Nordstrom opening more Local stores without inventory

Source: Nordstrom Local - Melrose
Jul 10, 2018
George Anderson

When the first Nordstrom Local neighborhood hub opened in West Hollywood last fall, some questioned the wisdom of opening a store that did not carry any inventory for sale on the premises.

Others saw the 3,000-square-foot store as a more enjoyable shopping experience. The location is set up with eight dressing rooms where customers try on clothing and then have their purchases retrieved by on-staff stylists from local Nordstrom stores or ordered online.

Yesterday, the retailer announced plans to open two additional Nordstrom Local neighborhood hubs in Brentwood and downtown Los Angeles in the fall. 

Ken Worzel, president of and chief digital officer, said Local hubs are part of the company’s broader strategy to increase its share of market by delivering services and products that meet the needs of its customers.

“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,” Mr. Worzel said.

The new locations will be smaller than the West Hollywood hub — Brentwood will measure 1,200-square-feet and the downtown LA site at 2,200-square-feet. The stores will offer the same services as those in the first test store, including onsite tailoring and alterations, curbside pickup, buy online, pick up in-store and easy returns at any Nordstrom location.

“We’re learning a lot from customers through our first Nordstrom Local store on Melrose and we’re looking forward to learning even more from the addition of the Brentwood and downtown L.A. locations,” said Shea Jensen, senior vice president customer experiences. “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 neighborhoods.”

DISCUSSION QUESTIONS: What do you see as the appeal of the Nordstrom Local hub concept? What do you see as the keys to the concept’s ultimate success or failure?

Please practice The RetailWire Golden Rule when submitting your comments.
"The key will be ensuring that the assortment aligns with local tastes but, if they can master that, I see nothing but positives in this program."
"...the smaller locations would seem to indicate that the primary purpose has shifted to facilitate convenience more than personalization."
"This is the evolution of brick-and-mortar. It is hard to beat the financial model, low fixed costs and no inventory."

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18 Comments on "Nordstrom opening more Local stores without inventory"

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Dick Seesel

Bonobos and others have already shown that the concept of a “showroom” with little or no merchandise for sale is a winning idea. It’s not surprising to see other stores like Nordstrom experimenting with a small footprint formula of their own.

My biggest concern is whether Nordstrom can adequately represent its breadth of assortment in a 1,200-to-2,200 square foot space, no matter how carefully “curated” the merchandise selection might be.

Jeff Sward

Good point about Bonobos and good point about the use of finite space. I always think about it in terms of the best use of space. And it’s not about pure math or algorithms. Nordstrom still has to tell some kind of story. There still has to be some kind of emotional embrace. It’s not purely transactional. But they learned enough from the first store to take the next step. Crawl. Walk. Run.

Max Goldberg

Nordstrom is not afraid to experiment with new formats and ways to be available to customers. Nordstrom hubs allow the retailer to reach consumers without the expense and overhead of an anchor-sized store. Customers can try on clothes and their orders will be delivered to their doors. All of this is backed by Nordstrom’s industry-leading customer service. There is little downside for consumers or the company.

Roy White

That Nordstrom is opening more inventory-less Local neighborhood hubs is a highly positive development and appears to confirm the success of the initial store. Long term, it is another step in breaking the mold of the traditional store and replacing it with something exciting and different which is aimed at creating a new shopping dynamic for shoppers that no longer respond to the old format.

Carol Spieckerman

It’s interesting that the services Nordstrom’s SVP calls out are onsite tailoring and alterations, curbside pickup, BOPIS and easy returns. Initially, much was being made of customers putting looks together with the help of Nordstrom associates and having them fetched from a local store. When I checked out customer reviews of the service early-on, reviews were generally favorable, though with some calling out that Nordstrom Local is a primarily a pick-up depot. I’m sure that to Nordstrom, it’s all good, but the smaller locations would seem to indicate that the primary purpose has shifted to facilitate convenience more than personalization.

