Nordstrom Sees an Open Door
Bruce Nordstrom admits he felt a little intimidated when he first visited South Coast Plaza four decades ago, even though retailing is in his bones.
The Orange County shopping center was “arguably the best mall in America,” he said, and the company his grandfather co-founded in 1901 had never branched out from its home turf in the Pacific Northwest.
“I was just trying to learn something,” said Nordstrom, now 71 and chairman of the Seattle retailer that bears his family’s name.
Apparently, he did. Nordstrom Inc. eventually opened its first California store at South Coast Plaza, and it has been the chain’s sales leader ever since. Today, the company is a retailing force in California, where it will open its 29th department store at Irvine Spectrum Center on Friday.
It’s the first of what could be as many as half a dozen new Nordstrom stores in the region in the coming years, in part because of Federated Department Stores Inc.'s $11-billion purchase of May Department Stores Co. Federated has said it would sell 26 Macy’s and Robinsons-May stores in the Southland. To satisfy regulators, it agreed to give competitors such as Nordstrom and Neiman Marcus priority in bidding on the stores.
The Fashion Island shopping center in Newport Beach and the Victoria Gardens mall in Rancho Cucamonga are likely at the top of Nordstrom’s list, said Gregory Stoffel, a retail real estate strategist in Irvine. Other sites might include Santa Monica Place and Simi Valley Town Center, he said.
Nordstrom executives have said they will be “opportunistic” about selecting sites, but won’t say which ones they’re most interested in.
“We view it as a great opportunity,” said Blake Nordstrom, Bruce’s son and the company’s president, during a recent interview in his Seattle office, where a glass display case bearing old shoes, shoehorns and polish stands as a memorial to the company’s roots as a footwear seller. “California’s a very important part of our business.”
It’s a business that’s likely to get tougher as Federated, by far the nation’s largest department store chain, focuses its considerable firepower on expanding Macy’s and opening two more of its vaunted Bloomingdale’s stores, in San Diego and South Coast Plaza.
For Nordstrom, the key will be to stay riveted on customer service -- the thing that most distinguishes it from the pack -- and on top of fashion trends, retail experts say.
When it comes to service, “I don’t think Nordstrom is going to have to change its plan one iota,” said Robert Buchanan of A.G. Edwards & Sons Inc. “Customer service, by and large for the department stores, is still abysmal,” which gives Nordstrom an edge, he said.
On the fashion front, Nordstrom is betting that the recent hiring of Jeffrey Kalinsky, whose Jeffrey stores in Manhattan and Atlanta serve as guideposts for East Coast fashionistas, as head of designer merchandising will help make it more adventurous, analysts said.
“They have to focus on making the merchandise mix even more special,” said Betsy Sanders, a former Nordstrom executive who orchestrated the company’s move into the region. “They have to work harder.”
In Southern California, Nordstrom fills a slot once occupied by Bullock’s, offering a shopping environment that’s both elegant -- customers are often wooed by a tuxedo-clad man at a grand piano -- and family-friendly, said Ilse Metchek, executive director of the California Fashion Assn.
Compared with Neiman Marcus and Saks Fifth Avenue, which have only a few stores in the area, Nordstrom offers a wider range of merchandise, including moderately priced lines, Metchek said.
Bloomingdale’s, Federated’s top-tier chain, is strong on the East Coast but hasn’t captured many Southland shoppers in the same way that Nordstrom has, Metchek said. Many shoppers “don’t consider Bloomingdale’s one of our stores,” she said.
That leaves Macy’s, which from a size standpoint will become an even bigger competitor after the conversion of the Robinsons-May: 132 stores in the region, up from the current 107. Although it lacks Nordstrom’s cachet, Macy’s offers a wide range of merchandise, some of it moderately priced, and many product lines -- including furniture, kitchen appliances and housewares -- that Nordstrom does not. Macy’s executives declined to discuss their plans for competing with Nordstrom.
The changing retail landscape reminds Sanders of the years after Nordstrom’s entry into California, when it was competing fiercely with Bullock’s and Robinson’s for Southland shoppers. Bullock’s was the toughest competitor Nordstrom had faced, she said, and Robinson’s had the edge in fashion.
There was also Neiman Marcus. Nordstrom wanted to open its first California store in downtown San Francisco, but it was edged out by the Dallas-based merchant of luxury goods, Sanders said. Nosing around Southern California, Nordstrom warmed to Fashion Island but was again aced out by Neiman Marcus.
One prominent shopping center operator thought Nordstrom was a catch.
Bruce Nordstrom recalls the day he was sitting in his Seattle office in 1971 when a gray-haired stranger in a great-looking suit arrived unannounced. Might Nordstrom be interested in opening at South Coast Plaza? asked Henry Segerstrom, whose family owns the Costa Mesa shopping center.
“I don’t know,” Nordstrom said he replied. “I don’t think so.”
It was the first step in what Nordstrom calls “a very slow mating dance” that ultimately altered the company’s future.
Opening Day at South Coast Plaza -- May 1, 1978 -- gave no hint of Nordstrom’s future success. The only “celebrity” available for the grand opening ribbon cutting was the mayor of Costa Mesa, Nordstrom said. A few reporters and photographers showed up. All that was missing was the customers.
“I looked out on the mall ... and there was nobody there,” Nordstrom said. “I was absolutely sick to my stomach.”
So he hustled into the store and urged employees to get out in the mall and pretend they were shoppers. When the mayor snipped the ribbon, it was employees who were clapping.
But word of mouth worked magic for Nordstrom, and California became a trampoline for growth nationwide.
Although the stores have improved their merchandise in recent years, the crux of Nordstrom’s popularity is its service.
“I like that they will help you and go get clothes for you,” said Ann Harrison, a 46-year-old substitute teacher who lives in Fullerton.
Such service was once commonplace in department stores, she said, but now is scarce.
“Now you go to a store, and salespeople are talking to boyfriends on the phone or to each other,” she said. “I just got fed up with that. I decided I’ll pay more to get the service [at Nordstrom]. It’s worth it to me.”
One way that Nordstrom makes service a priority is by paying its sales force strictly by commission, typically 6.75% of what they sell. The average salary for a Nordstrom salesperson is $34,500, a spokeswoman said. Last year, 61 of the retailer’s approximately 24,000 salespeople each sold at least $1 million worth of products, earning more than $75,000.
Analysts say the company’s new “personal book,” launched last fall, could further strengthen ties between customers and salespeople. The electronic ledger notes customers’ birthdays, sizes, brand preferences and other information, allowing salespeople to stay linked to the consumers.
But what many shoppers like best about Nordstrom is its liberal return policy.
“If a customer has been exasperated and in a tough situation, it may be the right decision to take something back that didn’t even come from our store,” said Erik Nordstrom, executive vice president of full-line stores who is a son of Bruce and brother of Blake. “Ninety-nine percent of the time, people are honest.”