Retail Gets Personal With Nordstrom Local

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Nordstrom (NYSE: JWN) announced a new concept store this week called "Nordstrom Local", which will take a different tack in enticing you to buy the company's apparel and accessories.

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In the following segment from Industry Focus: Consumer Goods, the cast describes the unusual idea and the strategy management has in mind when designing a shopping experience that is unlike any traditional Nordstrom department store.

A full transcript follows the video.

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This video was recorded on Sept. 12, 2017.

Vincent Shen: For our next story, we have another company also generating buzz in the news this week, and that's Nordstrom. The luxury department store is going to be welcoming shoppers in West Hollywood, California to their new retail experience. It's a new store called Nordstrom Local, and that's supposed to open on Oct. 3rd. What makes this specific location so special is the fact that you won't find rack after rack of clothing and accessories there. So while a normal Nordstrom store is usually well over 100,000 square feet, this Nordstrom Local would be just 3,000 square feet, so a much, much smaller footprint. As a result, it'll be more service focused. They'll offer things like beer and wine, manicures, alterations and dressing rooms where personal stylists can help put together outfits for the customers. Asit, for some time, Nordstrom has been the cream of a very difficult crop among the major department stores. They're still managing to expand and open new full-line Nordstrom locations in addition to their Nordstrom Rack stores. But a lot of competitors have actually closed stores or consolidated their brick-and-mortar footprint. What do you think is going through management's mind as they roll out an experimental retail experience like this?

Asit Sharma: Obviously, they want to keep up. Everyone can see that. The trends for shopping, as we discussed many times on the show, moving away from brick and mortar more toward online ordering. How do you survive and continue to open new stores? One way you can do it is to forge a different and stronger relationship with your customers. If you feel extremely loyal to Nordstrom and have a deeper bond than just going up to a rack and looking for a discount, you might be persuaded to order regularly, frequently stop in at your local store to pick up your clothes, and maybe pick up something else when you get there. So part of this thrust is to make it extremely enticing to do business with Nordstrom. I have to admit, I don't get manicures, but the thought of going into a small space without having to look at any physical merchandise, maybe grab a beer and thumb through some choices, hey, why not? It's a bright idea. 

There's something else behind this that's not quite as visible to customers. This type of innovation in retail is also data-driven. Some of the tools that Nordstrom will use when you go in to Nordstrom Local will actually be on screens. Your stylist will walk you through certain choices, and you may click on a touchscreen and punch some choices in. The company is then going to obtain data from that, and they're going to gain a deeper insight into how you make your fashion choices, which is more useful to them than just studying patterns from you buying clothes in the store and taking them home.

Shen: Yeah, absolutely. The thing with this is, for Nordstrom, and what they're offering here is this experience to get people out the door and potentially visit with the many various services they offer.

Asit Sharma has no position in any of the stocks mentioned. Vincent Shen has no position in any of the stocks mentioned. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.