Nordstrom Looking to Rack Up Sales in NYC

Discussion
Jul 23, 2009

By
George Anderson

It
was just a matter of time before Nordstrom decided to take its act to
Manhattan. The chain announced that it will open its first location in
the spring of next year at Union Square. As something of a surprise,
the first Nordstrom in the city won’t be a full-line department store but
a Nordstrom Rack.

“They’re
doing what’s right for the right part of Manhattan,” Sam Poser, an analyst
at Sterne Agee & Leach, told The Seattle Times. “It’s a more
moderate shopping area than Park Avenue.”

Mr.
Poser said the location should do considerably more business than the
$16 million he estimates is generated by the average Rack location. “There’s
a ton of traffic because subways go through there, and a lot of people
live and work in the area.”

Nordstrom
typically opens full-line stores before opening Rack locations. The
company thought it had a deal a few years back on Park Avenue, but
it fell through when the developer had financial issues.

Brooke
White, a spokesperson for Nordstrom, said the company is still looking
for a suitable location to open a department store in the city.

“Manhattan
real estate is very hard to come by,” she told The
Seattle Times
. “With a Rack, there were more
options available to us, and we wanted to not pass this opportunity
up.”

Consumers
in Manhattan won’t be confusing the Rack location with the chain’s
department stores. “People understand this is a Nordstrom Rack and not a
Nordstrom store,” Ms. White said. “People get that there’s a difference.
New York City consumers are pretty educated people.”

Discussion
Questions: Will Nordstrom be successful with its Rack format in New York
City? Is there any concern that the company is leading with a Rack instead
of a full-line department store?

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15 Comments on "Nordstrom Looking to Rack Up Sales in NYC"


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David Rich
Guest
David Rich
11 years 9 months ago

As a New York City resident I would say…YES the concept and location will work. New Yorkers (all 8 million plus) are always looking for a good deal, and “The Rack” has things to offer that Filenes, TJ Maxx and Burlington do not. Hopefully it will be an upgraded Daffy’s. The real question is would a regular Nordstrom’s do well?

Gene Detroyer
Guest
11 years 9 months ago

The Rack will do well in NYC. But, it is a long-term strategic mistake. NYC doesn’t know Nordstrom and the high quality department stores they run. The NYC introduction of the Nordstrom name will be associated with low-price selling. In the minds of those who make that initial association, the mainstream Nordstrom will always carry the lower priced, lower quality cache. If Nordstrom ever wanted to open in NYC, this move will kill that opportunity.

Susan Rider
Guest
Susan Rider
11 years 9 months ago

NYC shopping experience is known world wide. This is a positive move and will attract many. Long time in coming.

Phil Rubin
Guest
11 years 9 months ago

This is a smart and opportunistic move by Nordstrom. The key is real estate and that is always a challenge in Manhattan. They could not have picked a better location and the Rack absolutely fits the bill here.

Yes, New York is different and very competitive but Nordstrom is too. Those who bet against them don’t fully understand what makes them so good and better than almost every other retailer out there.

Bill Robinson
Guest
Bill Robinson
11 years 9 months ago

Nordstrom Rack in Manhattan? Yes, yes. What took them so long?

It is amazing how long-standing company-wide beliefs stand in the way of obvious success. In this case the department store culture of Nordstrom argues that Nordstrom Rack only makes sense in the shadow of a department store. But it make sense to open a Nordstrom in Manhattan as it would in London, Paris, or Tokyo.

Does the Nordstrom family remember that the company first started selling footwear?

The Manhattan Nordrom Rack will have a broad selection of women’s shoes at great prices in a city filled with overpriced women’s shoes? That’s a winner.

Bob Livingston
Guest
Bob Livingston
11 years 9 months ago

Brilliant! About time.

Anne Bieler
Guest
Anne Bieler
11 years 9 months ago

Nordstrom should do well in NYC – they understand the value the shoppers want and deliver it with style.

Doug Stephens
Guest
Doug Stephens
11 years 9 months ago

Having worked retail in New York for several years, I can say with some assurance that Nordstrom will do just fine in Manhattan.

The area they’ve chosen is a good one. Provided they can cut a good real estate deal (which they should), build a great store and give the service their reputed for giving, they should do well.

Their timing could be very good on this.

Martin Balogh
Guest
Martin Balogh
11 years 9 months ago

It will be huge hit. The Rack on State Street always seems busier than either Filene’s Basement or TJ Max across the street. It may help that we have a Nordstrom on Michigan Avenue, a few blocks away, but I suspect most shoppers in Manhattan are savvy enough to know the difference between the company’s offerings.

Ted Hurlbut
Guest
Ted Hurlbut
11 years 9 months ago

I don’t see any issues with opening a Rack in Manhattan now with full line Nordstrom to follow. It’s a huge market with a broad demo and savvy shoppers. Obviously, location is key, but the company will do very well in the city with both formats.

Craig Sundstrom
Guest
11 years 9 months ago

A few thoughts: What exactly is meant by “do well”? If one simply means (sales) revenue, then probably the answer is yes; but if one has to include that pesky other side (expenses), then the issue is more complicated: how issues like shrinkage, rent, labor, and marketing costs will play out is less clear.

I share Gene’s concern about perception (though I think he overstates the case of New Yorker’s ignorance of the Nordstrom brand); it is common–or at least it once was–for higher-end stores established in a market to expand down–the “bargain basement” angle–but quite novel for the opposite to occur (i.e. a lower-end store to add luxury “upstairs”); of course that really isn’t the case here, since Nordstrom and Nordstrom Rack are essentially separate operations, but I think there’s still a danger that people who fixate on the first word in the name rather than the last will be disappointed.

Tim Henderson
Guest
Tim Henderson
11 years 9 months ago

Given the recession, launching the Rack before the full-line store is a good strategy. Recession shoppers are looking for good buys on quality goods–Nordstrom Rack fits the bill. And I have to agree that shoppers are pretty savvy about brands, i.e., they know the difference between the two nameplates. And for those that may not, patronizing the Rack should help build brand loyalty that hopefully transfers to the full-line department store once it debuts.

Marge Laney
Guest
11 years 9 months ago

I too agree with Gene. Does Nordstrom Rack offer the legendary service experience that their full line stores are known for? No. I think it’s a risk as it will be the defining store experience for those who never had the opportunity to shop at a full line Nordstrom and “get” the difference. Nordstrom and Saks shoppers trade down and find great value at the Rack and 5th Off, especially now. But, when Nordstrom opens a full line, will the Filene’s, TJ Maxx, Burlington, and Nordstrom Rack customer trade up?

PAMELA FLOYD
Guest
PAMELA FLOYD
11 years 9 months ago

As a former New Yorker, I can definitely see a Nordstrom Rack as a very successful venture in NYC. New Yorkers love a bargain and a high-end bargain is even more attractive. Watch out Century 21–you may soon be the former “best kept secret in NY.”

William Passodelis
Guest
11 years 9 months ago

Oh, Please! New Yorkers are some of the most savvy people in the country and those who want a bargain will love the Rack and–by the way–New Yorkers travel and I am certain they have encountered the full line stores in locations such as Michigan Ave., or Pentagon City–or even Short Hills!

I think the Rack will do very well for Nordstrom and when Nordstrom finds the Right location and space–NYC will get a full-line store as well.

If L&T would have gone under then the Fifth Ave. location would have been the Manhattan Nordstrom.

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