Buying into the "Nordstrom Way"
David Sali, OBJ
Published on April 01, 2015
The most anticipated new store at the Rideau Centre in years brought more than just exclusive fashion brands when it officially arrived in the capital last month, retail experts say.
Nordstrom also sets a higher standard of customer service than most Ottawa shoppers are accustomed to, they argue, and that could have ripple effects for high-end retailers across the city.
“Nordstrom walks their own talk,” says Ian Lee, an assistant professor of business strategy at Carleton University’s Sprott School of Business. “If they didn’t invent superior customer service, then by God, they certainly were the people that refined it.”
Long one of the most recognizable upscale retailers in the United States, the Seattle-based fashion chain launched its expansion into Canada with a store in Calgary last fall. Ottawa is the second of six stores Nordstrom is planning to roll out north of the border over the next two years.
The 157,000-square-foot Rideau Centre location features many of the company’s latest design concepts, incorporating natural light, wood finishes and other elements it hopes will make the store inviting and easy to navigate for shoppers.
The chain is aiming to raise the bar for fashionistas’ retail experiences in other ways, too.
For example, Nordstrom offers in-store alterations and shoe shines as well as a complimentary wardrobe and shopping service that sees fashion experts picking out items ahead of time for busy customers. Its restaurant Bazille has a range of menu selections, from tuna salad to flat iron steak to roasted salmon and herbed mushroom risotto, not to mention a fully stocked bar. There are interactive games for the kids, and one of the store’s dressing rooms even features a couch and flat-screen TV in the waiting area.
Barry Nabatian, director of market research at Shore Tanner & Associates, says the Nordstrom model caters to higher-income consumers who “expect to be pampered.”
He says he thinks Ottawa is an ideal market for the retailer given the capital’s relatively high number of upper-middle class and wealthy residents. About 40 per cent of the city’s 400,000 households earn more than $150,000 a year, and those are exactly the kind of customers Nordstrom is targeting.
“I think they and Tiffany (the famed jeweller, which is coming to the Rideau Centre this summer) and a few others, they really cater to people for whom money is irrelevant,” Mr. Nabatian says with a chuckle.
Nordstrom is bringing a new dimension to fashion retail, just as Whole Foods did in the supermarket business, he says. With Holt Renfrew now gone from the local scene, shoppers looking for top designer brands in the capital don’t have many other options, he notes.
“In a way, one can say that Nordstrom does not have any serious competition,” Mr. Nabatian adds. “Its competition is a number of small stores in the Glebe, the ByWard Market and Westboro, but they are very small.”
Still, he says the added competition might actually give homegrown boutique retailers a boost, especially if they capitalize on their ability to provide personalized service.
“Will the other stores suffer? At the beginning, yes, but a lot of these small stores have established a good relationship with their customers and I don’t think they’re going to suffer really much,” he says. “In a way, as high-end shopping becomes more popular, they may even benefit from (Nordstrom).”
Other Canadian fashion chains such as Quebec-based Simons, which will open its first Ontario store at the expanded Rideau Centre next year, will also be forced to step up their game to compete, Mr. Nabatian adds.
“They probably will have to rethink some of their strategy because Nordstrom and Tiffany, in addition to the quality, it’s just the personal service that they offer,” he says.
Mr. Lee, who says Nordstrom is a popular case study topic in his fourth-year class because of its long history of success, marvels at how the 114-year-old chain has been able to maintain consistently high standards of service even as it continues to expand.
While he doesn’t shop there himself when he travels down south – “I’m a Macy’s kind of a guy” he confesses with a hearty laugh – he says he’s visited Nordstrom locations across the United States and always comes away impressed.
The chain does its homework before entering a new market, he says, which will bode well for its move into a foreign country. While buying habits and retail trends in Canada and the United States are very similar, “there’s lots of subtle differences underneath the surface and they understand that,” Mr. Lee says.
“I’ve long said Nordstrom is going to do very well when they come to Canada,” he adds. “They know what they’re doing. They’re not going to do the mistakes of Target, which was to go in whole hog, all nine yards, 120 stores all at once. Nordstrom’s always been very cautious. They study the markets, they hire local consultants, they look at the demographic data. They don’t do things flippantly or frivolously.”
Nordstrom spokesperson John Bailey says the company’s buyers made regular trips to Ottawa ahead of the March 6 opening, studying the way downtown shoppers dressed and where they bought their clothes.
“They really try to grasp as much as they can about the style of the community, and they go to work at trying to find merchandise they think customers might like here,” he says.
Mr. Bailey says the chain is well aware of the challenges of expanding into a foreign market. But he adds Nordstrom is confident it will succeed.
“We just opened our first store in Calgary a little over five months ago and are still learning how we can best serve the customer in Calgary,” he says. “We know that we may stub our toe, and we know that we have a lot to learn, as we will in each city that we open up in as we expand across Canada. For us, it’s really about listening and responding in real time to the feedback that we’re hearing from customers.”
http://www.obj.ca/Local/Retail/2015-04-01/article-4097881/Buying-into-the-Nordstrom-Way/1
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