What do Nordstrom, Starbucks, Amazon, Costco, and Recreational Equipment, Inc. (REI) have in common?
They are all world-class retailers based in Seattle.
And don’t forget 103-year-old Ben Bridge Jeweler (a division of Berkshire Hathaway, with 75 stores in 11 states), 95-year-old Eddie Bauer, and eCommerce sites Blue Nile and Zulily (now a part of QVC. According to the American Customer Satisfaction Index, Nordstrom was tops in the Department and Discount category; Amazon was the leader in the Internet category, and Costco was the pacesetter in the Specialty category.
Among Fortune Magazine’s “World’s Most Admired Companies,” Amazon was fourth, Starbucks fifth, Nordstrom fourteenth, and Costco sixteenth. Again, each led its particular retail category. No other region had such a retail presence.
So, what’s in the Puget Sound water?
Very simply, it’s an approach to retail that offers customers a unique customer-centric experience (whether online or in-store) and a value proposition that is not strictly about price. On the surface, all of these companies are markedly different from one another. “When you come to Costco, you don’t expect a Nordstrom experience. When you come to Starbucks, you don’t expect a Costco experience,” I was told by the late Jeff Brotman, founder and chairman of Costco. “Customers come to Costco because they can get the most popular versions of high-quality goods at a decent price.”
Seattle retail is built around taking care of the customer. In Seattle’s historically egalitarian culture, providing outstanding service is a noble calling. “We were raised kneeling in front of the customer—literally and figuratively,” says chairman emeritus Bruce Nordstrom, who began working for the company when it sold only shoes (and who still describes himself as an “old shoe dog.”) “You’re down on your hands and knees, waiting on customers, which I find an appropriate position for our level of service.”
When I interviewed Eddie Bauer himself in 1982, he told me that he was most proud of his guarantee that “Every item we sell will give you complete satisfaction or you may return it for a full refund.” Eddie knew that some people would abuse this guarantee, but he felt that it was worth it to burnish the company’s reputation. And he was right.
Seattle companies influence each other. When I asked Jeff Brotman why Seattle has so many world-class retailers, he said, “Nordstrom has set a very high bar. If you’re a retailer here you have to give great customer service. If you’re doing anything less, you’re not doing it right. That became part of the Seattle cultural landscape, and then we rolled it out at Costco. It’s not just cultural; it’s really good business.”
Jeff Bezos, who arrived in Seattle from New York in 1994, has often said that he wanted to make Amazon.com “the most customer-centric” company in history. He took notice of how Nordstrom was doing business. Even before he launched the website in July 1995, he made customer service his top priority because he knew that positive word-of-mouth buzz would have a greater impact on consumer perception than any kind of paid advertising. (Anyway, in 1995, he couldn’t afford to spend money on advertising.) “It was seeing how successful word-of-mouth was in that first year that really led us on this path of being obsessively, compulsively, anal-retentively focused on customer service,” said Bezos. Bezos also noticed that Costco, with its narrow margins, made a lot of money on its annual membership, which was the inspiration for creating Amazon Prime.
Seattle companies believe that the employee experience determines the customer experience. Therefore, they don’t want “clerks”; they want happy, empowered employees (with product knowledge) who want to help the customer feel welcome and in the mood to make a purchase. Seattle companies generally prefer growing their own managers and executives. They are in the business of grooming people to succeed within their culture.
At Costco, everyone starts in the warehouse, and, if he or she so chooses, an employee might one day manage a store.
Nordstrom encourages its employees to act as if their name is on the door, and empowers them to own the customer experience.
REI employees live the brand. They all participate in outdoor activities and they use and know the benefits of the products they sell.
Every one of these companies is constantly asking itself what’s next. Amazon, of course, is always reinventing itself and moving into new areas. Although Amazon is not a warm-and-fuzzy Seattle company, it is certainly the leader in adaptation and innovation. Describing what Amazon is has always been a moving target.
In the end, it all comes down to the customer making a purchase. A few Christmases ago, I was in the downtown Nordstrom flagship store, where I ran into Bruce Nordstrom, who said to me with a grin: “Don’t just stand there. Buy something.”