Nordstrom going to Private Equity?

[ClownLoach]

Many of their closures have been small markets in the Pacific NW that probably date back to when they bought Best. I'd imagine these either had cheap long-term leases or were owned by them but never generated much volume.

The Best stores were only in Seattle with one store in Portland. They may have also had a store in Spokane.

The reality is that their store real estate strategy changes after opening stores in the Northwest and California. Their original plan was to go into any mall that could support them. When they decided to go national, they changed their strategy to open only one or two large stores per market. That's how they ended up with so many, often smaller, stores on the west coast and fewer but larger stores elsewhere. For instance, Oregon would have been a 1 or 2 store market, which they are down to now but at one point they had 6 full line stores.

That could place them in a similar situtation like the Macy's of today.

Really all of these department store chains over expanded in some areas creating inconsistency and problems. Nordstrom overexpanded into areas that were growing population but not necessarily growing their demographic, so then they had to pull back because the customer base wasn't there. Macy's acquired too many stores in California and that leaves the sales dollars too spread out. Too little cash flow and too much overhead put them into the deferred maintenance and lack of remodeling which has helped lead to their irrelevance in the marketplace today. I saw all these lists of Macy's rumored to be closing and there not only weren't any surprises but I felt there were several missing that should not be operating. I feel that there are still quite a few Nordstrom left to close as well. The department stores have to deliver the combination of a superior experience, superior selection with exclusive items, and superior pricing to be able to survive. Otherwise why should the customer drive past their favorite brands DTC store to go see it at Macy's or Nordstrom?

[storewanderer]

They've probably hit a tipping point with the Rack stores where they can't add much more made-for-outlet stuff, although they are more interesting to visit than Marshall's. The problem for all these places is that outside of the bubble that occurred around COVID because of bottlenecks, there is less and less true outlet merchandise coming to market, as logistics operations get better. If Nordstrom was to eliminate the e-commerce channel, they might have even less available to the outlets. The last true outlet I visited was a Dick's Going Going Gone---which had the odd sizes, odd colors, low profile brand names, etc. that used to fill outlets---people either bought a lot of stuff and seemed to enjoy the treasure hunt or they were in and out quickly because they probably were looking for one thing. I was just killing time and bought something to drink.

The Marshalls and TJ Maxx units in my area have infinitely more traffic than the Nordstrom Rack has. The customers also seem to be buying a lot more items at Marshalls and TJ Maxx. I dislike all three stores. I'm not sure I've ever bought anything from "TJ Maxx" - I have bought a few random items at Marshalls over the years; about as many as I've bought at Nordstrom Rack. I thought Nordstrom Rack was a lot better pre-COVID. They are terrible now. Barely any merchandise for men's clothing.

[ClownLoach]

They've probably hit a tipping point with the Rack stores where they can't add much more made-for-outlet stuff, although they are more interesting to visit than Marshall's. The problem for all these places is that outside of the bubble that occurred around COVID because of bottlenecks, there is less and less true outlet merchandise coming to market, as logistics operations get better. If Nordstrom was to eliminate the e-commerce channel, they might have even less available to the outlets. The last true outlet I visited was a Dick's Going Going Gone---which had the odd sizes, odd colors, low profile brand names, etc. that used to fill outlets---people either bought a lot of stuff and seemed to enjoy the treasure hunt or they were in and out quickly because they probably were looking for one thing. I was just killing time and bought something to drink.

The Marshalls and TJ Maxx units in my area have infinitely more traffic than the Nordstrom Rack has. The customers also seem to be buying a lot more items at Marshalls and TJ Maxx. I dislike all three stores. I'm not sure I've ever bought anything from "TJ Maxx" - I have bought a few random items at Marshalls over the years; about as many as I've bought at Nordstrom Rack. I thought Nordstrom Rack was a lot better pre-COVID. They are terrible now. Barely any merchandise for men's clothing.

That Orange Rack had the best men's dept I've ever seen in any of these discount places. Blew my mind. Can't figure out how it was such an outlier in the chain.

[storewanderer]

They've probably hit a tipping point with the Rack stores where they can't add much more made-for-outlet stuff, although they are more interesting to visit than Marshall's. The problem for all these places is that outside of the bubble that occurred around COVID because of bottlenecks, there is less and less true outlet merchandise coming to market, as logistics operations get better. If Nordstrom was to eliminate the e-commerce channel, they might have even less available to the outlets. The last true outlet I visited was a Dick's Going Going Gone---which had the odd sizes, odd colors, low profile brand names, etc. that used to fill outlets---people either bought a lot of stuff and seemed to enjoy the treasure hunt or they were in and out quickly because they probably were looking for one thing. I was just killing time and bought something to drink.

The Marshalls and TJ Maxx units in my area have infinitely more traffic than the Nordstrom Rack has. The customers also seem to be buying a lot more items at Marshalls and TJ Maxx. I dislike all three stores. I'm not sure I've ever bought anything from "TJ Maxx" - I have bought a few random items at Marshalls over the years; about as many as I've bought at Nordstrom Rack. I thought Nordstrom Rack was a lot better pre-COVID. They are terrible now. Barely any merchandise for men's clothing.