Lyle Bunn (Ph.D. Hon)

The closer that Nordstrom can be to being a room in the targeted customer’s home, the better. More smaller footprint locations staffed with excellent personnel who are expert at using the technology and sales tools to present product and accessory options makes sense. Shopping can still be discovery and conversion rates can be high.

The concept’s success depends on the associates who must know fashion trends intimately and have increasing familiarity with what is in the customer’s wardrobe already.

Dave Bruno

The absence of inventory, to me, is a non-issue. What I really like about the Local concept is the fact that Nordstrom is bringing their experience to their customers. On-staff stylists, locally curated assortments, and on-site alterations, packaged with all the other Nordstrom amenities is, in my opinion, a brilliant idea.

Certainly the key will be ensuring that the assortment aligns with local tastes but, if they can master that, I see nothing but positives in this program for Nordstrom. If they include store pickup/curbside delivery and returns for all purchases, regardless of original purchase location, that would put this program over the top.

Joanna Rutter
I can feel the keywords twitching in my typing fingers: “unsurprising,” “retail experience,” “Millennials,” “smaller footprint,” “showrooming.” I’ll restrain myself. Yes, this is a move in the direction we’ve been talking about almost every day. What’s most concerning to me — just as private equity was missing from most of the Toys “R” Us coverage — is that Nordstrom had a similar public-to-private tango happening in its boardrooms in early March that’s fizzled out for now. I don’t think that story’s over at all, and what happens there may impact the company (including its ability to snap up more retail ops startups and successfully integrate them into their tech stack) much more than a cool showroom concept can, in my opinion. Though: Showrooming is a neat play among Nordstrom’s anchor store buddies, who are differentiating by buying up brainpower (STORY and Macy’s) or curiously partnering traditionally “highbrow” and “lowbrow” retail (Walmart and Lord & Taylor). I think a lot of us are watching and waiting to see whether these retail behemoths can steer their ships… Read more »
Brandon Rael

The move to an experiential showroom service-first retail model is truly a winning concept, and it has been a very successful model with the digital native innovators Bonobos, Warby Parker, Indochino and others leading the way. The legacy department store model of vast assortments, SKUs and being everything to every consumer is simply not resonating, and the inventory ownership itself is a significant financial risk.

Nordstrom is taking the right approach with this experiment, as stores are evolving to becoming a destination place, where the community comes together and brand experiences come to life. Bonobos and others have proven that the consumer doesn’t necessarily have to leave the store that day with the product. If you provide a wonderful experience, then the consumer is more than happy to wait several days for a personalized and customized product.

Experiential retail and storytelling have become the new gold standard for inspiring customers. Nordstrom’s challenge will be to keep the concept alive, fresh and renewed on a continual basis.

Bob Amster

This reminds me of the tailor shops and dressmakers, where one could only have garments made to order and didn’t walk out of the shop with the garment on the first visit. Good luck!

Gene Detroyer

I saw this type of presentation on Corso Como in Milan years ago. The smallest store (probably with the lowest fixed costs) on the most expensive street was doing booming business.

This is the evolution of brick-and-mortar. It is hard to beat the financial model, low fixed costs and no inventory. And it forces the retailer to focus on the customer experience rather than stocking goods up and cutting prices.

Rich Kizer

I love the fact that brilliant retailers keep moving to find solutions to silence the saga of “the demise of department stores”! Kudos to you, Nordstrom. I see this as the perfect answer for clients that are busy and in a hurry. My “old retail dog” mind still reminds me of the power of impulse shopping that crosses the boundaries of the intended need. I feel that could be a concern here. “Pulling the desired items from the local store the same day” is important, obviously. However, I am not sure if requesting that the client to make a return visit to secure the package is in the culture of Nordstrom. Times like this create challenges, and I think Nordstrom is the company that can and will figure out the answers. I’m looking forward to wandering in!

