The Nordstroms on Service in the Digital Age, Early Lessons From the Shoe Stockroom & Conquering NYC

Katie Abel

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The humble Nordstrom family isn’t always comfortable with a lot of pomp and circumstance. But if there was ever a time to go big and bold, the last full week of October was it. The tight-knit team threw a celebrity-filled bash and rang the ceremonial opening bell on Wall Street. They led spirited employee pep rallies, cheered loudly for shoppers arriving on opening day and held court at store tours for hundreds of journalists, investors and vendors from across the country.

And on the sixth day of events to inaugurate its much-buzzed-about women’s flagship, Nordstrom welcomed an eclectic crowd of New Yorkers — their families, kids and dogs — with a lively block party. It even included a special appearance by Stag, Pete Nordstrom’s band.

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Inside the store, the excitement was palpable in the women’s shoe department on lower level 1. As “Empire State of Mind” blasted from the speakers, a group of girlfriends sipped cocktails from the Shoe Bar — the cocktail and coffee venue in the center of the space. Nearby, a stylish teenager shot video on her iPhone as she paraded around in new Nike kicks. And everywhere you looked, salespeople were on their hands and knees, fitting customers as is the Nordstrom way.

The first weekend was in full swing at the 320,000-sq.-ft. store — which features a dramatic undulating glass façade on 57th Street and sits at the base of what will become the world’s largest residential building. “We have a specific focus for this story to be part of New York. The floor-to-ceiling glass connects the story to the city,” co-president Erik Nordstrom said. “A lot of retail is about being inward facing and isolated from what’s around it. We’re doing just the opposite. What’s great about New York is the energy, the noises, the crowds, all the things that go on.”

The high-stakes project, which brings a major department store to the West Side of midtown Manhattan, is an ambitious and costly endeavor — seven years in the making. (Nordstrom signed the lease for the space back in 2012 and has reportedly invested more than $500 million.)

“This is the biggest moment of my professional career,” said Pete, the other co-president. “For our generation, this was the one that required a heck of a lot of thought and consideration — and at a certain point, some guts — to pull the trigger. We don’t have the luxury of hindsight. We didn’t know the macroeconomic situation. But what we did know is New York is the single best market for retailing in North America, perhaps the world. If we can figure out a way to be here, represent our brand well and make money, we should be here. There are no regrets.”

Since Nordstrom first announced its plans, seismic change has swept across the industry. The so-called retail apocalypse forced thousands of stores to close as the digital revolution took hold. The impact on the department store sector in New York has been dramatic: Barneys could soon liquidate, the venerable Lord & Taylor flagship closed its doors last year and Saks shuttered its downtown women’s location.

It’s no surprise then that many retail insiders are skeptical that Nordstrom’s risky move will work — but the fourth-generation family members leading the charge are up for the
challenge.

“We viewed this as expanding New York versus opening a store,” Erik said. “It’s a big and important location, but Manhattan is already the biggest online market we have. We thought about how we could leverage our physical assets to service people who live here better.” (NYC could present an opportunity for $700 million in annual sales.)

In the past 18 months, the retailer has upped its presence with a men’s flagship — directly across the street from the women’s store — and two Local units — in the Upper East Side and West Village — to cater to consumers in their own neighborhoods. A pair of Nordstrom Rack locations and a Trunk Club space complete the New York roster.

As the Nordstrom brothers, along with COO Ken Worzel, outlined the intricate strategy in front of a tough crowd of market watchers at the New York Stock Exchange, company patriarch Bruce Nordstrom sat in the back of the room and took it all in. “I hope these guys give it a look. That building is a culmination of efforts and experiences. All the accomplishments, all the times you stubbed your toe. It’s sobering and humbling for a guy like me who’s been here the whole time,” he said.

The 86-year-old legend, who still remembers nearly every detail of his own time at the helm, recalled that when he took the company into Southern California in the 1970s, Seattle-based Nordstrom faced similar scrutiny. “I had to talk to different analysts. … Two of them told me I was making a mistake. I asked them why and one of them said, ‘You’re a dumb Swede up here in this corner of the world selling to a bunch of other dumb Swedes. And now you’re going to California, where they’re hip and cool?’ It really pissed me off. So I understand what [my family] is doing now.