That Orange Rack had the best men's dept I've ever seen in any of these discount places. Blew my mind. Can't figure out how it was such an outlier in the chain.

It must come at the expense of other locations. I thought the one in Reno was pretty good pre-COVID and I was offered assistance finding items in the department multiple times pre-COVID. There was a fitting room or something right near where the spot where they had the nicer dress clothing and the employee there always offered assistance. It wasn't that they had "a lot" in Reno pre-COVID but what they had was all quite decent product. Now they have less product and much of it looks to be hard sell type stuff; weird designs/colors etc.

[veteran+]

The Best stores were only in Seattle with one store in Portland. They may have also had a store in Spokane.

The reality is that their store real estate strategy changes after opening stores in the Northwest and California. Their original plan was to go into any mall that could support them. When they decided to go national, they changed their strategy to open only one or two large stores per market. That's how they ended up with so many, often smaller, stores on the west coast and fewer but larger stores elsewhere. For instance, Oregon would have been a 1 or 2 store market, which they are down to now but at one point they had 6 full line stores.

That could place them in a similar situtation like the Macy's of today.

Really all of these department store chains over expanded in some areas creating inconsistency and problems. Nordstrom overexpanded into areas that were growing population but not necessarily growing their demographic, so then they had to pull back because the customer base wasn't there. Macy's acquired too many stores in California and that leaves the sales dollars too spread out. Too little cash flow and too much overhead put them into the deferred maintenance and lack of remodeling which has helped lead to their irrelevance in the marketplace today. I saw all these lists of Macy's rumored to be closing and there not only weren't any surprises but I felt there were several missing that should not be operating. I feel that there are still quite a few Nordstrom left to close as well. The department stores have to deliver the combination of a superior experience, superior selection with exclusive items, and superior pricing to be able to survive. Otherwise why should the customer drive past their favorite brands DTC store to go see it at Macy's or Nordstrom?

True, but the distinction for me is that Nordstrom's cachet (like Macy's a while back) was special.

Over expansion is a common mistake but it becomes way more egregious and damaging to a formerly and carefully curated brand. I believe it is more difficult to course correct.

[SamSpade]

The reality is that their store real estate strategy changes after opening stores in the Northwest and California. Their original plan was to go into any mall that could support them. When they decided to go national, they changed their strategy to open only one or two large stores per market. That's how they ended up with so many, often smaller, stores on the west coast and fewer but larger stores elsewhere. For instance, Oregon would have been a 1 or 2 store market, which they are down to now but at one point they had 6 full line stores.

Off Topic

Which were:
Closed
Eugene (now has Rack) (Was Place Two concept, not full-line store)
Salem (now has Rack)- small store by their modern standards, but state capitol adjacent. No restaurant. eBar on a cart inside the mall concourse. Now becoming housing last I heard.
Clackamas Town Center - great eBar, very tired store by the time it closed (Rack across the street)
Lloyd Center - previously premiere mall, literal skybridge attached to large successful office tower. Closed 2015, writing was already kind of on the wall even then.
Vancouver Mall, Vancouver, Wash. - closed January 2015.
Open
Downtown Portland - literally "anchor" to the downtown retail scene. Has some problems but N has really invested in the store to keep it sharp over time, especially after Lloyd closure.
Washington Square - lovely store, successful mall (Rack across the highway system).

... I like what you said @babs.
Utah was similar:
Closed
Ogden City Mall (Demolished)
University Mall, Orem (now reimagined as University Place) - small store, combined restaurant/eBar. Odd time period here, 2002-2012 only.
Crossroads Plaza (replaced) - controversially announced as closing as lease ended in 2005, later re-signed for reimagined and redesigned City Creek Center
Open
City Creek Center - closed Sundays
Fashion Place Mall - relocated in March 2009, original store demolished and outdoor retail area constructed

So they cut their base there in half too, to two new modernized and better constructed for 2010s retailing vs. 1980 retailing.

Edit: Adjusted Oregon to better reflect information posted by Babs below.

[babs]

The reality is that their store real estate strategy changes after opening stores in the Northwest and California. Their original plan was to go into any mall that could support them. When they decided to go national, they changed their strategy to open only one or two large stores per market. That's how they ended up with so many, often smaller, stores on the west coast and fewer but larger stores elsewhere. For instance, Oregon would have been a 1 or 2 store market, which they are down to now but at one point they had 6 full line stores.

Off Topic

Which were:
Closed
Eugene (now has Rack)
Salem (now has Rack)- small store by their modern standards, but state capitol adjacent. Now becoming housing last I heard.
Clackamas Town Center - great eBar, very tired store by the time it closed (Rack across the street)
Lloyd Center - previously premiere mall, literal skybridge attached to large successful office tower. Closed 2015, writing was already kind of on the wall even then.
Open
Downtown Portland - literally "anchor" to the downtown retail scene. Has some problems but N has really invested in the store to keep it sharp over time, especially after Lloyd closure.
Washington Square - lovely store, successful mall (Rack across the highway system).

