Nordstrom family makes $3.8B bid for private ownership

[Brian Lutz]

https://www.retaildive.com/news/nordstr ... te/726005/

CEO Erik Nordstrom and his brother Pete are leading a $3.8 billion bid ($23 a share) along with Mexican department store El Puerto de Liverpool (which owns a 10% stake in the company) to take the company private. This has been attempted before when the share price was closer to $50, and was rejected at the time.

[c95xrk]

Hopefully this time it succeeds. I think the over-reliance on the Rack to build revenue is unsustainable, their core business has to get fixed and that core business is just no longer attractive to Wall Street.

[storewanderer]

I hope this is successful. The best thing a retailer can do is go private and under control of the founding family is a great move (or ESOP). Get off of Wall Street.

Maybe they can divest a large chunk of Rack including its buying team and management, and just keep/rebrand a handful of Rack Stores near their full service stores to serve the function as "clearance store" that is fed by the regular full service store nearby.

[babs]

I hope this is successful. The best thing a retailer can do is go private and under control of the founding family is a great move (or ESOP). Get off of Wall Street.

Maybe they can divest a large chunk of Rack including its buying team and management, and just keep/rebrand a handful of Rack Stores near their full service stores to serve the function as "clearance store" that is fed by the regular full service store nearby.

If the Rack is profitable, why would they divest it? There are some issues with the chain that needs to be addressed but a successful, lower priced chain is a smart way to diversify, especially in the current environment. The stores are generally packed and for the most part their core customer loves shopping there.

[buckguy]

I hope this is successful. The best thing a retailer can do is go private and under control of the founding family is a great move (or ESOP). Get off of Wall Street.

Maybe they can divest a large chunk of Rack including its buying team and management, and just keep/rebrand a handful of Rack Stores near their full service stores to serve the function as "clearance store" that is fed by the regular full service store nearby.

If the Rack.us profits, why would they divest it? There are some issues with the chain that needs to be addressed but a successful, lower priced chain is a smart way to diversify, especially in the current environment. The stores are generally packed and for the most part their core customer loves shopping there.

The Racks are basically a recreation of the “bargain basement”, that all but the most exclusive department stores once had, with a mix of close outs and made for basement merchandise. Those kept the big stores in business through the depression and did significant business for a long time. Once the department stores phased them out in the 70s and 80s, the off-price chains emerged and took that old business, but also cut into their main floor sales. Now, the off-price stores are declining in number but department stores have these which don’t rely on close-outs or faux close-outs. Having said that, they need to attend to their core business and figure out how to make it relevant to customers, including a younger generation of shoppers.

[pseudo3d]

I hope this is successful. The best thing a retailer can do is go private and under control of the founding family is a great move (or ESOP). Get off of Wall Street.

Maybe they can divest a large chunk of Rack including its buying team and management, and just keep/rebrand a handful of Rack Stores near their full service stores to serve the function as "clearance store" that is fed by the regular full service store nearby.

If the Rack.us profits, why would they divest it? There are some issues with the chain that needs to be addressed but a successful, lower priced chain is a smart way to diversify, especially in the current environment. The stores are generally packed and for the most part their core customer loves shopping there.

The Racks are basically a recreation of the “bargain basement”, that all but the most exclusive department stores once had, with a mix of close outs and made for basement merchandise. Those kept the big stores in business through the depression and did significant business for a long time. Once the department stores phased them out in the 70s and 80s, the off-price chains emerged and took that old business, but also cut into their main floor sales. Now, the off-price stores are declining in number but department stores have these which don’t rely on close-outs or faux close-outs. Having said that, they need to attend to their core business and figure out how to make it relevant to customers, including a younger generation of shoppers.

I know Macy's tried Backstage in some of its stores, which really did feel like a store-within-a-store including some snack items at the register. I wonder if Nordstrom could carve out some of its stores to add a Nordstrom Rack inside...

[storewanderer]

If the Rack.us profits, why would they divest it? There are some issues with the chain that needs to be addressed but a successful, lower priced chain is a smart way to diversify, especially in the current environment. The stores are generally packed and for the most part their core customer loves shopping there.

The Racks are basically a recreation of the “bargain basement”, that all but the most exclusive department stores once had, with a mix of close outs and made for basement merchandise. Those kept the big stores in business through the depression and did significant business for a long time. Once the department stores phased them out in the 70s and 80s, the off-price chains emerged and took that old business, but also cut into their main floor sales. Now, the off-price stores are declining in number but department stores have these which don’t rely on close-outs or faux close-outs. Having said that, they need to attend to their core business and figure out how to make it relevant to customers, including a younger generation of shoppers.

I know Macy's tried Backstage in some of its stores, which really did feel like a store-within-a-store including some snack items at the register. I wonder if Nordstrom could carve out some of its stores to add a Nordstrom Rack inside...

I don't think I'd mix Rack with a regular Nordstrom. I think it is important to keep the regular Nordstrom "upscale." You also would run into a lot of "window shopping" (unfolding clothes/messing up displays/not serious buyers) on the full price Nordstrom items from people "in the middle of walking to" Rack.

I don't think it would be an issue if they were in the same mall but in completely separate spaces though.

