Nordstrom Local Launch: An Idea Worth Trying

(Bloomberg Gadfly) -- Much of the retail world is struggling, and perhaps no corner of the industry feels more pain than department stores.

They are grappling with the shift toward online shopping, of course. But they are also being pummeled by an emerging preference for off-price outlets such as The TJX Cos.' T.J. Maxx and Marshalls.

And so it makes sense that Nordstrom Inc. on Tuesday opened a location that doesn't much resemble a department store.

The concept is called Nordstrom Local. It isn't filled with racks of merchandise; instead, it's a tiny outpost where you can meet with a personal stylist, who brings in a small selection of clothes picked out just for you. It's also a place to get manicures, have a glass of wine, and pick up or return an online order.  

Investors appear skeptical of the idea; the retailer's stock fell as much as 5.4 percent on the day it was announced.

But I think it's a worthwhile experiment, one that gives Nordstrom a playground to test some ideas that have been embraced by both insurgent competitors and retail heavyweights.

While Nordstrom Local doesn't exactly mimic the setup of a Bonobos or a Warby Parker, it clearly takes inspiration from those successful newcomers. Those brands use their tiny brick-and-mortar locations as showrooms, where customers typically try on different styles and have their favorites shipped to their doorstep later. The physical store gives these retailers a chance to deliver high-touch customer service, theoretically making customers more loyal to the brand.

That seems to be what Nordstrom is going for with its Local concept: a more boutique-like, personalized experience for shoppers increasingly seeking such environments.

Plus, by offering services such as manicures, Nordstrom gives people a reason to come to the store even when they're not in the market for a new outfit. This has much in common with Apple Inc.'s shrewd strategy of turning its stores into community centers

The Nordstrom Local concept could also help ease some of the pain points of online shopping. As a convenience-oriented service center for returns and a place to retrieve e-commerce orders, it could remove some of the perceived risk or hassle of buying online. This is exactly what Amazon.com Inc. is trying to do with its fast-growing network of physical access points such as campus stores and lockers.

And Nordstrom badly needs more dependable e-commerce growth. 

It's hardly a sure thing that shoppers will flock to Nordstrom Local. It could end up on the long list of failed attempts to jazz up department stores, alongside the likes of Kohl's Café and a J.C. Penney with no promotions.

But if you accept the premise that department stores are a troubled format, then you should tip your hat to Nordstrom for trying to reimagine what its physical footprint can look like and what purpose it can serve. Department stores can't keep trying to make subtle nips and tucks to their businesses to survive; they have to be willing to do more.

And it helps that Nordstrom Local is not exactly an expensive investment. There's just one location right now, and it's just 3,000 square feet -- far smaller than the 140,000 square feet that is typical for a Nordstrom department store. That makes it a cost-effective way to test how Nordstrom can best emulate some of the most innovative retailers in the game.

This is a time of great uncertainty for Nordstrom. It's exploring going private, and those talks are reportedly hitting snags. But it's right to keep trying to pull out of its traditional retailing lane. Its future may depend on it.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

To contact the author of this story: Sarah Halzack in Washington at shalzack@bloomberg.net.

To contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.net.