Easterners: Nordstrom's Coming!
SEATTLE — IF shoppers in Edison, N.J. haven't heard of Nordstrom Inc., they haven't driven past the new Menlo Park Mall.The Menlo Park Mall, although once considered one of the smaller central Jersey malls, is being spruced up and expanded. One end of the mall is anchored by Macy's, a New York retailer. But the other end will feature a new Nordstrom store, expected to open Sept. 27. The Menlo Park Nordstrom is one of several Nordstrom's stores opening soon, as the Seattle-based chain expands into the Midwest and East, and in the process competes with such upscale retailers as Saks Fifth Avenue, Lord & Taylor, and Marshall Field. Nordstrom will open stores at the Tyler Mall in Riverside, Calif., this month; the Montgomery Mall, in Montgomery County, Md., in October. Next year, Nordstrom will open stores in Towson, Md., Freehold, N.J., and Bloomington, Minn. Nordstrom, one of the few premier fashion retailers in the United States, has 67 stores in eight states. The company's sales last year were $2.9 billion, up from $2.7 billion in 1989. Meanwhile, earnings rose from $115 million to $116 million. Sales for the six month period ending July 31 of this year increased 12 percent over the prior year. "Investors love Nordstrom," says Mark Byl, senior portfolio manger of Composite Northwest 50 Fund, a local mutual fund. That's because the stock, traded on the NASDAQ index, has been a steady gainer in value. As of last March, members of the Nordstrom family controlled 39 percent of the firm's common stock. Competitors probably have different sentiments. A New York retail analyst speculates that one reason May Department Stores converted a New Jersey department store chain it controls to the more upscale Lord & Taylor chain was to be ready to compete with Nordstrom as it expands east. What is Nordstrom's ultimate business plan - the overall strategy that guides this company? "Plan? I don't think we have an ultimate plan," laughs James Nordstrom, a co-chairman of the company, and a grandson of John Nordstrom, the Swedish immigrant who founded the family empire when he opened a shoe store here in 1901. "If there's a demand for our services and products, then we'll fulfill that demand," says Mr. Nordstrom. "All that we try to do is take care of our customers." Nor does that mean that Nordstrom is preoccupied with warily watching the competition, as some retailers are known for doing. Indeed, he says Nordstrom is pleased to share the Menlo Park Mall with Macy's, since having two major retailers in the same complex gives customers a choice. "The more stores around in a mall, the better." Currently, he says, the chain is opening three to four new stores a year, a pace expected to continue the next few years. Nordstrom is perhaps unique within the retail industry for having not one or even two, executive officers, but a handful - each with distinct operating tasks. There are four co-chairmen, a vice chairman, and four presidents. Another unique practice: Unlike most national retailers, Nordstrom has a decentralized buying system for acquiring merchandise. "Our [local] buyers can get closer to customer needs," says Jo Danielski, a Nordstrom spokeswoman. Nordstrom generated a number of unhappy national press stories during the past few years following legal challenges by some employees who are union members. They held that the chain is anti-union. But James Nordstrom denies the charge. "We're an open shop," he says, noting that the company's distribution center is organized by the Teamsters Union. Other than that, only a handful of the chain's 40,000 employees currently belong to a union. Nordstrom instead rewards its employees through a commission pay structure which, company executives say, has allowed most sales clerks to earn higher salaries than are earned on average within the industry. Nordstrom looks upon its sales clerks as "entrepreneurs," encouraged to know customers by name.