Why Nordstrom Is Expanding Inventory-Free Stores

Innovation in retail isn’t just about delivering on customer expectations – that is more or less just managing the table stakes of retail at this point. Retailers that don’t live up to expectations can reasonably expect to lose their customers to merchants that do.

To be really innovative in retail, one has to elevate the customer’s expectations – or, in particularly ambitious cases, they need to find a way to upend and reset them entirely. And to look at the now proliferating Nordstrom Local store concept, it seems the 117-year-old retailer is making a play for upending and resetting.

The Nordstrom Local shop has all kinds of things one might not expect to see in a building with the Nordstrom name on it. The location features a Trunk Club desk for men looking to upgrade their sartorial game, a seamstress station for custom fittings, a marble communal table for the WeWork crowd, a manicure and pedicure shop in the back and a refreshment station ready to roll with an extensive (if pricey) assortment of beers, wines and juices. The floor space is also designed around allowing pop-up spots, so that customers can pop in to, say, have their gifts gift-wrapped during the holiday season.

But while there is no shortage of things to take in, the shop does have one lack that may seem rather curious for a retailer.

Inventory.

It’s not that there’s absolutely no inventory in a Nordstrom Local space, of course – there just isn’t very much. The locations are built more around services than item selection – and though the store does hope to lure in customers for wide stretches of time, those customers will not be browsing through a vast showroom of goods.

Instead, customers start their Nordstrom Local journey on the web, using the store as the one-stop location where they can pick up, try on, have altered or return their goods – all under the roof of one open-concept, breezy Southern Californian concept store.

“We aim to bring the convenience and accessibility of some of the most popular or highly demanded services right to the neighborhoods where our customers live and work,” Shea Jensen, Nordstrom senior vice president of customer experience, told Fast Company.

And it is a concept that is catching on, according to Ken Worzel, Nordstrom’s chief digital officer and president of Nordstrom.com – particularly among the highly coveted millennial consumers, who apparently appreciate the retail hub concept on offer at the Nordstrom Local location.

“We’ve got a young customer base that’s very engaged with our brand,” said Worzel. “One of the clear messages we’ve gotten is people love our brand when we’re able to bring the combination of highly relevant, great product — with a layer of our people and services — to help make [the shopping experience] compelling . . . and super easy for them.”

Which is why Nordstrom is expanding the local experience with two more LA openings on deck.

The two new shops will be located in Brentwood and downtown LA, and will offer some variations from the original Melrose location specific to their respective areas. The new shops will also be slightly smaller than the original 3,000-square-foot Melrose location, with Brentwood and downtown clocking in with footprints of 1.200 square feet and 2,200 square feet, respectively.

The rumors also indicate that Nordstrom Local might be making a jump off of the West Coast and into New York City. There is no official announcement on that yet, but Nordstrom has been avidly pushing into the Big Apple and its powerfully spending consumer base. Nordstrom opened a menswear shop in the Columbus Circle area and is in the process of building its first full-line department in the city.

“Nordstrom is continuing to invest in its growth strategy with the goal of increasing market share by providing customers with better and more convenient services and access to more products,” Worzel noted. “Through our local market strategy, we’re combining the scale of our national infrastructure with our local assets of people, product and place to help reimagine the shopping experience for our customers.”

Nordstrom operates 373 stores in 40 states, including 122 full-line stores in the U.S., Canada and Puerto Rico, as well as 239 Nordstrom Racks. Like many in the department store line, it has had an uneven past couple of years, as it has worked overtime to meet changing retail habits and preferences.

An attempt that started last year to take the brand private stalled earlier this year, as the Nordstrom family (which owns over 30 percent of the stock) wasn’t able to make a large enough offer to the special committee appointed last year by a group of Nordstrom family members to investigate going private. Lenders were hesitant to make a big buy in a department store when all of the physical retail is going through a transformative period.

But since that effort began, Nordstrom has been seeing stronger results in the public markets – as of its last earnings report, same store sales were up, customer retention was looking strong and its customer rewards program saw growth in excess of 30 percent.

“Part of our DNA is always trying to find a way to create a better experience,” reflected Jamie Nordstrom, president of Nordstrom stores.

And it looks like at least some of those “better experiences,” like Nordstrom Local, are starting to put a bit of wind under Nordstrom’s wings.