Lee Kent

Nordstrom appears to be more focused on the service aspects of these locations and that makes for a slightly different and perhaps better concept in my mind. Order online, pick up at the local hub. Try the item on and have alterations made. This is convenience, customization and can even save the sale. For my 2 cents.

Ken Morris

Nordstrom Local is a new twist on the trend of smaller store footprints and limited-to-no inventory. RH Gallery stores have been a success with a showroom approach with no inventory on-hand to purchase. Many consumers are beginning to think of stores as showrooms and use them to try on or test products in person and then order online from the comfort of their home or anywhere from their mobile device. This showrooming concept which requires minimal space lends itself well to affluent urban locations where real estate is expensive. More stores with smaller footprints help achieve higher sales per square foot. As Nordstrom continues to finesse the Local concept, look for more locations popping up in other major cities.

Another opportunity for Nordstrom is to offer custom-tailored clothing options for consumers. Consumers could visit the Local store to get measured and within a couple weeks they would receive their custom apparel. This is a trend that will continue.

Cate Trotter
It’s really interesting to see this concept evolving and how Nordstrom is taking it wider. As others have said the new spaces seem to be focused on being collection points, where customers can try things on and get them tailored. This works well with the smaller footprint too. I think the Local idea in general is just a nice mix of service and convenience — you’re not browsing through endless rails because you’ve already ordered (or have booked a stylist), so in a way the potentially “less fun” bit is already out of the way. Instead you get to concentrate on trying things on but with the added bonus of experts to help. What I really want to see is how far this concept can go. I’ve long been surprised that no one has opened up a tiny store space which has one fitting room and serves for a pick-up and try-on point. Nordstrom Local could be condensed even further and still retain many of the services above — even if the tailoring was done… Read more »
Craig Sundstrom

Looking back at the previous thread in Sept ’17, I didn’t comment, so maybe I didn’t quite understand how this works … and I still don’t. If the store truly has “no inventory” then where does the clothing come from for people to try on? If the answer is they have a small stock of samples (in back), then I question how a location this small can possible hope to replicate the Nordstrom experience of broad selection … one of their main selling points.

Alternately, if this is mainly a BOPIS pick-up point, then I see the constant traffic as interfering with the “salon” atmosphere they seemingly want to create.

So, while I’m reluctant to criticize what I don’t “get,” I can’t be too excited by it either.

Cynthia Holcomb

What is old is new again … relatively speaking. For years and years, local Nordstrom buyers selected merchandise specifically for their local market. I know as a vendor and later as a Nordstrom design director. Then a while back, several hundred buyer positions were eliminated and buying became centralized. For those of us who grew up with Nordstrom, the difference between local vs. centralized product offerings was very disappointing to say the least. The Nordstrom flair was missing.

Circle back to 2018 and the world of digital shopping. While reinvention is a constant with Nordstrom, transitioning to local, in this relatively new digital customer experience world sounds like a sure bet. While clothes may not be hanging in the “new stores,” customer service and personalized experiences will become the lever to drive apparel sales and loyalty. Just my two cents, as “they” say!

Min-Jee Hwang

Nordstrom’s boldness and willingness to experiment with unique business models that improve the customer’s shopping experience is setting it apart from competitors. The appeal of the Nordstrom Local hub concept is that the entire shopping experience is personalized. It’s customized shopping, which is the current trend in the marketplace. If more brands had the means and customer loyalty that Nordstrom is notorious for, we’d see a lot more creativity like this in the retail industry in regards to redefining the shopping experience. The key to success in this situation is taking risks and not being afraid to fail. Even if the Nordstrom Local hub doesn’t end up resonating with customers, Nordstrom can learn from their mistakes and take their brand down a different path, which could have large implications.

"The key will be ensuring that the assortment aligns with local tastes but, if they can master that, I see nothing but positives in this program."
"...the smaller locations would seem to indicate that the primary purpose has shifted to facilitate convenience more than personalization."
"This is the evolution of brick-and-mortar. It is hard to beat the financial model, low fixed costs and no inventory."

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