Nordstrom’s first New York City flagship store, opening on Thursday, will attempt to be many things, including a concept store, a funhouse, a fulfillment center, a retail platform, an upscale lounge, and a lifestyle center (formerly known as a mall). Think of it as all of retail’s current, buzzy concepts in seven floors.
“We’re constantly asking ourselves, ‘What is the customer telling us? What kinds of experiences are they looking for?’” said Jamie Nordstrom, the company’s president of stores. “That can be around a new trend, a new brand, a new style or a new restaurant. It affects how we lay out stores and how we merchandise them, the services we offer and the investments we make. Our time is spent asking, ‘What’s next?’ We want to be the place you go to find something cool.”
The classic department store model hasn’t aged well. Online shopping has stolen department stores’ thunder, to say the least, better delivering on their defining factor of a variety of brands, conveniently sold in one place. To evolve, 118-year-old Nordstrom is largely following the go-to playbook of many heritage companies. It’s teaming with young indie, often digitally native brands to tap their unjaded expertise in a valuable skill, usually that of appealing to a target market. Beauty companies like Estée Lauder and L’Oréal are investing in and acquiring such brands; Nordstrom, meanwhile, is hiring the minds behind them and putting their concepts on its sales floors — no fashion focus required.
In 2013, Nordstrom plucked buyer Olivia Kim from fashion-forward, NYC-based retailer Opening Ceremony. Now vp of creative projects, Kim is heading up the standout departments in Nordstrom’s new store, including the Nordstrom x Nike Boutique, which she described during the store’s press preview as “the ultimate sneaker destination for her,” as well as the Burberry Concept Shop. With their bold, custom interiors, each area would look at home at Dover Street Market. Kim also oversees Space Boutique, a home for emerging and “advanced” fashion brands, and Pop-In@Nordstrom, the retailer’s version of a pop-up. Both have become staples in Nordstrom stores. Everlane will occupy the flagship’s Pop-In space for the first six weeks.
“[Kim] is key to how we’re finding new trends, finding new brands and attracting new customers,” said Nordstrom. “She’s got a tremendous amount of credibility among brands, and she’s been able to open doors for us in terms of collaborations. Those things are hard to pull off, but she doesn’t see a lot of barriers. So we’ve been unleashing her creativity, and there will be more of that to come.”
Since early last year, Nordstrom has been earning a reputation of being a wholesale launchpad for influential direct-to-consumer brands, not limited to those highlighted in the Pop-In. Those being sold in the NYC store range from younger startups including La Ligne and The Arrivals to better-known brands like Madewell and Topshop. “They want to work with us because we’re customer-centric; our interests are aligned,” said Nordstrom. There are, no doubt, other deciding factors, including that the company often alleviates traditional requirements for brands on margins and order quantity, and also shares on data.
In the New York store, specifically, Nordstrom has also brought in a buffet of emerging brands and services, restaurants serving trendy menu items, and new technologies meant to provide ease and entertainment. Between shopping for fashion, a visitor could, for example, enjoy one of 110 beauty services, like a facial workout at Face Gym, test a new lipstick at an AR try-on station, snack on a gluten-free doughnut from Mochi, and customize a pair of Converse sneakers, all in one visit.
“The department store business historically has been a fairly rigid model, like: If you want to shop here, this is the way you have to shop here, and these are the times you can shop,” said Nordstrom. “But we are really focused on: How can we create a much more seamless experience and give customers whatever experience they want, friction-free?” And that takes plenty of partners.
The 320,000-square-foot flagship, located in NYC’s Upper West Side neighborhood, marks the culmination of the 18-month introduction of Nordstrom’s full-price brand into the city. It opened a Men’s Store, now located across the street from the flagship, in April 2018, and two Nordstrom Local stores centered on localized services last month. The company also has two Nordstrom Rack stores and a Trunk Club location in the city.
Brand exclusives peppered throughout the store are expected to engage shoppers, as is the sheer amount of inventory, practically guaranteeing something for everybody. According to Nordstrom, the store houses 100,000 pairs of women’s shoes, 10,000 handbags and 6,000 pairs of jeans.
The name of the game is a well-rounded portfolio that covers the bases, so that consumers won’t need to go elsewhere — the retail landscape is competitive, after all. As Nordstrom employees tell it, keeping customers in-store is a key focus.
In the course of a one-hour tour, one Nordstrom PR representative said, “We want shoppers to never leave, naturally.” A merchandising executive said, “You never have to leave — that’s our ultimate goal.” And Vince Rossetti, Nordstrom’s vp of restaurant operations, said he hopes people will spend the day in-store. “At some point, come in and get a great food-and-drink experience, or just celebrate a new shoe purchase with a couple martinis,” he said.
The trend of traditional-concept retail companies looking to comparatively innovative brands to drive foot traffic is gaining momentum. In NYC in March, The Shops at Hudson Yards’ mall opened amid great promotion of its included Floor of Discovery, largely dedicated to first stores of DTC brands. The grand American Dream shopping center, launching on Friday in East Rutherford, New Jersey, is hyping Fourpost, a retail platform renting space to new-to-retail companies. And mall developers across the board are increasingly incorporating spaces to host pop-ups, to bring in exciting, so-called disruptive retailers while keeping the mall’s offerings fresh.
Basing its new mega-store on the strategy is a big bet for Nordstrom, as it strives to regain momentum. The company is well into a five-year plan projecting an annual net sales increase of between 3% and 4% from 2017 to 2022. The plan entailed ramping up investments in areas including digital and new markets. 2018’s sales came up short, and as of the company’s latest earnings report for the second quarter of 2019, this year’s net sales are expected to decrease by 2%. The Nordstrom family’s failure last year to take the company private, after a year of negotiations, may have proven the plan’s monkey wrench. The move had similar goals to the plan, including furthering Nordstrom’s digital investments and fine-tuning its store footprint.
“At face value, what Nordstrom is introducing is exciting, it’s engaging, it’s interesting. They took the mentality of, ‘Go big, or go home,’ which was probably necessary,” said Michelle Fenstermaker, strategy director at brand and retail consultancy Fitch. “But we’ll see how it plays out, in terms of repeat visits. Frequency equals relevancy. A cool experience is one thing, but what are they going to do to keep shoppers coming back? Where stores have struggled is delivering constant newness, which customers can always find online.”
Shea Jensen, Nordstrom’s svp of customer experience, said Nordstrom is prepared for the challenge. “We believe stores matter a great deal — not just because they’re a place you can buy stuff, but they’re also a place where you can become inspired, discover product and have experiences,” she said. “Our role is to think about, develop and deliver new experiences, and iterate and optimize experiences to serve customers in what we know is a digital world today.”
