Nordstrom Local hopes for big returns from the competition

Photo: Nordstrom
Sep 10, 2019

As retailers try to woo customers with next-level convenience, they have begun introducing offerings that might have appeared to compromise their competitive edge in an earlier era. Case in point is the new return policy Nordstrom will be piloting at its Local concept stores in Manhattan — the chain is now taking returns from the competition.

People will be able to return products purchased online from Macy’s and Kohl’s at each of the small-format Nordstrom Local stores, which will be open by the end of this month in Manhattan, according to Bloomberg.

One Nordstrom Local location opened earlier in September on the Upper East Side; the second is slated to open in the West Village.

Making it easy to return products purchased elsewhere may drive foot traffic to the Nordstrom Local stores, but given that the concept holds little or no stock available for immediate purchase, it seems the chain is looking for a different type of conversion out of visitors. 

The service-focused locations in Manhattan will also feature shoe repair, charity drop-offs and stroller cleanings, Bloomberg reported.

The new returns relationship has been garnering comparisons to the recent partnership between and Kohl’s, which allows visitors to Kohl’s stores to drop off products purchased on for return to the e-tailer. The partnership, which began as a pilot in 2017, proved successful enough to merit being rolled out to all of Kohl’s store locations this year.

While the Kohl’s/ return relationship fits into a broader “co-opetitive” relationship between the legacy retailer and the e-tail giant, it’s not clear that Nordstrom’s handling of Macy’s and Kohl’s returns is indicative of any planned further connections between the chains.

Nordstrom has used similar tactics to get customers in the door. Earlier this year in Los Angeles, four Nordstrom locations — three of them Nordstrom Local stores — installed drop boxes for Rent the Runway customers. Plans are for the store locations to allow pickups for people renting clothing from the e-tailer in the future.

DISCUSSION QUESTIONS: Will the traffic generated by offering returns for other retailers at Nordstrom Local concepts in Manhattan be valuable enough to make it worthwhile? What might be the advantages of Nordstrom offering such a service and where might the test lead?

Please practice The RetailWire Golden Rule when submitting your comments.
"Interesting idea ... pulling people into a store that the shopper might not ordinarily have gone to, due to perception of priceiness and unawareness of the new concept."
"I am not sure if this is going to work, but this is the most customer-centric idea to come out of retail in a long time."
"Nordstrom is focused on relationship-building over direct ROI, which is exactly what it takes to compete in today’s marketplace."

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21 Comments on "Nordstrom Local hopes for big returns from the competition"

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Mark Ryski

Retailers today seem to be willing to trade their souls for traffic – this is often misguided and counter-productive. Traffic for the sake of traffic will not do Nordstrom, or any other retailer, much good, unless this ultimately connects back to a sale for the retailer. Associating the Nordstrom brand with tier two retailer returns and stroller cleaning seems to be a complete disconnect with who Nordstrom is (or who most people thought they were). I just don’t see how this helps Nordstrom be successful – instead of leading the way, they’re jumping in on a “do anything to get people in the store” approach that I think is pointless at best and brand damaging at worst.

Brandon Rael

This is such a winning proposition, with the stores having little to no inventory, driving the Nordstrom experience, building new customer relationships, and expanding the brand. It’s not just about streamlining the returns process for the Nordstrom Local team. By opening up a new location on the Upper East Side, the Nordstrom team once again validates that any manifestation of a retail store has become the latest form of media.

When the Nordstrom Local team launched the store in Los Angeles, the main strategies were to establish the location as a media point that enabled them to get into influential micro-markets they couldn’t otherwise penetrate with their traditional full-sized store footprint. The experience is the product even when the product is sold online.

Paula Rosenblum

Interesting idea … pulling people into a store that the shopper might not ordinarily have gone to, due to perception of priceiness and unawareness of the new concept.

The down side is, it sounds like a small-footprint store which means fewer staff. So whatever they do it has to be easy.

I remain unsure about the “little or no inventory for sale” concept. It’s like the other end of a pendulum swing from “something for everyone.” But I’ll have to see it in the wild to get a sense of what they’re trying to do.

Carol Spieckerman
Carol Spieckerman
President, Spieckerman Retail
2 years 8 months ago

On one hand, Nordstrom’s latest frenemy foray seems ingenious. Not only can Nordstrom potentially poach Macy’s and Kohl’s shoppers, it can even gather data on the types of merchandise shoppers are returning. Even so, I can’t imagine that a significant number of shoppers actively shop at all three retailers and that those who do will think of Nordstrom Local as a convenient return hub for non-Nordstrom purchases. It’s no harm, no foul for now.

Dick Seesel

Accepting returns from competitors like Macy’s and Kohl’s may represent a convenience, but it doesn’t necessarily add to the personalized experience that Nordstrom Local is trying to cultivate. As I understand the concept (and I’ll visit the Upper East Side location next month), it’s meant as a “personal shopping” experience. The goal is to facilitate ordering from Nordstrom’s assortments, and customer returns when things don’t work out.

Cluttering up an 1800 square foot storefront with a bunch of other stores’ returns (and distracting the service staff from the task at hand) doesn’t seem like a winning formula for driving Nordstrom sales and loyalty.

Neil Saunders

As innovative as this is, it raises the question of what Nordstrom is going to do with footfall in Local stores that have very little to sell. Certainly there are benefits from brand exposure and possibly some loyalty benefits, but these are very difficult to quantify and probably don’t amount to much. This isn’t necessarily a failure of this idea as much as a failure of Nordstrom to make Local stores really relevant and engaging and by having some items for sale there.

