By the end of the year, the company could have more Rack locations than full-price stores.
After 25 years, the old Nordstrom Rack location in downtown Seattle
closed for good last weekend as part of its move just one crosswalk over
from Nordstrom's flagship.
By putting them side by side, Seattle-based Nordstrom is challenging the conventional wisdom that a retailer's full-price and off-price stores cannibalize each other.
President Blake Nordstrom recalls how retail experts questioned the company's decision in the 1970s to launch the Rack business inside its downtown store, but the company has since opened 105 stand-alone Racks nationwide.
"What we've learned," Nordstrom said, "is that our Racks do well when they're closest to our flagships. We think there's a great synergy."
The Seattle Rack's move is part of an aggressive growth strategy for the discount business. Nordstrom plans more than a dozen additional Racks this year, bringing the total to 119. By contrast, the company plans one additional full-price store, for 117.
That means Nordstrom is poised to operate more Racks than flagships for the first time in its 111-year history, a milestone not lost on retail-industry experts.
Consultant Jeff Green recalls that the Rack was a bright spot for Nordstrom during the darkest days of the recession. While sales plunged at Nordstrom's full-price stores, the Rack posted much-needed gains.
"The minute the economy turned south, Nordstrom said, 'No more full-line stores except for the ones already under construction, and let's focus on the Rack,'" Green said.
"They had a backup for the downturn, and it was the Rack."
But putting a discount store next to a flagship takes Nordstrom outside the industry's norm. Neither Neiman Marcus nor Bloomingdale's puts its outlet stores next to its flagships.
"The old theory was why, if you have a core consumer who loves you, would you erode her respect for you by showing her cheap stuff? Why would she ever go back to paying full price?" said New York retail consultant Kate Newlin.
"But the Rack is a well-enough presented experience that they're pretty confident the two can coexist without eating each other's lunch."
With nearly all of its merchandise on one floor, the new Seattle Rack is designed to make shopping faster and more convenient, reflecting a major corporate emphasis.
Gone is the "shoe mate" window, where customers waited in line for the other half of a pair to complete a purchase. Now boxes contain both halves, so shoppers can grab and go.
The new Rack also will put 16 mobile checkout devices into the hands of sales clerks to cut down on lines at the register. "It's all about customers being able to get in and find what they want quickly," Rack President Geevy Thomas said in an interview at the store.
By putting them side by side, Seattle-based Nordstrom is challenging the conventional wisdom that a retailer's full-price and off-price stores cannibalize each other.
President Blake Nordstrom recalls how retail experts questioned the company's decision in the 1970s to launch the Rack business inside its downtown store, but the company has since opened 105 stand-alone Racks nationwide.
"What we've learned," Nordstrom said, "is that our Racks do well when they're closest to our flagships. We think there's a great synergy."
The Seattle Rack's move is part of an aggressive growth strategy for the discount business. Nordstrom plans more than a dozen additional Racks this year, bringing the total to 119. By contrast, the company plans one additional full-price store, for 117.
That means Nordstrom is poised to operate more Racks than flagships for the first time in its 111-year history, a milestone not lost on retail-industry experts.
Consultant Jeff Green recalls that the Rack was a bright spot for Nordstrom during the darkest days of the recession. While sales plunged at Nordstrom's full-price stores, the Rack posted much-needed gains.
"The minute the economy turned south, Nordstrom said, 'No more full-line stores except for the ones already under construction, and let's focus on the Rack,'" Green said.
"They had a backup for the downturn, and it was the Rack."
But putting a discount store next to a flagship takes Nordstrom outside the industry's norm. Neither Neiman Marcus nor Bloomingdale's puts its outlet stores next to its flagships.
"The old theory was why, if you have a core consumer who loves you, would you erode her respect for you by showing her cheap stuff? Why would she ever go back to paying full price?" said New York retail consultant Kate Newlin.
"But the Rack is a well-enough presented experience that they're pretty confident the two can coexist without eating each other's lunch."
With nearly all of its merchandise on one floor, the new Seattle Rack is designed to make shopping faster and more convenient, reflecting a major corporate emphasis.
Gone is the "shoe mate" window, where customers waited in line for the other half of a pair to complete a purchase. Now boxes contain both halves, so shoppers can grab and go.
The new Rack also will put 16 mobile checkout devices into the hands of sales clerks to cut down on lines at the register. "It's all about customers being able to get in and find what they want quickly," Rack President Geevy Thomas said in an interview at the store.
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