Long life, many happy returns; Nordstrom: Customer service, with a no-questions-asked return policy, have helped the department store chain stay independent and thrive.

THE BALTIMORE SUN

One of Jim Nordstrom's favorite customer service stories is about a Nordstrom shopper in desperate need of a blue dress shirt with white cuffs and collar and a salesman who produced one within a day.

When asked how, with none in stock, the salesman held back the details, but replied, " 'Well, if you need a white dress shirt with a blue collar and blue cuffs, we have one,' " recalled Nordstrom, a company co-president and part of the fourth generation to run the Seattle-based department store chain.

Stories about Nordstrom employees going to extra lengths have become almost legendary, as have ask-no-questions return policies, tailoring services and abundant size and style assortments.

When the chain entered the Baltimore market in 1992, it so shook up rival Macy's, then a relatively new player in the market itself, that the chain scrambled to make its own returns more flexible.

By turning the Nordstrom name into a brand that stands for customer service, the nearly century-old company has managed to expand to other regions of the country as well as transcend the whims of apparel retailing.

Over the years, other department stores have thrived by becoming divisions of large corporations. Others have shut their doors for good -- victims of ever-changing consumer shopping patterns and increased pressure from larger retailers. Names such as Woodward & Lothrop, Hutzler's, Stewart's and Hochschild Kohn have been long erased from the local retail landscape.

But Nordstrom, which started as a single shoe store and operated as a regional chain for decades, has maintained its independence and identity and even the involvement of its founding family, distinguishing its stores with espresso bars, cafes, live piano music and shoeshine stands.

At the same time, the retailer has evolved into a national player, with 68 stores, $5 billion in sales last year and a growing East Coast presence. On Friday, the chain will open its fourth Maryland store, at The Mall in Columbia, at the end of a new wing of 40 specialty stores.

"They've differentiated themselves from everyone else," said Howard Davidowitz, chairman of Davidowitz and Associates, a national retail consulting firm in New York.

"If you go into most department stores today, service is almost nonexistent. Nordstrom has people who not only are willing to help you, they'll do anything. At a time when service has collapsed in department-store America, they have maintained service. That has been a tremendous distinguishing characteristic for Nordstrom all these years."

As it prepares to move into the next century, the chain is launching an Internet division, with a short-term goal of becoming the largest online shoe store, with 20 million pairs. The company is also pushing ahead with its national expansion, planning to build four department stores and four Nordstrom Rack stores a year, mostly on the East Coast.

But analysts have raised questions about the company's growth strategies, merchandising and ability to compete with strong specialty retailers such as Banana Republic, Talbots Inc. and Ann Taylor. This year, the chain has been beset with lagging sales.

"They're struggling right now," said Michael J. Shea, a research analyst with D. A. Davidson & Co.

"Sales have been weak and they continue to be weak. There's a lot of competition out there, and some frankly do a better job of merchandising. In combination with some reporting systems within the company that are outdated, it makes it difficult to be nimble enough to have the right stuff in the stores.

"Now, they have this Internet strategy, which will detract from a focus on what I think is needed, which is the operating of full-line stores."

For the most recent quarter, which ended July 31, the chain reported net income of $70.8 million, or 51 cents a share, up from $69.2 million, or 47 cents a share. But sales fell 2.4 percent, which some analysts blamed on the chain's merchandise mix.

Shea noted that the company continues to perform well in areas such as cosmetics and shoes, and has sales per square foot of $400 and strong profit margins.

"In some respects, they're still the envy of the retail segment," he said.

Sought-after anchor

In the intensely competitive world of brick-and-mortar retailing, Nordstrom remains one of the anchor retailers most sought-after by mall owners. At Columbia mall, the addition of a 173,000-square-foot Nordstrom and the new 80,000-square-foot wing fit plans to take the mall more upscale with more fashion-forward retailers, said Jeffrey G. Sneddon, vice president and general manager of the Rouse Co.-owned mall.

"We view [Nordstrom] as being in the top tier of department stores," said Christopher B. Carlaw, a Rouse development director. "Nordstrom offers the opportunity for Columbia [mall] to capture part of the market in northern Montgomery County."

Typically, when Nordstrom opens at a mall it enhances business for the entire center, experts said.

