On The Firing Line -- Nordstrom Learns Pr Counts
A distaste for the public spotlight runs deep at Nordstrom.
Long before the onset of its current labor problems, Nordstrom top executives - all Nordstrom family members - were known for keeping a low profile when it came to public relations.
The men who run Nordstrom - two brothers, a cousin and a brother-in-law - rarely grant personal interviews.
Until last week, questions on any subject were juggled between in-house employees assigned to answer media questions and any of the Nordstroms available to come to the phone.
Observers say it is partly that approach to public relations that has caused a local labor controversy to mushroom into a national story that has, so far, drawn reporters from The Wall Street Journal and the CBS news program ``60 Minutes'' to Seattle, and inquiries from ABC's ``20/20'' news program.
``Nordstrom has been shooting itself in the foot with the kind of press it's getting, and I think it's a shame,'' said Neil Thall, partner in Kurt Salmon Associates, a national retail-consulting firm based in Atlanta. ``All companies have problems, and Nordstrom is still a terrific store. But the way they have handled the press has been very negative.''
Now that Nordstrom is engaged in what professional strategists call ``fire extinguishing,'' nearly everyone - including Nordstrom - agrees that with a more sophisticated public-relations effort, the retailer could have contained the controversy to a smoking ember.
Jim Nordstrom, co-chairman, now says his company was naive in its response to the controversy.
``Our strategy, so far, has been wrong,'' said Nordstrom. ``We thought when the press and general public saw what was going on in our stores - superior service, happy, well-paid employees - that that would speak for itself. We were wrong . . . We have proven beyond a shadow of a doubt that we are ill-equipped to handle this.''
Nordstrom a month ago hired the public-relations division of Elgin Syferd. The division is headed by Dave Syferd, agency chairman. It was the first time the retailer has ever gone beyond its in-house publicists for advice.
``We'll do whatever we're told,'' said Nordstrom. ``From now on, we do whatever (Dave) Syferd, Dave Marriott and Tim Doke tell us to do.''
One of the first tasks for Marriott and Doke, both vice presidents at Elgin Syferd, was coaching Nordstrom executives in preparation for their group interview two weeks ago with Morley Safer of ``60 Minutes.''
In retailing, an industry where public image is all-important, Nordstrom's problems have revealed a chink in the retailer's golden armor. For years the company has basked in the praise of analysts, reporters and customers.
Its philosophy of providing its clerks with appealing sales incentives and wide autonomy has made it a favorite of management gurus. And at a time when many major retailers are on the auction block or having financial problems, Nordstrom - with a strong balance sheet and blessings from securities analysts - has undertaken an aggressive expansion program into the East and Midwest.
But though no observers suggest that Nordstrom has suffered irreparable damage to its public image, they say the company's lustrous shine is at least slightly tarnished.
Public-relations experts say that Nordstrom's aversion to publicity also has been molded by the low-profile image that Northwest business people have traditionally sought. Unlike flamboyant business figures such as Donald Trump, whose personal and business affairs regularly make headlines in New York, Seattle business leaders have worked to retain their personal and professional privacy behind the closed doors of the Rainier Club and the top floor of Columbia Tower.
``(The Nordstroms) have become public figures, and they have to understand that they're going to be treated like public figures,'' said Ron Dotzauer, president of Northwest Strategies, a Seattle communications-consulting firm. ``The Nordstroms are synonymous with Seattle, and if they don't think the press is going to take a look at what they do, they're mistaken.''
Jim Nordstrom acknowledges that his company has tried to avoid publicity of any kind.
``We've never asked for one positive story. In fact, we've been embarrassed by those stories,'' he said, referring to the many past stories in local and national business and general-news publications that have heaped praise on the company for its soaring sales, climbing profits and top-notch customer service.
Now that retail analysts from New York to Atlanta are tracking developments with Nordstrom's labor controversies, ``We hate it,'' said Nordstrom. And though he said he has recently consented to interviews with The Wall Street Journal, which sent a reporter to Seattle last week to research another story on the retailer, Jim Nordstrom said, ``I'd prefer they didn't do a story at all.'' He also consented two weeks ago to an interview on King AM radio's Mike Siegel show.
Among retailers, Nordstrom is not alone in its unprepared approach to public relations - especially during times of corporate crisis. Unlike companies such as Boeing and Weyerhaeuser, which routinely have to deal with potentially damaging news, retailers rarely have in-house professionals trained to manage crises. Most retailers - including Nordstrom - employ people to publicize fashion shows and the opening of new stores. But those people are often inexperienced in handling responses to controversial events.
Public-relations professionals say Nordstrom's lack of a corporate crisis contingency plan showed up in the way the company responded to the labor controversies that began last summer.
Since the United Food & Commercial Workers Local 1001 began its first volleys, Nordstrom has publicly ignored or dismissed its allegations. While Joe Peterson, president of the local, was holding press conferences, Nordstrom executives were silent.
Then in February, the state Department of Labor and Industries ruled that Nordstrom violated state wage-and-hour laws by not paying some employees for work done on their own time.
