Two-thirds of customers shop for discounted merchandise, according to a 2016 NPD Group study. Bloomberg stated that, last quarter, Nordstrom’s off-price retail division recorded $1.2 billion in net sales, with Nordstrom Rack responsible for $990 million of that revenue.
“They’ve got a good website and then they’ve got the brand name, which means something,” said Bridget Weishaar, an analyst at Morningstar. “This is a really valuable asset they bring to the table.”
The person in charge of reviving Nordstrom Rack’s brick-and-mortar locations is executive Karen McKibbin. She is opening the chain’s newest store this week in New York, which features gender-neutral fitting rooms and mobile checkout. The retailer’s intent is to make convenience a core component of the brand.
“We’re doubled down on speed and experience,” McKibbin said in an interview. “We really see it as complementary.”
The off-price format brought 6 million new shoppers to Nordstrom in 2016, Bloomberg stated, but the retail chain has competition in the space.
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“Shoppers are savvier than ever and understand how to find value in the off-price game,” said Edward Yruma, an analyst at KeyBanc Capital Markets.“You’re in a spot now where the secular growth for off-price isn’t as favorable as it once was; it’s more hand-to-hand combat. It feels like a great value the first time you buy it, but if you keep seeing it, maybe that sense of urgency is a little dampened.”
This news comes after the company’s efforts to go private were dashed by lenders. Nordstrom shares have fallen 12 percent this year; before going private becomes an option again, the retailer must improve its performance.
