Nordstrom Rack to open in Herald Square as department store industry shrinks

BY Sarah Kim

Nordstrom Rack is set to open its second location in Manhattan on October 26. The new 46,000 square-foot store, at 855 Sixth Avenue between West 30th and 31st streets, is joining an area saturated with retail stores near Herald Square.

Nordstrom, Inc. is expanding its discounted outlet format, Nordstrom Rack, during a time when major department stores are closing and downsizing. The company is counting on the new location to attract uptown customers looking for deals on designer clothes. The new store will occupy the first three floors of the EOS Nomad, the 47-story glass residential building that opened in 2016.

“We have a big clientele,” said Rashidah Young, the service experience manager at Nordstrom Rack in Union Square. “People who live on the Upper East Side are also looking to get the perks and benefits of the Rack.” Young said the Union Square location works for customers from nearby areas like the Lower East Side, but the new midtown site will give uptown shoppers a more convenient option.

The opening comes after a decade of economic predictions about the death of department stores. According to the most recent U.S. Department of Commerce data, department store sales have declined from $84.76 billion in 2005 to $60.65 billion in 2015.

Joe Schuster, a consultant in retail and services practices and consumer products at Russell Reynolds Associates, believes that Nordstrom has fared better than other department stores.

“Nordstrom is a premium brand in the retail world, and while department stores are facing a lot of headwinds today, Nordstrom Rack is a ‘brand-within-a-brand’ in the company’s broader infrastructure,” he said, in an email. Schuster explained that the store’s outlet format outperforms traditional department store concepts. “If you break down the business, it wouldn’t surprise me to see these store formats still operating profitably.”

Nordstrom’s corporate communications officer, Brenna Sussman, declined to comment on the opening of the new store. However, Young said the new store in midtown will help the company reach its $50 million sales goal, which will be used to open more stores in New York City.

According to Schuster, Nordstrom Inc.’s strategy has other stores rethinking their approach. He said that department stores are figuring out “how they can leverage brick and mortar stores as mini-warehouses to support initiatives such as buy-online-pickup-in-store services.” He added that a store in a highly trafficked area like Herald Square could offer in-store perks, “while also providing Nordstrom with a competitive advantage over pure-play eCommerce retailers.”

Nearby stores are hoping the opening of Nordstrom Rack will increase foot traffic in the area. Bryan Velez, a manager at Gregory’s Coffee, predicts the new store will bring in additional business.

“It would have a huge impact,” he said. “The store alone would have above 100 employees that would hopefully come and try our coffee, and with the grand opening, there would be a lot of customers from there that could easily come over and also try our coffee.”

Nordstrom Rack will be located near several popular and trendy apparel stores in Herald Square that have lower price points, like H&M, Forever 21, and Uniqlo. However, for young professionals, the outlet offers upscale work clothes at affordable prices.

Sarah-Alice Hanna, a 23-year-old employee at 5 Penn Plaza, said she looks forward to buying high-quality office outfits that cost less than ones at Macy’s.

“I’m pretty stoked to have a less expensive department store option that’s so convenient to work and that isn’t Macy’s,” she said, adding that, “I bought one of my favorite blazers at Nordstrom in 2011 and it’s still in very good condition today.”

 

 

 

This entry was posted on Monday, October 9th, 2017 at 9:30 pm. It is filed under Featured and tagged with department stores, Flagship Store, nordstrom, retail, retail leasing. You can follow any responses to this entry through the RSS 2.0 feed.