SEATTLE _ Nordstrom will open its first Nordstrom Local store next month in Los Angeles, testing a new model for the fashion retailer: A small, neighborhood hub that will have no clothing in stock and will focus instead on digital sales, customer service and tailoring.
Nordstrom has managed to ride a rough decade for full-line department stores by responding to the trends that are disrupting the retail market _ developing its e-commerce capabilities and expanding its off-price Nordstrom Rack stores.
The Local effort, if successful, could add another element. It's "the first downscaling of the department store concept," said Neil Saunders, managing director at GlobalData Retail.
The company says customers will be able to come to the 3,000-square-foot store in West Hollywood to meet with personal stylists while drinking wine or beer, try on clothes the stylist ordered in advance for them, and pick up online orders the same day. They can also get a manicure or have clothes tailored.
Most department stores haven't bounced back from the recession. Besieged by superstores, fast-fashion retailers like Zara, off-price retailers like T.J. Maxx and Marshalls, as well as e-commerce, department stores like J.C. Penney and Kohl's have been in a tailspin. Nordstrom, while also suffering declines at its big, classic stores, has managed a 3.8 percent increase in total sales in the latest quarter.
But investors reacting to the news Monday showed they weren't impressed with the Local move. Nordstrom stock fell as much as 5.4 percent before ending the day down 3 percent, while the S&P 500 index rose more than 1 percent.
The Nordstrom Local initiative was led at the company by senior vice president of customer experience, Shea Jensen, who previously ran Nordstrom's fashion-by-mail service Trunk Club _ whose stylists will also be in the new Local stores.
"As the retail landscape continues to transform at an unprecedented pace, the one thing we know that remains constant is that customers continue to value great service, speed and convenience," Jensen said in a press release. "We know there are more and more demands on a customer's time and we wanted to offer our best services in a convenient location to meet their shopping needs."
Nordstrom is looking to focus on the upper middle class and upper class market in this expansion, according to Saunders. Discounted clothing from Nordstrom Rack won't be available at the hubs. Moving to curbside pickup and same-day delivery is also much more economical than using UPS or FedEx, and customers often prefer it over going to UPS, Saunders said.
If this model works, Saunders sees the potential for well over 100 stores. A company spokeswoman said there are no plans to build any more yet.
Other retailers like Target have been opening smaller stores in dense urban areas and college towns, and U.K. department store John Lewis has been expanding into small-format stores since 2011.
But neither has opened a store this small, Saunders said.
"Nordstrom has a habit of being ahead of the curve," he said. "It's still seen as being a destination."
Still, not all its experiments have panned out as expected. Last year the company took a $197 million write-down on the online styling service Trunk Club, for which it had paid $350 million two years earlier.
