Pete Nordstrom: The Brand Builder
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As a young shoe buyer in the late 1980s, Pete Nordstrom didn’t want to follow the typical fashion footwear playbook.
“I was the first guy in the company to buy Dr. Martens and Birkenstock,” he recalled during an interview in his Seattle office last month.
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But there was plenty of skepticism. “[The reaction was], ‘I don’t know why we would carry those. Those Dr. Martens shoes are totally punk rock and Birkenstock is just a bunch of hippies,’” he remembered.
But Pete had a knack for discovering brands with staying power. “It was not a data-driven or scientific approach. It was part of being attached and culturally paying attention,” he said. “We tried them and it was successful. Those brands transcended whatever narrow niche they were in, and they’d become cultural, iconic shoes.”
Nordstrom admitted that he had plenty of other buys that weren’t successful. “But it was part of the journey of having the latitude to make the decision,” he said.
Pete’s insatiable curiosity and forward-looking vision has served him well during his 47 years as a fourth-generation member of the family business, a journey that has taken him from stockroom worker to president and chief brand officer.
The retail veteran marveled at how little the strategy had to change during his first decades on the job. Under the leadership of his father, Bruce Nordstrom, and the third generation of family leaders, the company grew quickly, enjoying a robust period of brick-and-mortar expansion.
More recently, of course, digital has changed the game entirely, and Pete — together with his brother Erik and cousin Jamie — has kept Nordstrom at the forefront of the online revolution.
That foresight was crucial as the family navigated a moment like no other when the coronavirus pandemic upended life and work last spring.
“Everything got harder, no matter what you’re talking about,” Nordstrom said. “It’s been an intense time. And that urgency and intensity is good. But I’m not clear how sustainable all of that is for people, generally. I’m concerned about making sure people are doing all right, and we can work through this time.”
Amid a period of great change and challenge, the tight-knit Nordstrom team forged ahead with a number of attention-grabbing moves, such as the company’s minority investment in Topshop and Topman and expanded relationship with Asos, the brands’ new owner. It’s just one example of how Pete and his team have reexamined the idea of partnership.
“There’s a lot of receptivity to thinking about how we can do things better and differently,” Nordstrom said. “These are fun problems to solve together. I get a lot of energy from it.”
Here, the executive opens up about what the pandemic taught him, how categories such as home are driving big opportunity and why it’s essential to stay nimble.
What are some of the most important lessons you’ve learned during the pandemic?
Pete Nordstrom: “I don’t know that it’s just about the pandemic. Even when this time gets mostly in the rear-view mirror, it just represents the acceleration of change — and the need to not get locked into legacy practices. You need to make sure you’re taking a future-backed view as much as you can. The practices have to evolve, but the values remain the same.
Specific to these times, it’s the communication part of it. There’s not a lot of serendipity that happens online through a Zoom call, so you’ve got to be very intentional about how you communicate with people. That’s good to do under any circumstance. I’ve confirmed for myself that a big part of what I enjoy about work is just being around people. My leadership style is more informal than formal, so it lends itself to a more spontaneous way of working with people. I’ve had to adjust that.”
Despite the uncertainty of this moment, you’ve continued to evolve and redefine your partnerships with vendors in unexpected ways. Take us inside your strategy.
P.N.: “The spirit of it is that you want to try to be less transactional in your relationship with the partner. You want to talk about what their goals are, what they are trying to achieve and how we can be a vehicle to help them do that. When you think about our customers — how many we have and the quality of them— that’s attractive to brands. Our ability to have an effective and efficient online business that dovetails completely and seamlessly with the physical store is attractive. We’re willing to go to brands and say, ‘Look, if we took a complete clean slate and set this up in the best way to operate going forward, what would you want to see?’ And that’s where you can start getting to some really good discussions about inventory ownership, the service model, inventory levels. It’s a shared responsibility. If we solve for the common issues, there’s plenty of room for both of us.”
What do those alternative models look like?
PN: “There are a lot of different ways to do it — everything from drop ship to the traditional wholesale to revenue share to a hybrid concession model to a full concession, where the brand owns the inventory, the space, it’s their people managing it. We become more like a landlord. But there are versions of that. All of those discussions are easier to have because they’re relevant to our current issues. I feel like all the walls have gone down.”
You spearheaded the company’s recent deal to invest in the Topshop brands through a partnership with its new owner, Asos. How did that come to fruition?
P.N.: “Topshop was a big brand for us. When it became clear that they were going to sell, it mattered a lot. We had a lot of urgency around making sure that it ended up with the right owner. Asos was at the top of the list. They’re really good at serving the 20-something consumer. They’re super strong digitally. There’s a lot to be learned from how they do it. This brand’s a big deal to them, and it’s a big deal to us. What’s the best way we could ensure its success? It became clear that if we partnered on it, we both have skin in the game. It’s not ever been part of our strategic agenda to buy an interest in brands. But we were opportunistic about it. I give a lot of credit to Nick [Beighton], the CEO at Asos, and his vision for what it was and what it could be and how we could work together.
We’re the only people in North America who will sell it and we’re the only physical store in the world that will have it. There’s opportunity for us not just with the Topshop/Topman business, but with the whole stable of Asos brands. I remember telling the executive team and the board that I’d be hard-pressed to create a better opportunity, and we should go for it. We’ll learn a lot.”
