Nordstrom’s First NYC Flagship, Seven Years In The Making, Is Finally Opening-But Times Have Changed


Nordstrom’s first New York flagship opening on Thursday will feature its acquired Trunk Club … [+]

Andria Cheng

Come Thursday, New York’s competitive luxury retail market will get even more crowded. Upscale department-store chain Nordstrom will finally realize its decades-long dream of opening its first flagship in Manhattan.

A lot is riding on the 320,000-square-foot, seven-story store, two blocks south of Central Park and right across from its much smaller men’s store that opened last year. Nordstrom, which has opened Nordstrom Local online order pickup and return convenience hubs and two Nordstrom Rack off-price outlets in the city, has projected New York, where the Seattle-based retailer already gets its biggest online sales, as a “$700 million-plus” opportunity.

With Los Angeles, the two cities combined will total over 25% of Nordstrom’s full-priced business, the company has said.

But winning those sales won’t come easy. Nordstrom, once an industry outperformer, had $15.5 billion in sales last year but has posted declining comparable sales at both its full-priced stores and Nordstrom Rack this year. Over the seven years since it announced the plan to open a Manhattan flagship, its stock has slumped about 30% as the entire department-store group struggles with how to be relevant.

While it’s easy to blame Amazon, studies have shown department stores lost share to the likes of no-frills TJX, the parent of T.J. Maxx and Marshalls. In fact, Nordstrom’s new flagship sits right across from a T.J. Maxx that on Tuesday reopened with an additional selling floor.

“Consumers identify TJX much more closely with ‘value for money’ than they do full-price rivals,” UBS analyst Jay Sole said in a September report. “Last year, we thought department stores could slow the rate of share loss. We now have less conviction in this view.”

Nordstrom’s expensive flagship is also opening after rival Neiman Marcus has entered New York with a flagship and existing players Saks, Macy’s and Bloomingdale’s have done major makeovers of their shops. Meanwhile, the recent bankruptcy filing of Barneys New York and the January closing of Lord & Taylor’s Fifth Avenue store served as sobering reminders of the continued challenges facing department stores.

Department stores sales have dropped 4.8% the first nine months of this year, the worst-performing segment, in contrast to a 3.4% increase across the entire retail and food service industry, according to Commerce Department data.

That followed a streak of declines for the segment in each of the past five years, compared with gains for the U.S. retail industry, Euromonitor data shows.

Nordstrom is not blind to those market shifts.

At the flagship, located at the bottom of New York’s new tallest residential tower, signs of Nordstrom’s attempts to respond to the new retail playbook and cater to changing shopping behavior are evident.

As with the new architectural design ethos of other retailers, the store features an open floor plan with many windows that let in natural light. Gone are hard walls that traditionally divide different brand shops, replaced by what an executive described as “mesh walls” aimed at making “younger customers feel more comfortable.”

Nordstrom New York flagship uses veils, or what an executive described as “mesh walls,” as part of … [+]

Andria Cheng

Attempts to appeal to younger customers are sprinkled throughout the store. For instance, a section showcasing Burberry had graffiti over the windows. The nod to the popular athleisure trend was seen in shoe displays of brands from Versace to Gucci and in a special shop featuring Nike sneakers paired with many designer fashions.

Online clothing brand Everlane, pitching itself as sourcing from “ethical factories,” will headline the store’s rotating pop-up shop this month while Dirty Lemon’s text-to-buy vending machine, peddling collagen-infused drinks, can be found at the beauty-service floor.

NordstromXNike shop

Andria Cheng

Trunk Club, a Nordstrom-acquired personal stylist clothing box service, for the first time also sets up shop inside a regular Nordstrom store, even though it also has a stand-alone store in the city.

Like Neiman Marcus, Nordstrom’s New York flagship boasts the chain’s largest food and beverage offerings. Among seven options are four full-service restaurants, a gluten-free mochi donut shop and a cocktail bar located for the first time in the middle of Nordstrom’s shoe section so customers can have their drinks while they shop.

Nordstrom’s New York flagship features a cocktail bar right in the middle of its shoe floor.

Andria Cheng

“As the retail landscape changes, it’s about experience,” Vincent Rossetti, Nordstrom’s vice resident of restaurant operations, said on a store tour. Food “is a significant traffic driver.”

How significant? One in four transactions at Nordstrom comes through the company’s food-service offerings, he said.