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Speaker 1: only on Bloomberg Radio. The luxury department store chain Nordstrom.
Speaker 1: It has been around for more than a hundred years,
Speaker 1: a hundred and eighteen to be exact, expanding through the
Speaker 1: US UH and throughout North America, and until this week,
Speaker 1: did not have a store in what is really the
Speaker 1: department store capital of the world. We're talking about New
Speaker 1: York City, so joining us to talk about that and more.
Speaker 1: Eric Nordstrom, he's co president of Nordstrom. Thank you so
Speaker 1: much for doing this with us and really appreciate it.
Speaker 1: We'll talk to us about the opening. I mean, New
Speaker 1: York has been here for a long time. Why did
Speaker 1: it take so long to open such a presence or
Speaker 1: big presence here. Well, it wasn't from a lack of effort. Really,
Speaker 1: It's the only subject I can think of that has
Speaker 1: spanned literally generations for our company, my dad's Uh we
Speaker 1: opened our men's store last year. I asked him, was
Speaker 1: the first time he came New York about about having
Speaker 1: a store. He paused, and he said, it's right when
Speaker 1: I first became president company. It's thirty five. Well he's
Speaker 1: eighty six now, so it's a long time. The biggest challenge,
Speaker 1: I mean, certainly location obviously to have a retail store locations.
Speaker 1: He said to me that you guys even looked at
Speaker 1: the location that is our building headquarters. Yes, you know
Speaker 1: Alexanders used to be here, and uh, I know my
Speaker 1: dad and my uncle's made a run at it and
Speaker 1: then but Bloomberg outbid us. So if we didn't get
Speaker 1: this one had a couple others actually signed deals that
Speaker 1: you know, there's a complexity to doing a big open project,
Speaker 1: and they fell through. Um. But the big challenge, even
Speaker 1: more so than location, was the right space, uh, you
Speaker 1: know for what we do. Uh, and and knowing if
Speaker 1: we were to come here we had to be our
Speaker 1: very very best. Uh. And so that the space is
Speaker 1: super important for us to have high ceilings, big open
Speaker 1: space where customers can easily navigate and and uh find
Speaker 1: what they're looking for, discover new fashion. Um. And most
Speaker 1: buildings are office buildings, there are low ceilings and elevators
Speaker 1: in the middle. So it this area and not only
Speaker 1: came up that we really like being a little oriented
Speaker 1: towards the west side, but being able to start from
Speaker 1: the from the ground and build the building that we want. Uh.
Speaker 1: Really what tipped us over and certainly accessible from both
Speaker 1: the east and west side uptown downtown. In terms of
Speaker 1: kind of a central location. Sure, yeah, I look for things.
Speaker 1: You know, there's three constituencies. Uh. Certainly started and really
Speaker 1: end with locals people who live here. How how are
Speaker 1: we a part of the city, a part of the neighborhood,
Speaker 1: uh says location thing we think does that? Uh? There's
Speaker 1: obviously how people commuted intto work, and so the subway stops.
Speaker 1: The transportation is important. Uh. Then there's visitors. You know,
Speaker 1: New York such a great international destination, and to be
Speaker 1: close to the biggest tourist attraction in New York, Central
Speaker 1: Park and Columbus Circle there we felt really good about.
Speaker 1: I gotta talk to you about the environment. Eric. I
Speaker 1: know you read the headlines. You fall obviously your space,
Speaker 1: But I mean I think about Lord and Taylor closing,
Speaker 1: Sacks closing a downtown location, Bendel's closing, Barney's going into bankruptcy.