“My sons are great, and their brother Blake was the same way,” the father said, his eyes welling up with tears. “People don’t think a [family] group can run a business. We’ve done it now for 100-some-odd years. Look where we are.”

Perhaps he wanted to send a message to those prickly analysts, some of whom have advocated for more outside leadership at the top.

Just days after the opening, the company said in an SEC filing that Pete and Erik’s proposal to boost their stake in the retailer to a little more than half wouldn’t come to fruition after the family and board agreed to end discussions.

In addition, the board said it has had conversations with the co-presidents “around succession planning and the continued evolution of their and others’ management role and responsibilities.”

Already, Nordstrom has named company veteran Teri Bariquit to the newly created role of chief merchandising officer in August, and it promoted Worzel in September.

Following Blake’s Lead

As the storied family writes this defining new chapter, they are still mourning the loss of Blake, a huge force at the company and one of the architects of the New York expansion. (He died in January, a short time after he was diagnosed with cancer.)

“I personally spent a lot of time with Blake on this [project]. He was most proud of our reputation — we all are — but it was something Blake thought about on a minute-to-minute basis,” said his cousin Jamie Nordstrom, the president of Nordstrom’s stores. “What has enabled us to make the investment in this store? It’s not our balance sheet, it’s not some sort of financial measure, it’s our reputation,” Jamie said.

Pete added that his brother defined the culture of the company. “A lot of the things we do are qualitative in nature. He really understood how important they were,” the middle brother said. “His fingerprints are all over this thing. It makes me sad because I miss him.”

Erik recalled how much pride Blake took in Nordstrom’s rich history in shoes, the category that has defined the retailer from the beginning. “He was such a leader. The store is such a reflection of him, and it wouldn’t be here without him,” he said.

Shoes Play a Starring Role

While Nordstrom has always had a distinct advantage in the footwear arena — thanks to its top-notch service and broad range of brands from Vans to Valentino — the family knew that the New York story had to be unique.

Even in a challenging retail climate, the department store shoe floor wars continue. In Midtown alone, Saks is expanding its 10022-SHOE space, Bloomingdale’s unveiled a new floor last year and Bergdorf Goodman continues to stand out as the place to be for many designers.

“We wanted to make sure we had a specific point of view to attract both the local and tourist customers in the New York market,” said Anne Egan, VP and DMM of designer shoes. “That drove the strategy — from the matrix of the brands to the exclusives to the people we hired.”

In most Nordstrom doors, footwear is prominently housed on the main floor, but that wasn’t practical in New York.

“We knew we had to lead with shoes, so there was a lot of talk about that. But it’s a category that needs a lot of stockroom space, and the first floor would have been gobbled up,” Pete said. “So the fact that we got shoes one floor up and one floor down makes a strong statement. It allows it not to be compromised.”

The main footwear departments are on three of the seven floors, with designer on the second level, the women’s shoe department on lower level 1 and kids’ on lower level 2.

But make no mistake, shoes still occupy a powerful place on the ground floor. A Christian Louboutin pop-up is stocked with the designer’s exclusive collection for Nordstrom, and the red-sole king will make an appearance this week. And the eye-popping Nordstrom x Nike shop, with its own entrance on 57th Street, is unexpected. Walking into the space — which was the brainchild of Olivia Kim, Nordstrom’s VP of creative projects — shoppers are presented with a floor-to-ceiling wall of TV screens. “I wanted to pay homage to the city and that you can’t walk a block without being captured on CCTV. As soon as you come in, the cameras are live,” she quipped.

The shop is decked out in plush velvet red walls, which were custom made with a red toile pattern. “We want to proclaim our manifesto here, create an awesome sneaker destination and mix it with what we do best [in fashion],” Kim said.

Pete noted that Nike, one of the largest and most important vendors for Nordstrom, was crucial to the New York plan from the beginning. “When were talking about planting a flag with different brands, Nike was [at the top] of our list. It’s not just about a specific classification of shoes; it’s about a lifestyle that is appealing to so many people. We turned Olivia loose. It’s an explicit statement because it is a contained space,” he said.

