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Nordstrom Brings Neighborhood Market to Manhattan With New Flagship and Two Local Hubs

Nordstrom Inc. is getting ready to open its Manhattan flagship this October, rocking the West Side retail landscape and rolling forward with its second local market service hub.

When the retailer posted second quarter earnings results last week, co-president Erik Nordstrom provided some details about the upcoming launch. The department store strategy for Manhattan, he said, will leverage seven New York City doors, which includes three new sites. The women’s seven-floor, 320,000 square-foot flagship, set to open on Oct. 24, will be located at 225 West 57th Street, near Columbus Circle. The company has also announced two Nordstrom local service hubs, one on the Upper East Side and one in the Village. The stores will join the Nordstrom Rack at Union Square and at 31st Street and 6th Ave., the men’s store across the street from the women’s flagship that opened in April 2018, and the Trunk Club clubhouse at 457 Madison Ave. for a combination of physical and digital assets to drive sales in the New York City market. The company will take learnings from its first service hub in Los Angeles.

“Our local market strategy leverages our physical and digital assets to provide greater access to merchandise selection, with faster delivery and at a lower cost to us,” Nordstrom said. “Our business is highly concentrated in our top markets with the Top 10 accounting for 60 percent of our sales. This year we scaled our local market strategy in Los Angeles, our largest market. We’re seeing compelling results and predictive metrics for customer engagement and inventory efficiencies.”

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Customers spent 2.5 times more on average, and the L.A. service hub accounted for 30 percent of orders placed online with in-store pick-up the next day, while alterations increased by more than 10 percent. The co-president also noted that product returns were “coming in eight days faster” driving greater inventory efficiencies. In leveraging the inventory across the broader L.A. market, the company began offering customers up to seven times more selection that’s available next day, which helped sales from order pick-up grow nearly three times in July. New York, which Nordstrom said represents the company’s largest market for online sales, would be its next service hub milestone.

The company has experienced growth in consumer demand for buy-online and pick-up in store, and its tailoring service has also helped it grow sales, according to Nordstrom.

“We’re the largest employer of tailors in North America….And the customers are engaged in all our alterations’ areas. There’s been triples when a customer engages with a stylist [and] their spend goes up 5 times. So that engagement is really what we’re looking for with services, be it across channels…And through our local market strategy in particular, we feel really good that we’ve found some ways to leverage these physical assets that really resonate with customers,” Nordstrom said.

At a Cowen & Company presentation in April, Nordstrom also hinted at the technological investment that has been made for the new Manhattan flagship, noting that it will be the “most technologically-enabled store” with services that have yet to be disclosed. He also said the company has learnings from its men’s store that will come into play for its women’s flagship. The women’s flagship will focus on business strength in designer brands, feature an express return service enabling online orders to be returned in the store and, acknowledging that women account for 50 percent of the shoppers at the site, store will also function as a service hub.

As part of its aesthetic, the women’s flagship will have 19-foot high ceilings and a glass facade that will allow shoppers to feel connected to the city, even when inside the store. Shoppers will either be able to walk out with purchases in hand, or have the option of having them delivered.

In June, Nordstrom said it is partnering with Seattle-based chefs Ethan Stowell and Tom Douglas for the opening of three of the six restaurants planned for the store. Stowell will open Wolf on the third floor of the women’s flagship. Douglas has the two other restaurants, including Jeannie’s, a contemporary pizza, pasta and salad restaurant, and Hani Pacific, influenced by Pacific Rim dishes, both on the store’s lower level. Other food concepts at the flagship include a Broadway Bar on the second floor, the family-friendly Bistro Verde on the fifth floor, and the Shoe Bar, a cocktail-destination that includes a day menu on the shoe floor.

A company fact sheet for the Manhattan store said merchandise across the seven floors–two below street level and five above–will include a curated breadth of product offerings across price points, including apparel, accessories, shoes, beauty, children’s and home. The store will also include a “robust selection of exclusive, limited-distribution and emerging brands and styles” that would make Nordstrom a one-stop destination.

Walter Loeb, former retail analyst and now consultant at his eponymous firm, said, “I think the flagship store will change shopping in New York, and shift it more to the West Side. It will be a strong competitor to Macy’s, Bloomingdale’s, Saks Fifth Avenue and Bergdorf Goodman.”

Loeb didn’t think the new Nordstrom store would impact Neiman Marcus, which opened in March at Hudson Yards. While Neiman is also on the West Side, Loeb said the Hudson Yards location would likely get more shoppers from the Highline neighborhood, as well as visitors who want to climb the famed Vessel that’s become the viewing attraction at the new development.

“Neiman misses a lot of the main attraction that Nordstrom has, which is the big customer base in New York online, and the stores in New Jersey. Because of those two factors, there are more customers who know Nordstrom than they do Neiman’s,” he said.

Loeb also expects Nordstrom’s local market strategy will become very important for the New York customer, both because of the ability to deliver merchandise to the consumer in a timely manner and because of the retailer’s attention to details with respect to customer service. “I think generally speaking, Nordstrom is going to change retailing in New York, particularly with its attention to high quality service,” Loeb said.

During the second-quarter conference call last week, executives were asked how Nordstrom would define success for its New York flagship. Co-president Pete Nordstrom said, “I think it’s really along the lines of can we deliver a great customer experience there and all the ways that I think customers would expect from Nordstrom entering the market. There are plenty of places to buy things in New York, and if we’re really successful, that is because we do the little thing that is actually [the] big thing. Just the way that we serve customers in a more relevant, a more convenient way, we’ve heard that theme a lot.”