Speaker 1: I mean, I think some people would say, wait, why
Speaker 1: are you doing this? Why you know, how does that
Speaker 1: or how has that factored in in terms of some
Speaker 1: of the closings and what you folks wanted to do. Well, Yeah,
Speaker 1: there's certainly our industry, like a lot of industries, going
Speaker 1: through tremendous change, and uh, but it's actually not that
Speaker 1: much change. It's it's you know, people's shops as they
Speaker 1: want to shop. I certainly believe that customers are more
Speaker 1: empowered than ever before, less only to compromise any of
Speaker 1: their experience with shopping, including in that and uh, you know,
Speaker 1: in our industry, we talked about things like omni channel
Speaker 1: and you guys hate that from what I've read. Yeah,
Speaker 1: I talked to customers every day. Uh, and I've never
Speaker 1: had a customer used to work channel with me. It's
Speaker 1: not that they think they just want great experiences, and uh,
Speaker 1: the reality is, if you are to force a definition channel,
Speaker 1: the vast majority of the categories we sell are bought
Speaker 1: in stores, but much more accurately is uh, people are
Speaker 1: on their phones and they're in physical locations, and they
Speaker 1: want it. Wouldn't they want it? They want it on
Speaker 1: their terms. And uh, certainly New York is uh, you know,
Speaker 1: the greatest retail center, certainly in our country and maybe
Speaker 1: in the world. And uh, you know, for us to
Speaker 1: be a leader in our industry, and we've been at
Speaker 1: this a long time, and we've been a national company
Speaker 1: for a long time. But but to really be the
Speaker 1: leader that we think we can be, we have to
Speaker 1: have our best presence in New York. But I do
Speaker 1: think people think, Okay, so how will nord Strem be different?
Speaker 1: Then maybe some of the troubles that a Lord and
Speaker 1: Taylor fell into or I'm not saying you guys are
Speaker 1: apples to apples, or you know, sex closing downtown or Bindl's, like,
Speaker 1: how will it be different for you? Well, there's all
Speaker 1: there's a lot of success stories out there. If you've
Speaker 1: expand the definition of retail, a lot of categories which
Speaker 1: we can get into. But there's a lot of UH
Speaker 1: stores and retailers that I would admire. Uh, but again,
Speaker 1: we've always been will served focused on focusing on the customer.
Speaker 1: You know, we've we started as a shoe store over
Speaker 1: a hundred years ago. I grew up selling shoes and
Speaker 1: one of the things about selling shoes is you are
Speaker 1: literally on your hands and knees in front of the
Speaker 1: customer trying to take care of them. Uh. And that Uh,
Speaker 1: it's a good metafit for for for how we try
Speaker 1: to continue to run the business and if we focus
Speaker 1: on the customer and and certainly the customer wants things
Speaker 1: that are different and building a new physical store today
Speaker 1: gives us some advantages. We have technology built into the store, WiFi,
Speaker 1: cell service, connect that connectivity so customers can be on
Speaker 1: their phone, and a lot of product discovery for what
Speaker 1: we sell fashion begins online and we know that over
Speaker 1: half of our store sales involved a visit to our website,
Speaker 1: usually on someone's phone. So Uh, there's a lot of
Speaker 1: features we can build there and the architecture of the place.
Speaker 1: It's very different historically, and we've we have fallen this
Speaker 1: over the years. Historically, retail, especially mall based retail has
Speaker 1: been very inwardly focused, almost like a fortress. You enter
Speaker 1: a different environment and it's cut off from the rest,
Speaker 1: shield off from the rest. Uh. We want to do
Speaker 1: just the opposite. And keeping with that, I mean, you
Speaker 1: guys are incorporating food and I'm curious, right, you can
Speaker 1: be shopping, you can order some food. It's delivered to
Speaker 1: you on a nice plate. Yeah, food or drenk Yes. Uh.
