Retail Pulse: Nordstrom And Starbucks Expand Brick-And-Mortar Footprints

Nordstrom has been upping its digital efforts by naming a chief digital officer and opening a men’s store in Manhattan that is chock-full of digital features, such as buy-online/pick-up in store. However, even with its digital focus, Nordstrom doesn’t intend on changing its modus operandi of closing two to three stores a year.

The retailer doesn’t plan on large-scale store closings, executives told analysts in a post-earnings conference call last week, as all of its full-line and off-priced Nordstrom Rack stores are profitable. Instead, the company hopes to gain market share by leveraging its digital features and brick-and-mortar presence. It’s a strategy that might have kept margins in tact, so far, as the company evolves its omnichannel efforts.

In line with that strategy, Nordstrom has brought digital features into its first-ever full-line men’s store in New York City that opened in April. The store, which is three stories and has 47,000 square feet of space, boasts features such as express return kiosks and augmented reality. The idea behind the store is to offer a wide range of both digital and traditional services. For example, the store counts nearly 20 tailors on staff and has digital screens that can show custom-made jackets on a shopper’s avatar. In terms of inventory, the idea is to provide a wide range of price points. The store’s inventory ranges from Vans sneakers, which retail for about $50, all the way up to high-end Samuelsohn suits that start at about $1,000.

Beyond New York City, Nordstrom is expanding its brick-and-mortar presence in Canada. The retailer is bringing its off-priced concept — Nordstrom Rack — to the country: It has already opened three stores this spring in the Toronto and Calgary markets, and plans to open three more stores in the fall. Even so, Nordstrom’s off-price concepts hasn’t fared as well as its full-line stores. At Rack, comp sales only increased by 0.4 percent, when its full-price comp sales increased by 0.7 percent over the last quarter.

Though the retailer is certainly not happy with those numbers, executives said on the call that the company is still focusing on making improvements to its Rack business. One reason? Rack stores may be a way to bring in both younger and new customers for Nordstrom overall.

In Other Brick-And-Mortar News

Starbucks is making big moves in China, where it plans to open close to 3,000 new stores over the next couple of years. The company plans to open 600 stores per year and expand to around 100 new cites to reach 230 cities in Mainland China by its fiscal 2022 year.

Starbucks is pretty confident in its ability to expand in the country. In a press release, the company said it anticipates more than triple the revenue and double the operating income in the country over the next five years, compared to fiscal year 2017. Why? The company believes it is poised to grow along with the country’s burgeoning middle class.

Though some American companies might have difficulty breaking into the Chinese market, Starbucks has a major advantage: The retailer is already there. The result? Starbucks can use its existing presence to help caffeinate the country’s still-young coffee culture.