Nordstrom chooses to play the long game
Company’s sixth full-line store in Canada opening to public at Sherway Gardens on Friday
Nordstrom is preparing to open its sixth full-line store in Canada, at Sherway Gardens on Friday, amid reports that the chain is close to choosing a firm to help it fund a buyout that will allow the publicly traded retailer to go private.
Nordstrom Inc.’s stock price rose following a CNBC report stating private equity firm Leonard Green & Partners has offered to provide $1billion (U.S.) to help take the family business private.
The family announced in June that it wanted to go private to continue its turnaround plan outside the glare of public markets, giving them an opportunity to test new concepts without triggering negative shareholder reaction.
According to one estimate, the move would require raising between $7 billion and $8 billion in debt to finance the deal.
A spokesperson for Leonard Green was not available for comment. Jamie Nordstrom, president of stores, declined to comment.
“As you can imagine, there is a lot of protocol around how those things work and so, my answer is, I have to refer you back to that (June) announcement,” said Nordstrom in an interview Monday with the Star about the new Sherway store.
After opening the Sherway location on Friday, the company will focus on opening six Nordstrom Rack locations in Canada, Nordstrom said.
Three Nordstrom Racks are scheduled to open in the GTA: at Vaughan Mills in March; at One Bloor in May and at Heartland Town Centre in Mississauga in the fall of 2018.
The stores will sell apparel, accessories and shoes at savings of 30-70 per cent off regular prices and carry merchandise from Nordstrom stores, as well as spe- cially purchased items from some of the top brands sold at Nordstrom.
“It’s not outlet mall merchandise, where they will take this cool shirt, but say, ‘let’s make it cheaper, let’s put a cheaper button on it and make it in a cheaper factory with cheaper stitching and cheaper fabric,’ ” Nordstrom said.
“We don’t do that. That is the outlet mall model and that works really well for them. Our model is this is all first-quality merchandise that either was available for sale at our full-line store or the vendor made to offer to our full-line stores.”
For now, Nordstrom is standing pat with six full-line stores and six discount locations in Canada, Nordstrom said. While the company continues to monitor possible retail opportunities, it’s not currently considering further expansion.
“We will start opening Rack stores in the spring and that will take a lot of talent and focus and energy. Once we start moving through that, there may be other opportunities, but it’s not something we’re thinking about right now,” Nordstrom said.
Jamie Nordstrom said the company is not concerned about opening stores in a retail downturn.
“We were opening stores in 2008 when people would ask us the same question and some of those stores were our most successful store openings we’ve ever had. Maybe not that first month, but if you take the longterm view, we think being in the right locations, close to our best customers, is the right strategy, regardless of what kind of cycle we’re in,” Nordstrom said.
Doug Stephens, founder of Retail Prophet, a Toronto-based retail advisory, thinks Nordstrom may be bestplaced to survive the decline in fortunes affecting department stores world wide.
“I do think in the Canadian market, we, as consumers, are hungry for alternatives. I mean, how many years have we lived with — there’s Hudson’s Bay, or if you want to go upmarket there is Holt Renfrew or Harry Rosen, and retailers of that ilk.
“But there really hasn’t been anyone residing in the middle of those two and that’s where I think Nordstrom has an opportunity in terms of positioning — great brand, great service, great product, but they also, I think, reach down a little further than say, a Holt Renfrew would. So yeah, I think there is an opportunity for them.”
Stephens thinks the discount market may be a little tighter, with a slew of competitors including Winners, Marshalls and Saks OFF 5TH.
“I think that we’re maybe approaching a saturation point,” Stephens said, adding that for the moment at least, the sector still seems to have a lot of energy.
The new Nordstrom store at Sherway Gardens is 140,000 square feet over two floors and was built from the ground up.
The store includes many of the same features of other Nordstrom stores in Canada, including capacious and uniquely designed change rooms; 102 works of art, including works by five Toronto artists; a fullservice restaurant and bar, Bazille, on the second floor and shoe-tying lessons for children in the children’s department, which includes a playhouse with an interactive screen for games.
New for Toronto is the At Home department, which features luxurious decor, including cable large-knit throws for $119, throw pillows, hisand-her wine glasses for $62 and cocktail essentials.
At Home will be introduced to the Eaton Centre location in October, Nordstrom said.
Also specific to the Sherway Gardens store is the KBeauty section, which features a range of Korean beauty products, including Huxley Korean skin care and the Too Cool for School cosmetic brand.
The cosmetics section features a trending now section, with products for customers to try out and a “Mini Must-Haves” area featuring smaller versions of products for purchase.
Nordstrom said retailers will be doing business very differently five years from now and those investing in new experiences, in new ways of engaging customers, and in fulfilment technology and supply chain, including mobile, are more likely to survive than those that don’t.