Long life, many happy returns

Nordstrom: Customer service, with a no-questions-asked return policy, have helped the department store chain stay independent and thrive.

September 12, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

One of Jim Nordstrom's favorite customer service stories is about a Nordstrom shopper in desperate need of a blue dress shirt with white cuffs and collar and a salesman who produced one within a day.

When asked how, with none in stock, the salesman held back the details, but replied, " `Well, if you need a white dress shirt with a blue collar and blue cuffs, we have one,' " recalled Nordstrom, a company co-president and part of the fourth generation to run the Seattle-based department store chain.

Stories about Nordstrom employees going to extra lengths have become almost legendary, as have ask-no-questions return policies, tailoring services and abundant size and style assortments.

When the chain entered the Baltimore market in 1992, it so shook up rival Macy's, then a relatively new player in the market itself, that the chain scrambled to make its own returns more flexible.

By turning the Nordstrom name into a brand that stands for customer service, the nearly century-old company has managed to expand to other regions of the country as well as transcend the whims of apparel retailing.

Over the years, other department stores have thrived by becoming divisions of large corporations. Others have shut their doors for good -- victims of ever-changing consumer shopping patterns and increased pressure from larger retailers. Names such as Woodward & Lothrop, Hutzler's, Stewart's and Hochschild Kohn have been long erased from the local retail landscape.

But Nordstrom, which started as a single shoe store and operated as a regional chain for decades, has maintained its independence and identity and even the involvement of its founding family, distinguishing its stores with espresso bars, cafes, live piano music and shoeshine stands.

At the same time, the retailer has evolved into a national player, with 68 stores, $5 billion in sales last year and a growing East Coast presence. On Friday, the chain will open its fourth Maryland store, at The Mall in Columbia, at the end of a new wing of 40 specialty stores.

"They've differentiated themselves from everyone else," said Howard Davidowitz, chairman of Davidowitz and Associates, a national retail consulting firm in New York.

"If you go into most department stores today, service is almost nonexistent. Nordstrom has people who not only are willing to help you, they'll do anything. At a time when service has collapsed in department-store America, they have maintained service. That has been a tremendous distinguishing characteristic for Nordstrom all these years."

As it prepares to move into the next century, the chain is launching an Internet division, with a short-term goal of becoming the largest online shoe store, with 20 million pairs. The company is also pushing ahead with its national expansion, planning to build four department stores and four Nordstrom Rack stores a year, mostly on the East Coast.

But analysts have raised questions about the company's growth strategies, merchandising and ability to compete with strong specialty retailers such as Banana Republic, Talbots Inc. and Ann Taylor. This year, the chain has been beset with lagging sales.

"They're struggling right now," said Michael J. Shea, a research analyst with D. A. Davidson & Co.

"Sales have been weak and they continue to be weak. There's a lot of competition out there, and some frankly do a better job of merchandising. In combination with some reporting systems within the company that are outdated, it makes it difficult to be nimble enough to have the right stuff in the stores.

"Now, they have this Internet strategy, which will detract from a focus on what I think is needed, which is the operating of full-line stores."

For the most recent quarter, which ended July 31, the chain reported net income of $70.8 million, or 51 cents a share, up from $69.2 million, or 47 cents a share. But sales fell 2.4 percent, which some analysts blamed on the chain's merchandise mix.

Shea noted that the company continues to perform well in areas such as cosmetics and shoes, and has sales per square foot of $400 and strong profit margins.

"In some respects, they're still the envy of the retail segment," he said.

Sought-after anchor

In the intensely competitive world of brick-and-mortar retailing, Nordstrom remains one of the anchor retailers most sought-after by mall owners. At Columbia mall, the addition of a 173,000-square-foot Nordstrom and the new 80,000-square-foot wing fit plans to take the mall more upscale with more fashion-forward retailers, said Jeffrey G. Sneddon, vice president and general manager of the Rouse Co.-owned mall.

"We view [Nordstrom] as being in the top tier of department stores," said Christopher B. Carlaw, a Rouse development director. "Nordstrom offers the opportunity for Columbia [mall] to capture part of the market in northern Montgomery County."

Typically, when Nordstrom opens at a mall it enhances business for the entire center, experts said.

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