Nordstrom Now Facing Same Sales Slump, Challenges As Other Mall Retailers

Image courtesy of Mike Mozart

Over the past year, a number of onetime mall behemoths — Macy’s, Sears, and other retailers — have suffered slipping sales that have led to store closures. While these mid-range department stores have working for years to increase sales and meet customer demand, many high-end retailers – like Nordstrom — have avoided that fate, at least until now.

The Los Angeles Times reports that Nordstrom began seeing warning signs that customer shopping habits were in flux late last year when sales rose by just 1%. For the first quarter of 2016, the company’s same-store sales actually fell 1.7%.

While the changes were rather small, they still came as a shock to the company, which had previously enjoyed years of steady growth and the expansion of its discount Nordstrom Rack brand.

“Then all of a sudden,” that growth began stalling in a “very strong” way, Michael Koppel, Nordstrom CFO told investors this summer.

The change of pace proved that Nordstrom wasn’t immune to the same challenges facing other department stores like Sears and Macy’s, where declines in mall traffic, lower consumer spending on apparel, and shoppers’ increasing desire to buy online have eaten into profits.

In an attempt to turn around the sluggish sales, the Times reports that the company will work on across the board upgrades.

“If we’re going to improve our business, we have to improve the customer experience and we have to improve the product,” Erik Nordstrom, a co-president for the retailer, tells the Times. “Our results are not where we want them. We need to get better.”

While the retailer operate online versions of both its traditional department store and its discount Nordstrom Rack brand, it’s still looking to attract more shoppers to physical stores.

“We’re looking at how can we — regardless of the mall that we’re in — give the customer a compelling reason to make a trip to the store,” James Nordstrom Jr., the company’s executive vice president, said.

But that’s an issue most retailers are having, analysts say, noting that overall apparel spending is not growing.

To combat slumping apparel sales, Nordstrom has turned its focus to popular, limited distribution brands like Beyonce’s Ivy Park active wear, J. Crew’s Madewell, and British brand Topshop, the Times reports.

“That category is becoming more and more important,” Erik Nordstrom said. “Our customers look to us to see what’s new.”

It’s a strategy that some analysts say could pay off for the retailer, as many Nordstrom customers are willing to pay full price for unique merchandise.

Although the sales declines and the need for a revamp show that Nordstrom isn’t immune to the challenges facing other retailers, the company hasn’t yet reached a point where it will close stores.

“We don’t have any announcements to make. But I wouldn’t say it’s off the table, either,” Erik Nordstrom tells the Times. “We look at our store portfolio all the time.”

Why have upscale retailer Nordstrom an other apparel giants lost their luster? [Los Angeles Times]