Nordstrom - Waterside Shops, Naples FLSpeakers at the National Retail Federation convention (held this week at the Javitz Center in New York) debated the future of malls. CEO of Caruso Affiliated Rick Caruso, owner of several U.S. malls, said the structures will be obsolete in the next ten or 15 years unless reinvented.

Indeed, Nordstrom President Blake Nordstrom said despite the company’s solid overall performance, foot traffic and sales in full-line stores have been flat or slightly down. Topping our Digital IQ Index: Department Stores report, Nordstrom has employed a robust digital strategy to improve in-store and e-commerce sales. It has dedicated 30% of its $3.3 billion in capital expenditures to e-commerce. In-store staff use iPads to generate product suggestions, and it is one of five department stores to offer real-time inventory integration for products at specific locations.

Our report says a strong digital strategy is a necessity for department stores, more so than fashion brands, but their strong offline footprint positions them well for serving multichannel consumers. The top brands in our Index have taken advantage. Neiman Marcus, Macy’s and Bloomingdale’s also offer real-time inventory integration. Saks Fifth Avenue has made substantial investments in fulfillment. And a third of Department Stores in our Index offer in-store pickup of items ordered online, versus 14% of retailers and brands assessed in our 2013 Digital IQ Index: Specialty Retail report. Nordstrom sales improved 8% after it implemented in-store pickup and real-time inventory integration.

So while the traditional mall might be in need of an update, there is a case for brick-and-mortar — especially department stores — to remain.

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