The department store will open two more ‘no merchandise’ stores in Los Angeles and is also looking at New York locations. It already has opened one inventory-free outlet under its Nordstrom Local banner in West Hollywood.
The counterintuitive move from the department store comes as retailers continue to grapple with competition from online retailers. Nordstrom was originally a shoe shop but has expanded to offer clothing, accessories, cosmetics and jewellery. Many of Nordstrom’s 373 retail outlets also feature restaurants and cafes.
Nordstrom Local: an innovation in retail
The first Nordstrom Local, on Melrose Avenue, has a bar, nail salon and facilities to try on apparel and have clothes altered. The store also offers curated clothes shopping through its Style Board service which sees online personal stylists select clothes and apparel for customers based on their responses to a questionnaire.
Customers can use the location as a pickup point for online orders. The store is only around 1,000 square metres compared to the 42,000 square metre space of the regular Nordstrom stores.
The concept is designed to be experiential and add to the overall value the brand can offer above and beyond the basic bricks-and-mortar retail transactions.
Nordstrom Local is also a way for the store to engender brand loyalty among the millennial demographic. Fast Company reports that the existing Nordstrom Local store “looks and feels nothing like its traditional stores” and is a popular spot for young people to work at the communal tables or simply hang out in its luxurious surrounds.
In a statement, Nordstrom.com President and Chief Digital Officer Ken Worzel said Nordstrom Local outlets were a key component of the company’s growth strategy and an avenue for the company to increase market share.
“Through our local market strategy, we’re combining the scale of our national infrastructure with our local assets of people, product, and place to help reimagine the shopping experience for our customers,” he added.
“We’re learning a lot”
“We’re learning a lot from customers through our first Nordstrom Local store on Melrose and we’re looking forward to learning even more,” Shea Jensen, Senior Vice President: Customer Experiences, said.
“We think there are more ways to serve customers on their terms and we are looking forward to introducing Nordstrom Local to customers who live in these neighbourhoods.”
At a presentation to investors on Tuesday 10 July, Nordstrom executives said the company was forecasting revenue growth of three to four per cent until 2022.
In a note to clients before the presentation, Telsey Advisory Group analyst Dana Telsey said: “As the retail landscape remains highly competitive and challenging, we admire the initiatives that Nordstrom continues to implement to solidify its place as a best-in-class multi-channel retailer.
“However, earnings growth for at least the medium-term appears muted due to softer top-line performance and margin pressure from investments in long-term growth initiatives, among other factors.”