What are some great examples of innovative partnerships on the footwear side?
P.N.: “The first brand that comes to mind is Nike. Five or six years ago, we said, ‘How can we elevate this beyond a transaction? We’ve always done a lot of business together. We would like to be more important to you. They talked about how they wanted to do a better job with female customers. It was just being more purposeful about how we work together. We try to take down some of those barriers and say, ‘You have all these customers who are interested in what you do. They may never walk into a sporting goods store and they may never walk into a Nike store, but they’re buying all kinds of things from us. That’s one of the best examples in shoes about how to be collaborative to our mutual advantage.
We’ve had so much growth in designer shoes, and we’ve always been good at that. But we’ve gotten even better. I think about a brand like Christian Louboutin — they’re really selective in what they do. They’ve been really good partners, and we’ve had a lot of success with them.
Birkenstock has been a good one for us — they don’t sell everybody. They’re loyal and focused and they wanted to have a trusted partner. We’ve earned that trust over time with them.”
The Nordstrom brand has always stood for certain values. How has it evolved and what does it mean today?
P.N.: “When you talk to most people out there, the word service is the first thing that comes up, and we’re the benefactor of that legacy and that reputation. The bar is set high, and that’s what customers are going to expect from us. We’re well served to keep that front and center. It helps us make decisions for sure: What is in the best interest of the customer experience? Erik and I, we talk about that a lot — it’s part of the DNA of the company and what we’ve learned. It comes naturally.”
How do the burning topics of diversity and sustainability play into your service model internally and externally?
P.N.: Diversity is not new for us. The best way to serve customers is to reflect the customers and communities we’re serving. And that obviously applies increasingly to diversity. We’ve always been a company that had a large percentage of women working here. [About] 70% of our employees are women. That’s what we grew up with, but we have to keep going with it. With regard to sustainability, if you’re paying attention to what’s important to customers, then you reflect that in your business practices and what you’re offering in your experience. It’s always been a subject, but it was kind of a special-interest subject. Now it’s literally a commercial subject. If you embrace it — or if you don’t — that has a major impact in your ability to be relevant.”
How are you navigating new pressures around sourcing and inflation?
P.N.: “It goes back to relationships. As things evolve, we obviously have a heavy reliance on our vendor partners. Increasingly, the problems we have to solve are mutual — it’s not like they have their own set of issues. Almost all of these brands are retailers, too. We become part of that strategy for them. They become more selective. For us, we have to be top of mind. We have to be clear about our value proposition. Most of that’s around our customer base and the way we sell things and the seamless ability we have [to sell digitally]. We’ve got a story to tell that’s compelling. We’ve had to double down and make sure we have those relationships. That’s an example of how being around for a while is helpful. We’re not coming and going. They know [many of our leaders] have been here a long time, and they develop relationships and the trust that comes with it. That creates favorable opportunity.”
Home is a category that’s really taken off during the pandemic. How much opportunity do you see there?
P.N.: “We’ve always been in the business, but in a very small and kind of incidental way. Home is tough because it’s a broad category, and a lot of it’s based on a subjective taste. We realized that our customers buy all kinds of things from us, and then they might leave to buy something at Restoration Hardware or Williams Sonoma. They might buy some of that from us, too.
We put Olivia Kim in charge, and she’s just such a great merchant and perhaps the best kind of curator we have. We said, ‘Here’s a huge, broad subject matter. We want you to come up with an offer that makes sense for Nordstrom to do.’ We’ve broadened our assortment and have a lot more offer than we ever had before. We’re working through that and finding our lane. People don’t come in here and say, ‘Well, I guess I bought a candle or a pillow or throw, so I’m not going to buy a pair of shoes or a pair of pants. It’s an ‘and.’ That’s great for us that we can have more choices and increase the size of a basket.”
Looking back, what are the biggest ways the family business has changed since you started out four decades ago?
P.N.: “For the longest time, the practices didn’t change much. There was a way of doing business, and there was one way to sell to customers — through a physical store. That worked for a long time, through the entirety of my dad’s generation [leading the business]. The big, brave things they did were, first of all, going from being a shoe store and adding apparel. And then they went public. And then when we got in, that playbook was there and there were still a lot of places for us to go. We had to figure out how to scale the business. We had to introduce more best practices around process. We had to introduce technology. The internet obviously came in and changed everything. Once we opened New York and a couple of stores in Canada, that basically exhausted our North American physical store strategy. It doesn’t mean there isn’t one here, one there. But by and large, that playbook went away. Then it was [figuring] out how to continue to grow online and make it a complementary part of the physical store experience. Which kind of brings us to where we are now — this closer-to-the-market strategy, this synergistic way of how physical and digital assets work together to create a good experience for customers.”
What does turning 120 mean to you?
P.N.: Heritage brands can have a lot of meaning, but it’s because they evolved to something else. That’s the lesson for us: We’re proud of our legacy. We’re proud of the reputation it affords us. Yet we’re really humbled by the fact that if we don’t continue to evolve and stay curious and nimble, [we] could be the generation of Nordstroms that screw it up. We’re interested in the long-term view and setting up our company for success for another 120 years. That’s our goal. It’s going to outlive us, and it should.”
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