Nike also gets top billing in the women’s shoe department, where a strong mix of sneakers is a reflection of stellar growth in the segment; it now accounts for about 20% of the business. “We’re finding that it’s being driven by brands from Converse, Vans and Nike to the designer end,” said Kristin Frossmo, EVP and GMM of Nordstrom’s shoe division.

The evolution of sneakers is just one major way the business has changed through the years, Pete noted. “When I was a shoe buyer, we could identify a style, classification or theme and it would last. You could order the same shoe for years,” he recalled. “Now there’s so much more speed. Customers have so much choice, and newness matters a lot.”

To tap into that constant demand, Nordstrom partnered with 14 brands and their accompanying influencer collaborators for an initiative called Perfect Pairs — which debuted ahead of the opening and is only selling at the Nordstrom NYC flagship and online. It brought together duos like Steve Madden and Winnie Harlow, Cole Haan with poet and activist Cleo Wade, Nike with tennis champion Maria Sharapova. “We are at our best when we can offer our customers exciting partnerships and exclusive products they can’t find anywhere else,” Frossmo said. “These styles were created with a diverse group of inspiring women who are true New Yorkers.”

Both local residents and tourists also continue to demand the star luxury brands, so it’s no surprise that Nordstrom made a splash with its permanent Louboutin shop on the second-floor designer floor, which also features jewelry and handbags.

“Our customer has an affinity for the [label]. It has an incredible breadth of classifications, including sneakers, and is great at dress too,” Frossmo said.

While Louboutin is the only shoe-specific designer shop, there are many other notable names, including Gianvito Rossi, Saint Laurent, Manolo Blahnik and Prada. “[Outside of Louboutin], the idea is to not close spaces in with hard wall shops. We have beautiful glass windows that allow light to flow through the whole floor,” Frossmo said.

Service Rules

Shoes have always been at the core of Nordstrom’s legendary customer service — and Pete, Erik and Jamie have implemented the many lessons they learned during their formative years in footwear. “You learn a lot about life in a stockroom. The conversations that were had there — I grew up pretty quick,” joked Jamie, who noted that selling shoes is the best example of how Nordstrom demonstrates service to its customers. “You have to be a humble servant — literally. There’s not a more pure act of service than getting on your knees, measuring the customer’s foot and tying their laces,” he said.

While many Nordstrom shoppers still crave that kind of attention, great service means a lot more in today’s digital age.

Nordstrom has been at the forefront of bridging digital and physical through its Local concept — which debuted in New York this fall and has already seen strong success in Los Angeles.. Among the features of these stores is that they don’t stock a significant volume of inventory and instead focus on services like in-store pickup for online orders. The company took key learnings from its California locations and combined those with data from New York consumers to build out unique features for its Local stores here. For example, the Upper East Side location, a neighborhood popular with families, offers stroller cleaning.

“Shopping can be a chore or it can be fun. It’s a chore when you have to jump through a bunch of hoops and wait a long time for something or there’s friction. We try to take as much of that out of the process as possible. When we do that, people buy more stuff,” Jamie said.

That philosophy also plays into how Nordstrom services customers online. The retailer was a digital pioneer in the department store space and has been one of the biggest success stories when it comes to cross-channel shopping.

“We know that the more we engage with customers, the better everything becomes. We don’t care where they shop. Customers don’t think of channels. They go back and forth seamlessly, so we need to do that,” Erik said. “Multichannel retailers can send signals to their customers, almost coercing them into [shopping in one or the other]. We don’t have a bias. Our economics are the same in-store as they are online.”

In the New York store, for example, ensuring that infrastructure enabled strong Wi-Fi and cell service was critical. “We have that connectivity to build a lot of services, both what we have today and what we can layer in going forward,” said Erik.

Ultimately, top-notch service is the only way Nordstrom can win in New York, according to Pete. “It’s something we talk about all the time: We’re not perfect, but we work at it and we’re intentional,” he said. “Ultimately, this city doesn’t need another place to buy shoes. We’re keenly aware the customer service is what’s going to give us the best chance of being successful.”

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