Nordstrom responded by filing a petition in King County Superior Court appealing the state's order. Last week, the state volleyed back by asking a King County Superior Court judge to determine how much Nordstrom owes in back pay in Washington.
Nordstrom, meanwhile, has come up with its own plan to pay back-wage claims to employees outside the state of Washington and set aside a $15 million reserve to pay those claims.
Soon after the state's February ruling, The Wall Street Journal published a front-page story quoting former Nordstrom employees who said, among other things, that they had been forced to work on their own time without pay.
Though professional strategists say Nordstrom should have immediately countered the story point by point, Nordstrom's response was to charge The Wall Street Journal with biased reporting.
Nordstrom executives also charged The Seattle Times and Seattle Post-Intelligencer with unfair reporting, and withdrew its advertising from the two papers.
Jim Nordstrom said the decision was part of Nordstrom's ``re-evaluation'' of its advertising program, and was unrelated to coverage of the labor controversy.
``Once you develop a bunker mentality and continue to lash out, things get worse,'' said Dotzauer of Northwest Strategies. ``And, obviously, they are lashing out at the union and at the press coverage.'' When Nordstrom announced that it was withdrawing its advertising from the two Seattle dailies to re-evaluate its effectiveness, ``Nobody believed that for one second,'' Dotzauer said. ``They should never have said it.''
Dotzauer said Nordstrom's response to the union's allegations has attracted more headlines than it has squelched. ``If they had handled this earlier, ``60 Minutes'' wouldn't be here,'' Dotzauer said. `` `60 Minutes' would not be my vehicle of choice to tell my story.
``The bottom line is that they still have a quality product,'' he added. ``But they do have a major PR/communications problem. And you're always doing better when you're not on the defensive, which they are.''
Lincoln Ferris, vice president of Sammons & Conner, a Seattle communications-consulting firm, said Nordstrom's most immediate task should be to counter the question of whether the retailer treats employees unfairly.
``I think, fundamentally, there is a tremendous reserve of goodwill for the company. But they have to say, `If we were wrong, not that we were, we'll fix it.' It should not become a question of whether employees want a union or whether the media coverage is unfair.''
Though the off-the-clock labor issue has, so far, been the union's biggest trump card, the real issue is the survival of the union.
The union acknowledges that fewer than half of the 1,800 Nordstrom employees it represents in six Puget Sound-area stores pay dues. And there have been recent efforts by employee groups to decertify the union. Nordstrom's insistence on an ``open shop,'' in which employees could chose whether or not to join the union, is the major stumbling block in negotiations. The two sides meet occasionally, but there is little progress towards a settlement.
Peterson, acknowledging from the beginning that there would be little support for a strike, said as far back as last summer that one of the union's weapons in efforts to win a contract settlement with Nordstrom would be a public-relations campaign.
``We realized early on we couldn't change public sentiment about Nordstrom overnight,'' said Peterson. ``We thought hard and long about how to get the public to think differently of Nordstrom. What we thought is that public pressure would be more important in the long run than a boycott or strike.''
A former Nordstrom shoe salesman, Peterson said he has worked hard to publicize his message, even though he believes the media, at first, was unresponsive.
``I'd call every reporter who should know about this and after a while, they'd call me. I'd make myself available 24 hours a day and there's no reporter I haven't given my home phone number to,'' Peterson said.
Though Jim Nordstrom believes his company ``has been way outspent by the national union,'' which he says is orchestrating the local's campaign, Peterson says he receives no financial or public-relations help from the union's national headquarters or any professional public-relations experts. He said the local's campaign strategists are himself, his attorney and his staff.
Jim Nordstrom acknowledges that the union has mounted a dogged public-relations campaign.
``The union understands the workings of the press, how to talk to the press, and its deadlines,'' Nordstrom said. ``By the time you guys call us, it's close to your deadlines and we haven't had time to learn what's going on . . . They have used a negative publicity campaign and it has worked very effectively for them. I applaud them for the wonderful job they've done.''
Public-relations professionals agree that the union has waged a successful public-relations campaign insofar as it has attracted attention to issues it wants publicized. ``To date, the union has been able to define the opposition, i.e. Nordstrom, and Nordstrom has had to respond,'' said Dotzauer.
Jim Nordstrom says the labor controversy has not dampened Nordstrom's sales.
Jeff Atkin, partner with Kunath Karren Rinne & Atkin, a Seattle investment firm, says he expects Nordstrom's profits to be flat in the first quarter ending April 30, and expects profits for fiscal 1990 to be up about 24 percent, to about $142 million from $114 million.
``Over time, I'd be surprised if (the labor controversy) had a meaningful impact on Nordstrom's financials,'' Atkin said. ``Was the $15 million (set aside) debilitating? Of course not. There is a number that could be meaningful, but I don't know what it is. It would hurt if it gets to the point where it causes cutbacks in expansion or changes in their modus operandi.
``My biggest concern,'' said Atkin, ``is that the time (Nordstrom executives) are putting into this is time not spent minding the store. As a shareholder, I'd rather see them putting time into the store than preparing for Morley Safer.''
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