Speaker 1: Is that going to become kind of a significant separate
Speaker 1: revenue line for you guys, But it's not so much
Speaker 1: about a revenue line, it is. Uh. One of things
Speaker 1: we've really learned as we continue to get better information
Speaker 1: is the importance of engagement, just experiences. Whether there's a
Speaker 1: sale made explicitly in that engagement or not, isn't so
Speaker 1: much at the point. The point is the more we
Speaker 1: can engage customers, and food and drink is part of
Speaker 1: that essentially. Well, No, we keep in there even if
Speaker 1: they don't spend that time. I love it because I
Speaker 1: think about what I'm shopping in and get hungry and
Speaker 1: then I leave and then I don't go back. Yeah,
Speaker 1: we don't like that. That's but there is there is
Speaker 1: that part, But there's also you know, even if people
Speaker 1: don't spend in that time, the more we can engage
Speaker 1: somewhere where it's just it's a it's an under piece
Speaker 1: of engagement. People come back more often digitally in physical locations,
Speaker 1: the more we can engage them. And food is such ah,
Speaker 1: you know, it's such a century experience, often more so
Speaker 1: than a lot of other other experiences. It really is
Speaker 1: important tell us about how important this store in New
Speaker 1: York will be to North term overall in terms of
Speaker 1: sale because typically are a lot of times you see
Speaker 1: with these big chains or department store and the high
Speaker 1: end that the flagship in New York is typically a
Speaker 1: big driver in terms of revenues. Will this be your
Speaker 1: number one driver of revenues? Will certainly be our biggest store, absolutely,
Speaker 1: they will be our biggest volume store by a healthy march,
Speaker 1: And it won't be as big a percentage of our
Speaker 1: revenue as it is mostly other competitors we have there.
Speaker 1: We're a bigger company that way, So um, it's not
Speaker 1: it's not gonna be the biggest driver in terms of revenues.
Speaker 1: We would be the biggest single revenue store we have, Yes,
Speaker 1: but we have stores, so it's you know, It's not
Speaker 1: company's revenue by any means. It's a but as important
Speaker 1: it is the most important thing we've done, the visibility
Speaker 1: of being in New York and certainly that was our goal.
Speaker 1: We we didn't aim to open another Nordstrom store. We
Speaker 1: aim to build really a world class flakeship store. Our
Speaker 1: team spent several years scouring the world and really trying
Speaker 1: to pull out those elements through and drinks one of them.
Speaker 1: Uh that you know what makes these these world class
Speaker 1: flameship stores that are really become, uh, these these integral
Speaker 1: parts of the city of urban life. And that's that's
Speaker 1: been our goal, a destination for locals. And um, I
Speaker 1: am curious to about the holidays, have you guys? I mean,
Speaker 1: your timing is impeccable. As we're all gearing up for
Speaker 1: the holidays, what are your expectations for fourth quarter? What
Speaker 1: about what? Well, I would say it's you know, it's
Speaker 1: a challenging environment out there. I think there's some some
Speaker 1: reasons to be optimistic for holiday and I've seen some
Speaker 1: numbers that that we expected to be maybe a little
Speaker 1: bit higher than what we've seen in I've seen that too.
Speaker 1: US retailers. We tend to be optimistic, but uh, yeah,
Speaker 1: I think there's reasons for the optimistic for holiday. Tell
Speaker 1: me about the consumer overall, because I love talking to
Speaker 1: folks like you, because I think we're at this time
Speaker 1: where we're trying to figure out is the expansion getting old?
Speaker 1: The big macro stories continue to bother us, whether it's trade,
Speaker 1: whether it's Brexit and so and so forth. Um, how
Speaker 1: do you see the qus consumer right now? And I
Speaker 1: know your higher end, but still, oh sure we are
Speaker 1: pretty broad range. It's uh, we really know. We talked
Speaker 1: about carrying from Vans to Valentino. I mean that that
Speaker 1: is a key part of what we do is having
Speaker 1: a breadth of merchandise. And really I think that's how
Speaker 1: a modern customer shops stay. That customers doesn't buy one
Speaker 1: brand and stick to it or even one price point.
Speaker 1: There's a mix and matching that people put together. That's
Speaker 1: that's part of fashion, that's part of the interest of
Speaker 1: expressing who you are. Uh. That the health of the
Speaker 1: customer is is good. Uh, but what we focus on
Speaker 1: it's much more about what we do or you were
Speaker 1: not an industry where you know there's this massive market
Speaker 1: share and really any movement has to be at a
Speaker 1: market level. Uh, there's plenty of places to buy shoes
Speaker 1: and clothes. Our success is much more on what we do. Well.