[BillyGr]

The Racks are basically a recreation of the “bargain basement”, that all but the most exclusive department stores once had, with a mix of close outs and made for basement merchandise. Those kept the big stores in business through the depression and did significant business for a long time. Once the department stores phased them out in the 70s and 80s, the off-price chains emerged and took that old business, but also cut into their main floor sales. Now, the off-price stores are declining in number but department stores have these which don’t rely on close-outs or faux close-outs. Having said that, they need to attend to their core business and figure out how to make it relevant to customers, including a younger generation of shoppers.

I know Macy's tried Backstage in some of its stores, which really did feel like a store-within-a-store including some snack items at the register. I wonder if Nordstrom could carve out some of its stores to add a Nordstrom Rack inside...

I don't think I'd mix Rack with a regular Nordstrom. I think it is important to keep the regular Nordstrom "upscale." You also would run into a lot of "window shopping" (unfolding clothes/messing up displays/not serious buyers) on the full price Nordstrom items from people "in the middle of walking to" Rack.

I don't think it would be an issue if they were in the same mall but in completely separate spaces though.

I did see one of the Macy's where, instead of "hiding" the Backstage in the rear of the store, they actually had it right at the front, off to one side.
Looked like they might have actually taken over a small storefront space that was next to their store to put it in (maybe a store that was on the smaller side and didn't have room within to do it?). You could walk from the mall into the Backstage area, then could also walk from that into the rest of the Macy's storefront.

That setup might work to avoid some of the issues of those walking through the store, while still allowing those who want to visit both to do so without going back into the mall (and possibly getting distracted and not going to the other storefront)?

[babs]

I know Macy's tried Backstage in some of its stores, which really did feel like a store-within-a-store including some snack items at the register. I wonder if Nordstrom could carve out some of its stores to add a Nordstrom Rack inside...

I don't think I'd mix Rack with a regular Nordstrom. I think it is important to keep the regular Nordstrom "upscale." You also would run into a lot of "window shopping" (unfolding clothes/messing up displays/not serious buyers) on the full price Nordstrom items from people "in the middle of walking to" Rack.

I don't think it would be an issue if they were in the same mall but in completely separate spaces though.

I did see one of the Macy's where, instead of "hiding" the Backstage in the rear of the store, they actually had it right at the front, off to one side.
Looked like they might have actually taken over a small storefront space that was next to their store to put it in (maybe a store that was on the smaller side and didn't have room within to do it?). You could walk from the mall into the Backstage area, then could also walk from that into the rest of the Macy's storefront.

That setup might work to avoid some of the issues of those walking through the store, while still allowing those who want to visit both to do so without going back into the mall (and possibly getting distracted and not going to the other storefront)?

Adding Backstage to nearly all their stores was probably a smart short-term decision but an awful long term decision. It does take advantage of underused space that most Macy's have plenty of. And it does draw a different crowd, and it does seem to be doing a fair amount of business. But in the long term it just diminishes whatever brand Macy's have. I think they still seem themselves as a higher end store, now they have a prominent part of the store with product on the level or Ross ( or perhaps lower ). I don't think that does much to improve the perception of the store.

Now circling back to Nordstrom's. Adding the Rack to the department stores would be dumb. It's actually a nice chain that does have a niche of selling higher end brands at a discount. We could debate how well it does and their execution but it really has few national competitors and the stores seem busy. But adding it to their stores would cause some customers to trade down and detract from the higher end image the stores convey.

[storewanderer]

Now circling back to Nordstrom's. Adding the Rack to the department stores would be dumb. It's actually a nice chain that does have a niche of selling higher end brands at a discount. We could debate how well it does and their execution but it really has few national competitors and the stores seem busy. But adding it to their stores would cause some customers to trade down and detract from the higher end image the stores convey.

I don't want to be rude but you do not want many of the Rack customers in a traditional Nordstrom. They will mess the store up. You do not want to introduce Rack policies such as centralized checkout with customers lining up, locked restrooms that you have to hunt for an employee to open, to a traditional Nordstrom. Just the traditional Nordstrom customer seeing those things in passing (walking by, etc.) is going to immediately cause an image issue that may be irreparable.

Another issue is staffing. The staff in Rack do not dress the same as staff in a traditional Nordstrom. Again- image issue.

Music in Rack vs. music in a traditional Nordstrom...

I could go on and on.

You just don't want the customer who has made the effort to get to a traditional Nordstrom, to get "any" of the Rack experience, even if it is was in passing. They probably drove past multiple Rack Stores to get to the traditional Nordstrom in the first place. If they had wanted to go to Rack, they would have already stopped miles back.

I find Rack to be a below average operation. The TJ Maxx Stores I go into (and some but not all Marshalls) have better presentation, staffing, seem better stocked, and seem to be having far larger customer tickets, than these Nordstrom Rack Stores. I am somewhat shocked every time I go into a TJ Maxx Store with what is going on as my past perception of that chain is of a low end dive but every time I go in I am really shocked by how well run they seem to have become. Rack used to be better when it was smaller; the employees behaved like it was a traditional Nordstrom and their merchandise looked better (they had less merchandise but what was there, was better).