The Nordstrom Lessons

February 9, 2017

The Nordstrom Lessons

In nearly three weeks since Inauguration, President Trump’s willingness to engage with – and about – specific brands on Twitter has kept many jittery business leaders on their toes. And it is no secret that how to avoid, or react to, a Trump tweet has become one of Corporate America’s most frequently discussed concerns.

The recent Nordstrom incident provides a good case-in-point. So in an effort to provide some guidance, we wanted to briefly analyze the facts, and share some valuable lessons for companies looking to navigate this new landscape.  

Lesson #1: There Are No Boundaries

Perhaps the first lesson is that we may not be able to predict the scope of the president’s tweets, as they may know no bounds. The purpose behind the president’s prior tweets, aimed at companies, was to criticize them because, in his view, they charged the U.S. government too much money for projects (Boeing, Lockheed Martin), or cost our country jobs (Carrier, Ford, Toyota). There was a semblance of a policy disagreement underlying each of them. 

The latest tweet is very different; it clearly sprung from the president’s desire to defend his daughter while criticizing Nordstrom for cutting the Ivanka Trump clothing line from its stores this season. Here is the text:

“My daughter Ivanka has been treated so unfairly by @Nordstrom.  She is a great person – always pushing me to do the right thing!  Terrible!” 

Press secretary Sean Spicer later doubled down and tried to inject policy into the flap, calling Nordstrom’s decision a “direct attack on his policies and her name.” But indisputably, the president’s tweet took direct aim at Nordstrom’s business decision.

Lesson #2: A Fast, Credible Response Can Mitigate Adverse Impacts

Nordstrom responded quickly and matter-of-factly to the president’s tweet, explaining in a statement:

“We made this decision based on performance. Over the past year, and particularly in the last half of 2016, sales of the brand have steadily declined to the point where it didn’t make good business sense for us to continue with the line for now.” 

The Company went on to say it had a “great relationship with the Ivanka Trump team” including “open conversations with them over the past year to share what we’ve seen and Ivanka was personally informed of our decision in early January.”

Nordstrom’s response is proof that straight, factual responses from targets of tweets play well and can even win the news cycle. Nordstrom’s response was pitch-perfect. The company responded with a short and reasonable business explanation for its decision. It avoided any language that might further provoke the president. And Nordstrom closed with nice words about Ivanka and her team.

Lesson #3: Not All Trump Tweets Are Created Equal

While the president’s tweets criticizing companies for overcharging the government or moving jobs overseas may be potent, tweets that defend his family and call out companies for sound business decisions may be less impactful. Along these same lines, the Ivanka Trump line of clothing is not a big deal for Nordstrom’s business success say, in comparison, to Boeing’s relationship with the U.S. government which was at issue with criticism regarding the cost of the new Air Force One.

Lesson #4: Secondary Narratives = Diminished Impact

Trump tweets that trigger secondary, unintended debates diminish his intended impact.

In this case, the president’s Nordstrom tweet set off an unintended debate and significant media coverage about the ethics of the president commenting on routine business decisions that adversely affect his family. That debate was further exacerbated when the official POTUS Twitter account retweeted the president’s personal message, and Spicer escalated the attack during his daily press briefing. Over the course of the day, the narrative of the news cycle shifted quickly from the substance of Trump’s tweet to its appropriateness, a transition that repositioned Nordstrom from villain to victim.

Lesson #5: The Market Is Adapting

The market may be adjusting to, and no longer overreacting to, Trump tweets.

Having seen Lockheed Martin and Toyota bounce back strongly following Trump tweets, the market may be factoring in this experience and taking new tweets in stride. For Nordstrom, this impact was clear: after the stock initially dropped about 2% as news of the tweet hit, it eventually closed up 4%, with its strongest one-day gain this year, even though the overall market dropped slightly.

Conclusion:

President Trump’s tweets are giving rise to a new communications specialty, advising companies on best practices to respond to critical presidential social media messages. There is a growing body of experience from which to learn, but companies should remain vigilant and flexible because every situation is different, and there is not one best way to manage when your business is caught in the @realdonaldtrump crosshairs.

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