What's next? Grocery stores that don't sell food? Liquor stores with no alcohol? Appliance sores that don't stock washers, dryers, and refrigerators? Well, if they follow the trail Nordstrom (NYSE:JWN) is blazing, that's exactly what they'll do.
New meaning to "asset-light"
The clothing retailer earlier this month announced that it will be opening a new, small-format store called Nordstrom Local that will be devoted to everything but clothing. Want to get your nails done? Sure, there will be a salon on premises! A glass of wine or beer for an afternoon libation? Come on in! The bar will also have fresh-pressed juices and espresso. Need your clothes hemmed or taken in? Step right up! There are on-site tailors to assure your clothes fit perfectly. Want to shop for a new pair of jeans or a dress? Whoa! What do you think this is, some kind of clothing store or something?
Nordstrom is obviously undergoing changes. After years of being a bellwether retailer, the department store chain has found itself suffering from the same malignancy affecting many retailers, so much so that it is actively pursuing a financing deal to take itself private. Bloomberg just reported that the clothing retailer has lined up Leonard Green & Partners to provide $1 billion to fund the buyout.
Out of the public eye, it would certainly be able to pursue more seemingly loony ideas like opening a clothing store without any merchandise. Whether that helps turn around its business is another matter.
It's all about the customer
On one hand, the new concept makes some sense. As Nordstrom notes in the press release announcing the idea, as retail goes through its upheaval, the one constant is that "customers continue to value great service, speed, and convenience."
Nordstrom has always been known as the epitome of customer service, and even in these tumultuous times that hasn't changed, with the new Local store putting that commitment on steroids. It's not that you won't be able to buy clothes from there; it just won't stock any. If you want to shop, Nordstrom will have its employees fetch any item you want from a nearby Nordstrom store or one of its off-price Rack shops and bring it to you at Local, where you can try it on. That's customer service raised to a level of crazy.
Customers will also be able to shop online at Nordstrom's Web store and pick up the merchandise at the store, and you don't even have to get out of your car -- someone will bring it to you curbside. And if you do get any clothes altered while you're there having a fresh-pressed juice, someone will deliver it to your home on the same day.
These are all the ways of catering to customers' needs and whims that made Nordstrom the epitome of service, but not actually having merchandise in stock seems a misstep.
It's not unprecedented for retailers to open boutiques without merchandise. Rent the Runway, for example, has something that's probably closest to what Nordstrom wants to do with the brick-and-mortar store it opened in New York last December, allowing customers to browse inventory online and then make an appointment at the store to go in, try it on, and rent it to wear the same day.
That's also similar to the Bonobos Guideshops that allow customers to go in, try on clothes, and then order online. The store itself doesn't actually sell anything. Even diamond seller Blue Nile opened up "webrooms" -- inside Nordstrom stores, no less -- that didn't have merchandise but let people order online.
The difference between what these retailers do and what Nordstrom is attempting is that they were already internet-only retail outlets that began expanding into physical locations to boost sales, sort of how Amazon.com is beginning to open a fleet of brick-and-mortar bookstores. Nordstrom isn't going in the opposite direction, it's just cutting out the major reason people shop its stores.
Nordstrom describes the Local store as a "neighborhood hub" where people can gather and discuss their fashion needs. That is along the lines of what Urban Outfitters is attempting to do with its Anthropologie chain, making it a place where people come and get lost for hours wandering around the store.
Yet it's not settled that people actually want to spend more time in a store shopping. Urban Outfitters maintains customers want an experience when they go shopping, but their own experience belies that: Anthropologie hasn't recorded a single instance of higher quarterly comps in almost two years, and comparable sales have worsened since it launched the change.
Because it's only one store, even if Nordstrom Local fails miserably, it won't affect its results that much, and the apparel retailer looks determined to get out of the public eye anyway. But for all of Nordstrom's vaunted attention to detail when it comes to its customers, eliminating the very thing they want from you seems like an odd way of achieving it.
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