How Nordstrom is Changing the Department Store Game

The luxury retailer is drawing on its best attributes to create a new high-touch store experience

here was a time when the department store, spanning thousands of square feet in malls all across the country, was emblematic of shopping convenience. Now department stores are looking for a new way to give consumers the convenience and experience they crave, and Nordstrom Inc.’s suggestion is its smaller Local store, opening in Los Angeles on October 3.

Covering just 3,000 square feet as opposed to the usual 140,000-square-foot emporium, Nordstrom Local will offer personalized stylists and services available through Nordstrom’s Trunk Club JWN, -2.09% company. In addition, there will be a place for customers to have a glass of wine and get a manicure.

There will be no inventory at the shop, but shoppers can get their hands on purchases through curbside pickup, same-day delivery, and other methods.

“Department stores were born out of a need for convenience, but online shopping has improved on that convenience,” said Jennifer Schulties, vice president of account management at PMX Agency, a global marketing firm.

With malls falling out of favor and their anchor retailers like Macy’s Inc. M, +0.05%J.C. Penney Co. Inc. JCP, -1.17% and Sears Holding Co. SHLD, -0.33%  looking for ways to revamp their businesses in a world of e-commerce, Nordstrom Local emphasizes the biggest advantage that bricks-and-mortar retail has: a high-touch experience with lots of services to enhance the visit.

“What Nordstrom is doing may be unconventional for physical retail, but the strategy is getting back to some of the simplest principles of personalization through customized, one-to-one service,” said Schulties. “This tactic might not necessarily be scalable for all department stores, and it may not work for their specific customers. But the experimentation component is what’s most worthwhile for similar stores to consider—analyzing customer behavior and preferences at a smaller scale to determine what tactics can be scaled up.”

Certainly, Nordstrom isn’t the first retailer to come up with the idea of shrinking the size of their stores. Target Corp. TGT, +0.02%  has talked about its small-format stores, which cater to the needs of surrounding communities.

And Kohl’s Corp. KSS, +0.91%  has announced new 35,000-square-foot locations.

Others, like Bonobos, which is part of Wal-Mart Stores Inc. WMT, +0.18% growing stable of online retailers, doesn’t keep large stocks of inventory on hand, but rather uses the physical locations for the touch-and-feel that some customers still prefer.

But this kind of setup for a department store is a big leap away from what these large retailers have always been.

Read the full story here in MarketWatch

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