Canada: Nordstrom’s Big Department Store Bet
“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 spendmoney.
“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 tooutpace 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?
Source: Market Force
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