Why Nordstrom Is Keeping Its ‘Passion’ for Stores Amid Broader Retail Downsizing
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Amid a rapidly changing retail landscape characterized by widespread store closures and the rise of e-commerce, Nordstrom has arguably managed to stay ahead of many of its competitors.
The Seattle-based retailer has often been lauded for its innovative concepts and omnichannel savvy, including its pioneering of the “buy online, pick up in store” service, a revamped loyalty program and experiential store offerings.
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But even as the department store naturally ramps up its focus on digital, it’s hardly scaling back on its brick-and-mortar strategy. According to Co-president Erik Nordstrom, success in today’s highly competitive selling environment lies in balance.
“Pete [Nordstrom, my brother] and I have been in this business all of our lives, and we are retailers cut to the core. All the changes in our business keeps it interesting, but we still have the passion for a store,” he said on Tuesday at NRF 2020: Retail’s Big Show, held by the National Retail Federation at the Javits Center in New York. “Over half of our store sales involve an online journey somewhere in the process, [and] over a third of our online sales involve a store experience. … Those lines are completely blurred.”
Nordstrom offered a glimmer of hope for the retail industry in November when it posted third-quarter earnings per diluted share of 81 cents — besting Wall Street’s forecasts of earnings per share of 64 cents. Profits were $126 million, compared with $67 million for the same period in 2018, and revenues decreased 2% to $3.67 billion but met analysts’ bets.
The firm also noted improvements in its loyalty program, digital marketing efforts and merchandise assortment. In the past couple years, Nordstrom has invested more resources into BOPIS and curbside pickup, opened small-format stores and edited its brick-and-mortar footprint to account for falling traffic in some locations and better opportunity in others, not the least of which is its 320,000-square-foot women’s flagship in New York City that debuted in October.
“We get a lift in our online sales when we add a store to a market,” he said. “Manhattan is our biggest online market to begin with, so again that interplay [and] that synergy between the store and online is super important. The reason for a store has changed a lot, too: Stores need to be more experiential than before.”
The seven-level store on 57th Street, which sits at the base of the tallest residential building in the Western Hemisphere, houses not only the womenswear and children’s collections but also an array of services including a repair shop, a customization station, a stylists’ lounge and a beauty space.
At the NRF panel, Nordstrom revealed his favorite part of the store: The footwear department, which spans three floors — the designer on the second level, women’s on lower level 1 and kids’ on lower level 2. “I grew up selling shoes,” he said. “I’m a bit of a shoe dog, so I’m a little biased here.”
At the center of the shoe floor, one level below the street, is The Shoe Bar — one of the store’s seven restaurant concepts. “It helps sell things,” he added. “We think a lot about shoes; I don’t know why it took us so long to put drinking and shoes together, but it’s a great combination.”
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