... I like what you said @babs.
Utah was similar:
Closed
Ogden City Mall (Demolished)
University Mall, Orem (now reimagined as University Place) - small store, combined restaurant/eBar. Odd time period here, 2002-2012 only.
Crossroads Plaza (replaced) - controversially announced as closing as lease ended in 2005, later re-signed for reimagined and redesigned City Creek Center
Open
City Creek Center - closed Sundays
Fashion Place Mall - relocated in March 2009, original store demolished and outdoor retail area constructed

So they cut their base there in half too, to two new modernized and better constructed for 2010s retailing vs. 1980 retailing.

Eugene never had a full-line Nordstrom but had a Place Two, sort of a mini Nordstrom they tried in the late 70s, early 80s. There was one at Jantzen Beach as well. Vancouver Mall in washington should also be on your list since it is part of the Portland market.

They are currently remodeling the Washington Square store so that's a safe bet to stick around. Department stores haven't been remodeling their stores like they used do on a 10 year rotation so it's nice to see Nordstrom spending some money to keep their stores fresh.

[SamSpade]

The reality is that their store real estate strategy changes after opening stores in the Northwest and California. Their original plan was to go into any mall that could support them. When they decided to go national, they changed their strategy to open only one or two large stores per market. That's how they ended up with so many, often smaller, stores on the west coast and fewer but larger stores elsewhere. For instance, Oregon would have been a 1 or 2 store market, which they are down to now but at one point they had 6 full line stores.

Off Topic

Which were:
Closed
Eugene (now has Rack)
Salem (now has Rack)- small store by their modern standards, but state capitol adjacent. Now becoming housing last I heard.
Clackamas Town Center - great eBar, very tired store by the time it closed (Rack across the street)
Lloyd Center - previously premiere mall, literal skybridge attached to large successful office tower. Closed 2015, writing was already kind of on the wall even then.
Open
Downtown Portland - literally "anchor" to the downtown retail scene. Has some problems but N has really invested in the store to keep it sharp over time, especially after Lloyd closure.
Washington Square - lovely store, successful mall (Rack across the highway system).

... I like what you said @babs.
Utah was similar:
Closed
Ogden City Mall (Demolished)
University Mall, Orem (now reimagined as University Place) - small store, combined restaurant/eBar. Odd time period here, 2002-2012 only.
Crossroads Plaza (replaced) - controversially announced as closing as lease ended in 2005, later re-signed for reimagined and redesigned City Creek Center
Open
City Creek Center - closed Sundays
Fashion Place Mall - relocated in March 2009, original store demolished and outdoor retail area constructed

So they cut their base there in half too, to two new modernized and better constructed for 2010s retailing vs. 1980 retailing.

Eugene never had a full-line Nordstrom but had a Place Two, sort of a mini Nordstrom they tried in the late 70s, early 80s. There was one at Jantzen Beach as well. Vancouver Mall in washington should also be on your list since it is part of the Portland market.

They are currently remodeling the Washington Square store so that's a safe bet to stick around. Department stores haven't been remodeling their stores like they used do on a 10 year rotation so it's nice to see Nordstrom spending some money to keep their stores fresh.

Off Topic

Oh right, the Place Two stores! I was reading about them in old corporate reports (on file in Seattle Public Library main branch) a few years ago. Thanks for the reminder about Vancouver Mall! I can't believe I forgot her. I'll edit the original post.

[Brian Lutz]

I know Crossroads in Bellevue had a Nordstrom Place Two store for a while, but I don't think it lasted long. After that store closed it got subdivided into smaller stores. The Hallmark store moved into part of the space along with Party City, a Dress Barn that's now gone and Hand and Stone massage. It was a very small space for a Nordstrom store, probably less than 15,000SF.

[SamSpade]

I know Crossroads in Bellevue had a Nordstrom Place Two store for a while, but I don't think it lasted long. After that store closed it got subdivided into smaller stores. The Hallmark store moved into part of the space along with Party City, a Dress Barn that's now gone and Hand and Stone massage. It was a very small space for a Nordstrom store, probably less than 15,000SF.

Off Topic

Not to drag us too far into history/off topic, but in case anyone is curious what Place Two was, via WWD in 1994:

The Place Two division was formed in 1976 for markets too small to support Nordstrom’s regular-sized specialty stores. The stores are like mini-Nordstrom’s, offering scaled-down versions of the chain’s women’s, men’s and footwear assortments in 17,000-to-20,000-square-foot settings. Most Nordstrom stores are from 150,000 to 250,000 square feet.

The division peaked in 1983 with 10 units.

Bellingham was converted to a Rack location and was a relocation from downtown Bellingham to Bellis Fair Mall.
The other three remaining at this announcement were in Lacey (I'm assuming in today's "South Sound Center" when it was a mall), Crossroads (Bellevue) open until May 1996, and SeaTac (probably "SeaTac Mall" now known as "The Commons at Federal Way").