Recognized as the Year's Innovative Store Format: Nordstrom Local

Nordstrom, the renowned department store, made a bold move in October 2017 by opening its first merchandise-free concept store, Nordstrom Local, in urban locations such as Los Angeles, Seattle, and New York City. This innovative store, which offers online order pickup and return, alterations, style advice, and tailoring services, has been a game-changer for the company.

Since its inception, Nordstrom has opened two Local stores in Los Angeles in the fall of 2018 and another in New York City in September 2019. The company's co-President, Erik Nordstrom, considers these stores as the company's "model for the future."

However, the journey for Nordstrom Local hasn't been without challenges. In May, S&P lowered its outlook on Nordstrom to negative, citing "recent execution issues, heavy investments, and intense competition." Similarly, UBS designated Nordstrom a "no-growth retailer" in July, partly based on shifts in apparel trends that don't favor Nordstrom's upscale focus. Both reports mentioned missteps, with UBS analysts specifically targeting the execution of Nordstrom's new loyalty program.

Despite these challenges, Nordstrom Local has managed to separate the company from the rest of the department store pack, and it is seen as a potential saviour for department stores as they struggle for relevance. The concept focuses on the intersection of service and the experiential, offering services such as nail beauty services, in-store bars, and clothing donations, which vary by location.

However, there are concerns that testing concepts in these unique markets may not provide a good data set for determining whether they will work elsewhere. To address this, Bitar believes that for Nordstrom Local to live up to expectations, the offerings need to become less "cookie cutter" and more localized and personalized, which is costly.

As for the future, Jensen, a Nordstrom analyst, is open to the idea of suburban or rural Nordstrom Local stores, but the focus remains on learning from the New York and Los Angeles locations. Nordstrom's largest market is Los Angeles, and its largest digital sales market is New York. As of now, Nordstrom has five total Local stores in these two cities, with three in Los Angeles and two in New York.

In conclusion, Nordstrom Local, with its unique focus on service and experience, has been a significant step forward for the department store industry. While it faces challenges, it is clear that this concept could pivot again in the future to better meet the needs of its customers and the ever-evolving retail landscape.