Speaker 1: That's interesting that you say that, because when you look
Speaker 1: at some of the retailers that have had problems, I mean,
Speaker 1: I really do feel like if you shop at North
Speaker 1: Tom you know exactly what you're getting. The brand is
Speaker 1: very clear, the identity in terms of the store and
Speaker 1: the stores and those that don't do it. Yeah, well,
Speaker 1: well listen, I got all the fall out that we've
Speaker 1: seen in retail. Are we overstored? Yeah, sure we're overstored.
Speaker 1: There's uh, that's not big news flash that America has
Speaker 1: two many malls to many stores. Um and and when
Speaker 1: you have a shift to go online, people are online more. Now.
Speaker 1: Are there gonna be no stores? Well, of course not.
Speaker 1: There's there's there's times where especially we sell people like
Speaker 1: to touch feels, the sizes. You're saying that our our
Speaker 1: online returns, the vast, vast majority customers choose to come
Speaker 1: in a store. Do it. We have free shipping around
Speaker 1: our online returns, but they'd rather come a store. It's
Speaker 1: just easier than putting it in a box. So customers
Speaker 1: are going to do what they want to do. Our
Speaker 1: job is not to try to course them into a
Speaker 1: channel or a certain experience. That what we prefer. Our options,
Speaker 1: our challenges to give them options and let them do
Speaker 1: what they want to do. You guys definitely do give
Speaker 1: them options. And I want to talk a little about
Speaker 1: nords to local, which I find is a fascinating concept. Um.
Speaker 1: And I think we reported this past fall that you
Speaker 1: guys are also going to accept merchandise returns from rivals.
Speaker 1: Is that right? Yeah, yeah, we do. It's why it's
Speaker 1: not that big deal. It doesn't call that no, it's
Speaker 1: basically we're a hub for ups. We can if that
Speaker 1: helps a customer, for us to take it and get
Speaker 1: sales out of that as well. We get also traffic.
Speaker 1: Traffic is good, interactions good by any measure. And um,
Speaker 1: these local service hubs have really been a real interesting
Speaker 1: and we think an important part of our future. It's uh,
Speaker 1: and it really is looking at what are the assets
Speaker 1: that we can bring where customers live to serve them better. Uh.
Speaker 1: Certainly we have stores, but uh sometimes you know, getting
Speaker 1: in the car and go into the mall, is it's
Speaker 1: not the most convenient. I think one of the interesting
Speaker 1: things we've we've learned from these service hubs, like tailoring.
Speaker 1: It's yeah, so we are we don't Yeah, we don't
Speaker 1: stock Marshy Center. But it's uh, it's services. So it's
Speaker 1: being able to do returns, merchandise pick up by online,
Speaker 1: pick up in the store, alterations, Uh, styling help our
Speaker 1: stylists can meet their customers. They're they're doing well, really well.
Speaker 1: And one of interesting things there's all source things and
Speaker 1: you know, customers they're spending this more than doubles when
Speaker 1: they when they interact with us in one of the
Speaker 1: local stores. Uh. I think one of the interesting little
Speaker 1: effects there is is, uh we get returns back faster.
Speaker 1: And now that may not seem like a big deal,
Speaker 1: but part of selling fashion, especially online, returns our our
Speaker 1: effect of life and what we sell. Uh, it's not wine.
Speaker 1: It doesn't get better with age. There is a pershability
Speaker 1: to it. So getting it back faster is good for us,
Speaker 1: certainly for our model. Uh, but it reflects that when
Speaker 1: we're here from customers is yeah, I've had this return
Speaker 1: to my trunk and I'm waiting to go to the
Speaker 1: mall and if I can do it more more conveniently. Uh.
Speaker 1: So it is serving customers in our terms. And we
Speaker 1: piloted these stores in Los Angeles and we opened to
Speaker 1: here in New York last month and it's been a
Speaker 1: bit of a were in we're in Los Angeles. Communicating
Speaker 1: to customers what it was took a little bit. Uh
Speaker 1: here rap the boat. People get it, and I think
Speaker 1: it's understandable. And if you live in Manhattan, you know
Speaker 1: blocks matter. You're not you don't have your suv pullm
Speaker 1: up to a big parking lot. So but to be
Speaker 1: able to do and alterations or a return or in
Speaker 1: order pick up in your neighborhood on your terms, uh,
Speaker 1: is appealing and we're able to do it. Not all
Speaker 1: these these local service ubs are rack stores. We can
Speaker 1: do a lot of these services in our rack stores.
