absolutely minimizing the wonderful opportunity Nordstrom was presenting."
The review, conducted by Select Resources International, West Hollywood, Calif., narrowed to three finalists in addition to Fallon. Two, N.W. Ayer & Partners, New York, and Richards Group, Dallas, dropped out close to final presentations.
Saatchi & Saatchi, Los Angeles, was the other finalist.