Nordstrom was planning on opening five department stores and two discount Rack stores, but after the economic downfall the company decided to only open three department stores and ten Rack discount stores. In 2008, the company's full line department stores dropped 12.4%, while the company's discount store Rack rose 3% for the year. With the recession in mind, customer buying habits have changed and more consumers are making more conscious buys, meaning that luxury items sold at high-end Nordstrom department stores are being bought less, making more markdowns. The company thinks that the recession is a good opportunity to branch out with more of its discount stores, however, the company also seems to be trying to keep the expansion under the radar.
As a luxory retailer, Nordstrom is also worried that by opening too many discount stores their company's brand image may be harmed and customers could start having different expectations for the company. Although, if done correctly, the opening of more Rack stores could help the turnover of Nordstrom's full-line department stores and could easily move old merchandise out of Nordstrom to allow for newer, fresher, and trendier items faster.
As a student in retail studies, I find this article very interesting and I plan on continuing to keep up with Nordstrom's decision of opening Rack stores to see if the decision was made for the best of the company. Whether the company's plan works by increasing turnover in their department stores and increasing sales throughout their Rack stores, or if this decision will only ruin the company's brand image will be particularly interesting to learn from.
Studying the successful/unsuccesful decisions of a company can help my classmates and I learn what better decisions to make in the future.
Source: Nordstrom plans to open 10 discount outlets this year. 22, February 2009. Retreived from http://www.msnbc.msn.com/id/29362106/ .
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