Speaker 1: We have a trunk club clubhouse here in Manhattan. So
Speaker 1: we really look at not just opening a store here
Speaker 1: this week. We can it's how can we leverage these assets.
Speaker 1: We have physical assets to serve customers better. Well, what
Speaker 1: I do think, And it's funny. We were talking about
Speaker 1: actually in our makeup room this morning, about that there's
Speaker 1: not a lot of service out there when you go
Speaker 1: to retail. So I think, you know, you guys are
Speaker 1: certainly um, really honing in on it. But so what
Speaker 1: I want to know is you've got the big North
Speaker 1: department stores, You've got Nords to local, you've got discount right,
Speaker 1: You've got um, you know, various ways of interacting with
Speaker 1: the consumer online of course e commerce. What's the makeup
Speaker 1: I don't know in three years from now in terms
Speaker 1: of what's the biggest driver. I mean, e commerce has
Speaker 1: been growing, that's for you. Are e conmerces about three
Speaker 1: percent of our business, which was bigger chunk than uh
Speaker 1: some of our more direct competitors. We've been at it
Speaker 1: for a long time. We've been an e commerce over
Speaker 1: twenty years. Uh. You know, I kind of cringe. You
Speaker 1: get these questions out what are you see in three
Speaker 1: to five years? Um, no one knows. I mean, someone
Speaker 1: to come on here and say they know what's going
Speaker 1: to happen three years I would challenge them on that.
Speaker 1: So all of that then going to continue to be
Speaker 1: an important Yeah. I think the point is, uh, the
Speaker 1: challenges to be nimble is to be actual and how
Speaker 1: do you have a platform uh capabilities that you can
Speaker 1: pivot to go where the customers going so to have
Speaker 1: for us, there really is a synergy to having a
Speaker 1: full price business and off price business e commerce and
Speaker 1: physical stores. UH. And to your point, physical stores have
Speaker 1: some some different elements to them. What's the right NIX
Speaker 1: the right makes those ingredients to to take care of customers.
Speaker 1: I think that will different different store by store, but
Speaker 1: a couple of UH general area is that I do
Speaker 1: believe it's heading in. You know, I've talked about engagements important.
Speaker 1: How can we engage with customers across channels and services,
Speaker 1: uh to make their lives easier and better. UH. The
Speaker 1: other is inventory. It's what we sell. It's not commodities.
Speaker 1: We don't have hundreds deep in the exact same thing. UH.
Speaker 1: There's a broad breadth and it can be pretty shallow,
Speaker 1: especially when you get down to size and color and
Speaker 1: our inventory, a lot of it sits in stores which
Speaker 1: is close to our customers and being able to connect
Speaker 1: the customer with the exact size and color they want.
