Nordstrom's Big Department Store

Nordstrom’s Big Department Store Bet While its peers are struggling, the retail giant is doubling down on what it does best — and going beyond its American roots. BY CHAVIE LIEBER NOV 15, 2016, 9:30AM EST Toronto Eaton Centre is unusually busy for a weekday morning. It's not even 8 a.m., hours before stores in the popular shopping mall will open on this Friday in September, and 1,500 people are waiting in its northeast corridor. Everyone is here to celebrate the grand opening of Nordstrom, the storied American department store. "Are they giving away anything for free?" This is the question asked by employees of other stores at the mall, who are slowly trickling into work, as they eye the size of the crowd. There are indeed plenty of freebies: Coffee and doughnuts are up for grabs, and beauty stations manned by makeup artists are offering up complimentary consultations. A live band is playing. But for the most part, shoppers have turned out to spend money. "This is the biggest deal in Canadian retail right now," says Jaclyn Marsh, as she sips her coffee and waits with fellow shoppers for the doors to open. "It's really exciting when an important American brand comes to Canada." "Honestly, it's about time," adds Sean McConnell, a 31-year-old marketing associate. "The main draws of Eaton Centre used to be stores like Champs, Sears, and Foot Locker, so it didn't really make sense for fashion folk to shop here. Nordstrom brings a certain level of prestige." It's more than just prestige, though. Alyssa Nettleton, the manager of a nearby Lululemon store who's come to marvel at the spectacle, notes that when Saks Fifth Avenue opened up across the mall earlier this year, "it didn't have the same reception." "I don't think a lot of people here have ever even been inside a Nordstrom before," she says. "I haven't! But from what I've heard, it's the best because there are affordable, everyday items, but then there's also all the luxury stuff." Right before 10 o'clock, the crowd pushes its way toward the entrance and starts counting down with Nordstrom Eaton Centre's store manager: "Five! Four! Three! Two! One! Welcome to Nordstrom!" The store's security gates slowly rise, and the cheering crowd is met with an army of 800 employees clapping just as enthusiastically. The shoppers flood into the store, disappearing into the sprawling space. Nordstrom is beefing up its department store portfolio at a time when we are constantly being told the department store is dying. This summer, Macy's announced it was closing 15 percent of its American stores after six straight quarters of declining sales. Since 2014, J.C. Penney has closed 80 locations; Sears closed nearly 300. According to the US Department of Commerce, department store sales have declined 30 percent from $87.46 billion in 2005 to $60.65 billion in 2015. Department stores face a grim future, and it gets even gloomier when Amazon, which is set to outpace them in apparel sales, is factored into the equation. Yet Nordstrom is envisioning eight stores in Canada and three more new stores in the US by 2019, including a flagship in New York City. Nordstrom certainly hasn't been immune to the squeeze — in-store sales were down slightly from $7.9 billion in 2012 to $7.6 billion in 2015. But in 2015, Nordstrom's total sales actually reached an all-time high of $14.1 billion, up 35 percent since 2011. It ranks as the nation's favorite fashion retailer pretty much every single year, according to research firm Market Force; its anniversary sale is arguably one of the most anticipated annual shopping events, and it's been hailed as "one of the most innovative retailers around" by WWD. Shoe designer Steve Madden recalled to Bloomberg Businessweek a few years ago that when he was first invited to meet with Nordstrom buyers, "it was like an invite to the White House." Its sales per square foot come in at $370, beating both Saks and Macy's. The 115-year-old retailer that's largely been run by one family since its humble beginnings is aiming for $20 billion in net sales by 2020. How is Nordstrom succeeding in a space where everyone else is failing? Craig Trounce was a 16-year-old sales associate at Nordstrom in the ‘70s, working at the company's Fairbanks location in Alaska. One day, a local came into the store with a pair of old tires he said he had bought at the location a few years earlier. He was told he could return the tires if he wasn't satisfied, and so there he was, ready to make the exchange. Trounce was surrounded by typical Nordstrom merchandise — button-down shirts, ties, shoes — but the customer wasn't totally off. Nordstrom had bought a few Alaska store locations from Northern Commercial Company, which used to sell tires, and so the shopper had technically come to the right place. Trounce called a local tire dealer to consult what the value of the tires would be ($25) and handed the customer cold, hard cash from the register. This is the story Nordstrom tells, again and again, to exemplify the customer service it prides itself on, but it's also just one of many. There's the story the New York Times reported in 1986, in which a manager in the men's suiting department at the Glendale, California location sent a tailor to a customer's office when he heard the customer was unhappy with his suit. There's the story published by the Jacksonville Business Journal about someone on the Nordstrom housekeeping staff finding a customer's bag and airline ticket in the parking lot of a Connecticut location in 2012 and driving to the airport to meet her. It's no surprise the company's most recent holiday campaign stars 34 customers. "Nordstrom has seen consistent success throughout the years because they maintain a high level of focusing on consumers," says Abbey Doneger, CEO of retail analysis firm the Doneger Group. Adds Robert Spector, the co-author, with Patrick D. McCarthy, of the 2012 book The Nordstrom Way, "Every store talks about customer service, but very few actually get it, so it becomes a cliché to mention it. But Nordstrom actually believes in it. It isn't bullshit." This focus on shoppers starts first and foremost with its generous return policy — or generous lack thereof. "We actually don't have a return policy. What we have is a belief in empowering our salespeople to deliver the best service, where we tell our folks there are no rules," says Jamie Nordstrom, sitting in the café inside the Eaton Centre location the morning before the store opening. Jamie is Nordstrom's 43-year-old president of stores and a second cousin to Pete, Blake, and Erik, the three Nordstrom brothers who serve as co-presidents of the company. "The best person to make a decision on how to best serve that customer is the person standing right in front of them, and that includes taking returns." Sally Issa, a Toronto resident who grew up in New Jersey, says the return policy is the reason she doesn't buy luxury items anywhere else: "I know Barneys or Saks sells a lot of the same product, but I feel more comfortable buying it here because if I blow $900 on a handbag and something happens to it, I know I'm safe." "It also comes from standing behind what we sell," Jamie explains of the policy, "so that we can tell the customer, ‘I am so confident you are going to love this thing, I want you to buy it, wear it to work someday, and if you do not feel great about it, I want you to bring it back. I don't want you to have anything in your closet that you bought from me that you do not love.' We've got to follow through on our promise." Nordstrom listens closely to its customers, responding to them even if no further action will be taken. After a woman wrote an open letter to the retailer asking it to stop carrying Ivanka Trump's fashion line in late October, Nordstrom replied on Twitter that it hoped "offering a vendor's products isn't misunderstood as us taking a political position; we're not. We recognize our customers can make choices about what they purchase based on personal views & we'll continue to give them options." Now that there's an extensive call to boycott stores carrying Trump brands following the results of last week's election, Nordstrom confirmed to Racked it has no plans to stop carrying it; it is the only company to issue a public response to the #GrabYourWallet campaign. In addition to transparent customer relations, Nordstrom stocks an impressive mix of higher- and lower-end brands, without managing to alienate anyone. Who else could get away with selling Christian Louboutin next to Crocs? "We play into the sense of inclusiveness, as opposed to exclusiveness," says Jamie. "I'm a fortunate person, I can afford to buy most things at Bergdorf Goodman, and yet when I walk into Bergdorf, I feel really self-conscious in there. I walk into Barneys, and I feel like a slob." "I have three kids," he continues, "so I spend a lot of time at soccer games and see the mom with her Hunter boots, yoga pants, and Moncler jacket over a $20 Topshop top with a Nike hat.

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