Nordstrom is ready to roll with its emerging local market strategy.
It will be up and running in San Francisco, Dallas and Miami by the end of this year and expanded to cover Nordstrom’s top 10 markets in 2020, Nordstrom officials disclosed Tuesday at an investor meeting on Wall Street.
In discussing the local strategy, as well as the Manhattan women’s flagship opening Thursday, officials said Nordstrom’s top 10 markets represent 60 percent of the $15.5 billion Seattle-based retailer’s total sales. L.A. is the biggest market representing more than $1 billion in sales, and the New York area, already Nordstrom’s biggest market for online sales, is viewed as a “$700 million-plus addressable market.” Seattle, as well as Washington, D.C., would also be among Nordstrom’s major markets.
The retailer’s local market strategy was launched in Los Angeles 18 months ago and just recently launched in New York City. The strategy is geared to provide elevated services and conveniences for shoppers and support the full-line department stores, Rack off-price stores and online operations.
“Customers want more control than ever before,” said Nordstrom copresident Erik Nordstrom. “Our response is to be in more places they want us to be.”
At the center of the retailer’s local market strategy are the new Nordstrom Local service hubs. They’re situated in neighborhoods where Nordstrom customers live and work so trips to actual Nordstrom stores farther away can be avoided.
In New York City, two Nordstrom Locals opened in September, at 1273 Third Avenue on the Upper East Side and in the West Village at 13 Seventh Avenue.
At the 1,800-square-foot Third Avenue location, services include order pickups, returns and consultations with a stylist. There is also shoe, handbag and small leather goods repairs, gift wrapping, stroller and kids’ car seat cleanings. The 2,200-square-foot West Village location, in addition to the core services, has a rotating selection of products from the Pop-In by Olivia Kim format.
Both locations serve as Housing Works drop-off destinations to donate “gently used” fashion, and will be used for community meetings for networking and family events.
Nordstrom Local sites don’t represent huge investments for the company, being small spaces with short-term leases that can be opened quickly. In Los Angeles, there are three Nordstrom Local locations.
Explaining the rationale for Nordstrom Local, Nordstrom said the company’s overall business model “is a bit unique…We have full-price and off-price stores and 30 percent of our sales are done online. These are not independent businesses. There is a synergy. We have compelling services, but we are being more purposeful in trying to talk to customers about them.” Nordstrom Local helps the company be more purposeful and is a piece of the retailer’s overall strategy to get closer to customers, get them more engaged, provide faster deliveries, and more seamless shopping, channel to channel. “When customers engage in our services, everything gets better — spending goes up, engagement goes up,” said Nordstrom
The Nordstrom Local strategy also leverages inventory so there’s increased visibility of what’s where, giving customers a read on all the inventory in the market. They can get purchases delivered to their homes, to any of the stores or to Nordstrom Local locations. They’re not mini-versions of Nordstrom stores and there’s no merchandise displayed, aside from a handful of items in the back of the store by a touch-screen for online shopping, or what Nordstrom stylists have gathered to show clients coming in.
“We are trying to serve customers on their own terms,” said Ken Worzel, Nordstrom’s chief operating officer.
In L.A., there have been several Nordstrom Local learnings. For one, the locations get returns back eight days faster than would Nordstrom otherwise, meaning products get back on the shelves faster and have a better chance of being resold.
Also, Nordstrom Local is contributing to sales growth in L.A., which Worzel said is outpacing other metro areas from a full-price perspective.
Regarding the Manhattan women’s flagship, Pete Nordstrom, copresident and Erik’s brother, said Broadway and 57th Street was selected because the flagship “needed a neighborhood foundational business that would sustain it, day-in and day-out. The orientation to the west side is super appealing,” particularly since Bergdorf Goodman, Saks Fifth Avenue and Barneys built their businesses largely on Upper East Side customers, he said.
The new Nordstrom flagship also expects to capture much business from commuters in the tri-state area and tourists.
“We don’t look at (the women’s flagship) in terms of a stand-alone store,” said Pete. “Our whole thing is how it all works together,” he said, referring to Nordstrom online business in the market, as well as Nordstrom’s men’s store on Broadway just across from the flagship, the two Nordstrom Racks, the Trunk Club clubhouse and the two Nordstrom Locals, all in Manhattan.