Speaker 1: By moving the mergation around in the market, which we
Speaker 1: continue to add capabilities to and the locals are those
Speaker 1: stores are part of it, UH, we can bring a
Speaker 1: much bigger selection to customers that can be available even
Speaker 1: same day and next day. Uh. Really more than anyone
Speaker 1: else can do it, because we have this inventory in
Speaker 1: our stores right right, and so customers can get it
Speaker 1: when they want it. I want to ask you a
Speaker 1: couple of questions if I may, um, the toughest long
Speaker 1: term strategy decision that you're working on right now. I
Speaker 1: know you hate long term. I don't hate locked term,
Speaker 1: but it is to be more prepared for the long term. UM. Well,
Speaker 1: I think we have. You know, so much of our
Speaker 1: our focus uh has been on and big investment has
Speaker 1: been in opening New York. Uh, And so what what
Speaker 1: comes after that? Uh? You know, for us, most most
Speaker 1: of our investments after we get New York open is
Speaker 1: in technology and supply chain. Uh. There's a lot of
Speaker 1: technology and supply change, and that the supply chain cap
Speaker 1: abilities to unlock uh that inventory to be productive and
Speaker 1: get customers really what they want in uh in a
Speaker 1: lot of speed. UH. Take some continued investment there. And
Speaker 1: that's probably the biggest challenge. Trade war is impacting you
Speaker 1: that much? Yeah, all right, what's um the biggest existential
Speaker 1: threat to your company or industry of Well, I don't know,
Speaker 1: I mean, I don't think these things will happen. But
Speaker 1: I think I think if if if people all of
Speaker 1: a sudden, Yeah, I just looked at that clothing and
Speaker 1: shoes and accessories as commodities. It's just body covering and
Speaker 1: they didn't care what the brand is. And it's uh, yeah,
Speaker 1: that we wouldn't survive that. That's not our deal. We
Speaker 1: have to be a place that where people are just
Speaker 1: in finding something new that's interesting to them. Shoes will
Speaker 1: never be a commodity and don't laying it. I don't
Speaker 1: think so. Um. What competitive do you most admire and
Speaker 1: why there's a lot of retailers that admire. Uh. I
Speaker 1: think Target is a trific job home depot Um. I
Speaker 1: think Walmart for a big, incredibly big retailer for some
Speaker 1: of the big bets they made and the things they
Speaker 1: have changed. Best Buy is something they've done and a
Speaker 1: lot of them. There's there's some common threads there of
Speaker 1: connecting the digital and physical experiences, leveraging the inventory that's
Speaker 1: in their stores. Um, and uh on top of that,
Speaker 1: for us, we'd layer again that the importance of people
Speaker 1: and kind of genuine human interaction and an authenticity there.
Speaker 1: But those are something people I think do a great job.
Speaker 1: I got to ask you this because I can't imagine
Speaker 1: you because of your last name and your family and multigenerational. Um.
Speaker 1: But if you weren't doing what you're doing, I know
Speaker 1: you've been doing it for a long time. He started
Speaker 1: when you were younger and Star Wars twelve. What else
Speaker 1: might you be doing? Uh? Well, it certainly wasn't as
Speaker 1: a teenage boy, it wasn't my dream too. Uh Yeah,
Speaker 1: I grew up in women shoes, selling stocking and selling
Speaker 1: women shoes. It wasn't that I had a passion for
Speaker 1: a woman's foot where I would have rather been a
Speaker 1: basketball player. But I certainly have a high I had,
Speaker 1: but I don't have the jumping for that. So when
Speaker 1: that ended, UM, I don't know. I mean really uh,
Speaker 1: in all genuine as it's uh. I've always enjoyed uh
Speaker 1: work with my family and my brothers were been very
Speaker 1: close are all our lives and uh um. But mostly
Speaker 1: what I've I've liked is, uh, it's a team. Uh.
Speaker 1: You know. It was part of the shoe team. And
Speaker 1: part of shoes is you got the stock room in
Speaker 1: the back room that you have to get the merchandise
Speaker 1: for the customers just wondered what goes on behind there.
Speaker 1: It's it's fascinating, but there's a camaraderie there and and
Speaker 1: always like being a part of a team. Uh and
Speaker 1: and that's all we have in our company. I mean,
Speaker 1: it's a big team, but it is, it is, it's
Speaker 1: you know, it's just that you know, our store this
Speaker 1: morning and uh, you know, our teams all fired up
Speaker 1: to open tomorrow. And and it's just feel very fortunate
Speaker 1: to have these people who are so passionate and their
Speaker 1: terrific pull on that they've they're on the front line. Yeah,
Speaker 1: and that they made a decision to hitch their wagon
Speaker 1: to us and be part of this thing is not
Speaker 1: something to take lightly. So I don't know what else
Speaker 1: are you doing, but it would be part of being
Speaker 1: a team. Well, great to hear, and thank you so much.
Speaker 1: And it's been a busy week. Congratulations on the store.
Speaker 1: Thank you appreciate. Thanks for listening to Bloomberg Business Week.
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