"They're a wonderful tenant because all the retail tenants do high volumes in centers that Nordstrom is a part of," said Rene Daniel, president of Baltimore-based the Daniel Group. "The large specialty chains like the Gaps and the Limiteds and the Venators are all anxious to be in centers with Nordstrom in them."

Retail experts expect a strong performance from the Columbia Nordstrom, which will employ 350. The chain has not ruled out building more department stores in the Baltimore-Washington market, though retail experts say they would be surprised at another full-line department store in the Baltimore area.

Nordstrom got its start in 1901 when Swedish immigrant John W. Nordstrom and a partner opened Wallin & Nordstrom shoe store in Seattle. John Nordstrom retired in 1928, selling his share of the company to his sons, Everett and Elmer. His partner later retired and sold his interest. A third Nordstrom son, Lloyd, joined in 1933.

Worked as 'button boy'

Jim Nordstrom, one of six members of the fourth generation of Nordstroms appointed to co-presidency in 1995, recalls his grandfather, Elmer Nordstrom, stressing the importance of customer service when telling stories about working in the shoe store as a "button boy," custom-fitting buttons to women's shoes.

The three Nordstrom sons built the company into the largest independent shoe chain in the United States with eight shoe stores in Washington state and Oregon and 13 leased shoe departments in Washington, Oregon and California. The downtown Seattle store grew into the largest shoe store in the country.

In 1963, the company acquired Best Apparel, a Seattle-based clothing store and soon incorporated it into the shoe business. The company acquired Portland fashion retailer Nicholas Ungare in 1966 and merged it with its downtown Portland shoe store, changing the company name to Nordstrom Best. The second generation of Nordstroms turned the chain over in 1968 to the third generation.

Nordstrom went public in 1971. By 1973, the chain had become the West Coast's largest volume fashion specialty store, with more than $100 million in sales, and changed its name to Nordstrom Inc. The company expanded into Alaska in 1975.

California market

"Each one of us has grown up in the business and learned the business at every level," said Nordstrom, who would go to stores with his father as a child and got his first job at age 13 stocking children's shoes. "This was very much a part of our family and a part of who we are. We talked about the business as I grew up around the dinner table."

In May 1978, the chain entered the highly competitive California market with the opening of the South Coast Plaza Nordstrom in Orange County. Prior to opening, the company surveyed potential consumers, asking "What is Nordstrom?"

"The No. 1 answer was a refrigerator company," Nordstrom said, adding that now that store produces the chain's highest volume.

A decade ago, Nordstrom launched its East Coast expansion, opening the first store in 1988 in Tysons Corner in McLean, Va. Some analysts balked at the move.

"Analysts were questioning whether [Nordstrom] could bring that message and brand image to this side of the country, and they've done that," said Bruce Van Kleeck, vice president of member services for the National Retail Federation. "They've identified with customers that they stand for something. Customers today really are looking for a brand they can trust."

Over the past few years, the company has looked for ways to operate more efficiently. The company reduced the number of buying teams from 14 across the country to four, one for each region.

"But we are still relatively decentralized, when you consider most competitors have even fewer buying teams than that," Nordstrom said.

Much of the chain's longevity has come from empowering employees, long a part of the company's culture, Jim Nordstrom said.

"We give [employees] the freedom and the opportunity to take care of our customers in whatever way they determine, one customer at a time," he said. "We've tried to create an entrepreneurial environment, where each of our people is trusted to make decisions for the customers. We don't allow rules or policies to dictate how the customer is going to be taken care of."

Inventory growth

While recent sales dips have concerned some analysts, the company says the problems have stemmed from inventory growth outpacing sales growth.

"What we've tried to do this year is reel in the growth of inventory," Jim Nordstrom said. "It was a very difficult decision because when you have less inventory, you run the risk of missing a sale, and we don't want to disappoint anybody. But we realized we had to stem the tide of inventory growth relative to sales, and this was the year to do it.

"It is such a competitive business, and customer needs and wants change, and fashion changes. It's always a challenge to provide exactly what the customer wants."

Customer service remains a powerful draw. Shoppers at the Towson Nordstrom store last week listed service, size and style selection and a calm, uncluttered atmosphere as advantages the chain has over the competition.

"I like their ability to locate sizes, colors and styles -- and they volunteer it," said a shopper from Homeland who gave her name only as Susan.

When a jacket she bought needed altering, the store shortened sleeves for no charge, she said. "I used to shop a lot in Washington, but this store has made a big difference to me."

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