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Nordstrom is streamlining some of its fulfillment operations in California as it further pushes to cut costs and delivery speed.
CEO Erik Nordstrom said Thursday during an earnings call that the department store’s full transition of operations from a San Bernardino fulfillment center to its budding West Coast omnichannel center is currently underway. Nordstrom expects the company to complete the transition in the second quarter.
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The CEO referred to the 1-million-square-foot West Coast facility in Riverside, Calif. as its “most automated, and lowest cost fulfillment center,” which is designed to serve customers across the Nordstrom and Nordstrom Rack banners. Nordstrom Rack inventory and fulfillment capabilities have yet to be integrated into the warehouse, but the company plans to add them in the future.
The facility first opened in 2020 to fulfill customer orders and ship merchandise to stores, and was designed to give customers access to a broader selection of products to choose from and expedite delivery speed.
Customers on the West Coast account for nearly two in five Nordstrom and Nordstrom Rack orders, according to the department store, giving the facility a wide reach.
In the call, Erik Nordstrom called operational optimization the second largest priority for the retailer in 2024, hoping that supply chain improvements would be a major catalyst.
“Efforts in this area resulted in an over 5 percent faster click-to-delivery speed and an improvement in variable fulfillment costs in the first quarter,” Nordstrom said. “We continue to see meaningful improvements in the movement of product throughout our network. We are getting merchandise through our network, to our stores and our customers faster, at a lower cost. This helps to drive better outcomes, like higher conversion and lower return rates.”
The fulfillment shakeup comes as the Erik and brother Pete Nordstrom, who serves as the department store’s president and chief brand officer, have formed a special committee to evaluate a move to take the retailer private.
The company officially made the announcement to relocate its San Bernardino operations roughly 20 miles southeast to the Riverside facility during a March 5 fourth-quarter earnings call. In the short term, the move will cost the retailer $32 million in asset impairment and related charges due to this relocation.