To Reimagine the Store Experience, Nordstrom Experiments with ‘Local’ Concept

At a time that desperately calls for reinvention in the retail space, and a need to reimagine the traditional department store identity, Nordstrom is responding through the introduction its newest retail concept: Nordstrom Local. The 3,000 square foot destination will leverage experiential tactics like manicures, personalized styling and an in-store bar; but what’s most unconventional about the small format space is the lack of inventory. How risky the decision is to operate a store without purchasable inventory is yet to be seen, but Nordstrom’s ability to pivot its strategy to this new format means that they are proactively thinking about innovative ways to engage customers in an increasingly competitive landscape.

Why Experiment with Small Format?

We’ve seen several scenarios of small format stores, and lately, even more e-commerce-first brands shifting to an in-store format in order to strengthen their direct to consumer approach. More broadly, what we’re seeing is a reaction, and a response to the one-stop-shop experience that was once the traditional department store, and by extension, the sometimes overwhelming experience of even today’s online store. Over time, certain products have become commodities, and consumers have been trained to look for discounts or perks regardless of brand. So, experimenting with small format stores allows retailers to understand what other kinds of experiences they can use to lure customers, and give them an authentic and valuable experience.

For Nordstrom, the Local concept can become a testing ground for various experiential components, and a way to tap into niche customer needs in a more refined setting. Traditional stores have been suffering, no doubt, but there is still a place for physical space. In fact the store still exists at the core of many retailers’ omnichannel strategies, and it’s the smart retailers who are now trying to figure out how to integrate the stores as unique destination points along their shoppers’ journeys.

Personalization that’s Scalable?

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. Personalization on a level that online shopping just can’t deliver (no matter how much recommendation bots try) not only offers a contrast to Amazon and other large digital retailers, but reinvents the notion of the department store itself.

Is the Nordstrom Local concept scalable, or even viable for other players in the department store space? Maybe not for all, 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. With pressures like Amazon constantly on their radars, retailers need to be more creative in how they respond, and how they offer competitive services to maintain customer loyalty.

Making it Work without Inventory

Operating without regular inventory may seem like risky business, but the choice to call these stores “Local” speaks volumes to the intended purpose. The experience of walking into a living-room setting, grabbing a drink and chatting with your stylist sounds a lot like meeting a friend for lunch or walking into your neighborhood bar as a regular. The point is to engender trust and promote authority so that the consumer relies on his or her “Local” store as a default stop in the buying process. Rather than bombard customers with so much choice, the limitations may actually provide a more seamless experience.

What Nordstrom does need to recognize is that its modern customers have far more outlets today for personal styling – many flock to social to collect insights from top fashion influencers and bloggers, while others use online styling options like Stitch Fix. Nordstrom’s in-store stylists will need to offer a level of expertise and service that customers can’t get elsewhere. Mix that with the added experiential components like manicures and an in-store bar, plus the convenience of in-store pick up, and it might just give Nordstrom a leg up against more traditional digital players leveraging similar strategies.

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