Nordstrom wants the fashion industry to know how serious it is about the designer business.

Two years ago, the Seattle-based retailer hired Jeffrey Kalinsky, founder of Jeffrey New York and Jeffrey Atlanta, as a part-time consultant and bought a majority stake in Kalinsky’s business. Nordstrom said on Tuesday that Kalinsky will take on a larger role “guiding the overall vision for the designer experience” at the specialty chain and revealed that it had significantly increased its ownership of Jeffrey.

Details of the purchase agreement were not disclosed. Industry experts estimated Nordstrom paid $40 million to $50 million for its initial Jeffrey investment in 2005.

Kalinsky, who is moving from a part-time advisory position to a hands-on leadership role, will remain president of Jeffrey stores. When he was initially tapped by Nordstrom, Kalinsky was given the title of director of designer merchandising for women’s and men’s. In an exclusive interview on Tuesday, Pete Nordstrom, president of Nordstrom full-line stores, said Kalinsky’s new title had yet to be formulated. For his part, Kalinsky said, “I’d love to have sort of a lead merchant kind of role. Very few stores have a position like this where you get to deal with men’s and women’s across all categories.”

Nordstrom has been moving to double the space devoted to designer merchandise by remodeling the units with a focus on designer products, which is about one-third of its 98 full-line stores. “Our customer wants and expects the best the market has to offer,” Nordstrom said. “When we have more floor space it gives us a bigger arena to pursue this.”

Nordstrom declined to say which women’s lifestyle departments, if any, are being downsized, explaining, “There’s always an ebb and flow.” On the main floor, Nordstrom gained more space for designer handbags by moving hosiery departments to the second level.

“Space isn’t so much the issue,” Nordstrom said. “It’s how we pursue the most coveted brands our customers want.”

That’s where Kalinsky fits in. Nordstrom wants to further leverage his relationships in the designer arena. “It’s difficult to do business due to the competitive landscape in some markets,” Nordstrom said, referring to retailers such as Neiman Marcus and Saks Fifth Avenue, which encourage designers to make exclusive deals. “We never tell people who they can and can’t sell to. We say, ‘We want you to sell to us, too.'”

This story first appeared in the June 6, 2007 issue of WWD.  Subscribe Today.

Nordstrom said 93 percent of the sales increases in stores where the designer offering was significantly expanded came from existing customers.

“We have a younger, more aspirational customer,” he added.

“I’ve opened vendors’ eyes to what we’re capable of at Nordstrom,” said Kalinsky, who will be traveling to Seattle one week per month to work with buyers, store planners, visual display and marketing staff.

“I’d also like to wait on a few customers at the Seattle [flagship] and see if I can mentor the sales associates,” he said. While Nordstrom is known for its attentive service, Kalinsky’s sales techniques are admired by the larger retailer. Kalinsky is fond of telling people that he sold his first pair of shoes when he was five years old — a pair of glass wedges for $50 — at his father’s Bob Ellis shoe store in Charleston, S.C.

Both Nordstrom and Kalinsky are open to expanding Jeffrey. “We’ll look at that down the road,” Nordstrom said. “The opportunity for Jeffrey now is to make an impact on our business.”

That’s why Nordstrom’s increased its stake in the retailer Jeffrey. “It’s so that I can spend as much time as possible working at Nordstrom,” Kalinsky said. “To help facilitate that, they were interested in taking a larger stake in my business.”

Working with Kalinsky has been “inspiring and motivating,” Nordstrom said, adding, “He’s our resident rock star.”

Nordstrom is also keen on having a presence in Manhattan. Hiring Madison Retail Group to find a location for a Manhattan flagship “is a signal that it’s imminent,” Nordstrom said. “We’re going to end up being here. We have a sense of urgency about doing something sooner rather than later.”

The company, which has been casually looking for real estate in Manhattan for 20 years, is considering neighborhoods such as the East Side, Upper West Side, Battery Park, the 34th Street corridor. “It’s hard to imagine doing something less than 200,000 square feet,” he said. “There’s no point in coming here unless we can deliver the store.”