Shep Hyken

Interesting concept. I’m asking myself several questions. What’s it worth to get someone who shops elsewhere to walk through Nordstrom’s doors? Is the effort and cost of taking a competitor’s return an economic advantage over the traditional cost of acquisition? Once in the store, will the charm and hospitality that Nordstrom reps are known for win over these potential customers? And what will Nordstrom do with the merchandise? Is there an agreement with the competitors to manage their returns – maybe for a fee? There are obviously more questions, but the answers to these would be a good start to understanding how this might work. Regardless, it’s a bold move that offers a level of convenience that is fresh and new.

Georganne Bender

I have to be missing something here because this store has never made a lot of sense to me. It’s touted as a place to “give customers more access to brands and styles they love, to try on or take home in a fast and convenient way” but it doesn’t sell anything so that access has to originate somewhere else.

Accepting returns for other retailers is a nice convenience but it won’t necessarily turn them into Nordstrom customers, especially if those returns are handled via a drop box a la Rent the Runway returns.

Bob Phibbs

Let’s just try everything and call it disruptive. Nordstrom has a conversion problem, not a returns-for-other-stores-problem. Returns to these service centers are not a compelling strategy to fix the simple truth: fewer people are converting to customers in their stores. Fix that and you won’t be reaching for straws like this and baby stroller cleaning.

Rich Kizer

I actually think this will be the retail move we refer to often in the future … with a grin.

Rich Kizer

And by the way, Kohl’s Amazon return program does drive customers into the store — which is loaded with items to buy, what a novel idea. That works.

Cynthia Holcomb

Wow, I did not know that so many people who shop Nordstrom also shop Macy’s and Kohl’s! I imagine this is a surprise to many analysts. Macy’s and Kohl’s are price-driven. Nordstrom is not. A huge disconnect for the Nordstrom brand in my opinion. Shoe repair and cleaning of strollers — Nordstrom always comes to mind when I need these services?

Kevin Graff

Welcome to the unfolding of this new retail world. Sometimes messy. Sometimes clear. Always interesting. Traffic is always the starting point for retail success, and this moves generates that for Nordstrom. Data is king … and Nordstrom now has access to more of that.

Conversion will be the key — and the unknown. How many of these “return” customers can they convert to a Nordstrom customer? Regardless of that number, it’s much higher than the conversion they are getting on those same customers if they don’t even come into the store!

The big question is — why would Macy’s and Kohl’s even consider sending their customers to a competitor? That’s the head-scratcher!

Gene Detroyer

I am not sure if this is going to work, but this is the most customer-centric idea to come out of retail in a long time. It seems to me that Nordstrom’s management said, let’s come up with a concept that is all about customer convenience first and let the Nordstrom benefits fall as they may.

I commend the effort and the thinking.

Doug Garnett

Retailers need to commit to making their own selection important and interesting enough to draw traffic.

So while this seems to be, perhaps, some cleverness for the short term, it’s concerning that Nordstrom doesn’t (apparently) believe in its ability to be a retailer — curating a collection of goods and selling them in a store/online in a way which draws shoppers.

This is especially frustrating to me as I spent years bringing people to retail with interesting products — innovations — while the stores reaped profits from both the innovations and their main-line goods.

This Nordstrom move is disappointing. This seems a consultant vision — but one that’s easy to knock off. The mere presence of Kohl’s/Amazon in this article makes that clear.

I wish them well with it (because I always like Nordstrom). But I am also concerned.

Jasmine Glasheen

Nordstrom is focused on relationship-building over direct ROI, which is exactly what it takes to compete in today’s marketplace. This is a creative way to get Macy’s and Kohl’s customers who may have been too intimidated to shop at a high-ticket retailer like Nordstrom in-store and interfacing with brand advocates who are willing to help. We talk about innovation and risk-taking a lot in these forums, and Nordstrom Local is making it happen. Wait and see which retailers stick around when the dust settles.

Kenneth Leung

This one is something I would expect to do in a pop-up. Basically Nordstrom is connecting with customers dissatisfied with another retailer’s offering (hence the return) and trying to convert them to Nordstrom products and experience, plus capture their contact information for future marketing. Given that it’s in Manhattan it may work. At the end of the day the data will tell.

Patricia Vekich Waldron

Interesting move by Nordstrom to target and understand Macy’s and Kohl’s shoppers — sounds like a chance to introduce their brand to new cohort. Having visited the #DTLA Local, I think Nordstrom would be well served to add some sample or featured items to further entice shoppers to visit their website or new flagship.

Craig Sundstrom

This seems to be the old — and apocryphal — story about retuned snow tires brought to life! There are very few concepts that I just plain don’t “get,” but I’ll have to confess this comes the closest that any has in a long time. Yes, I understand this might be a way to enhance Nordstrom’s (already large) reputation for service, and, yes, it might bring a lot of people thru the doors of the “Local” locations, but for what purpose? The point of the latter as I understand it is to provide convenience/services to Nordstrom customers, and there seem to be few opportunities for upselling in this scheme. I think it will be confusing to Macy’s and Kohl’s customers … and woe to any Nordie employee tasked with explaining it.

Manish Chowdhary
This is a fantastic idea that benefits both parties! Back then, Kohl’s wasn’t exactly celebrated when partnering with Amazon for returns. However, within three weeks Kohl’s saw a 24% lift in in-store traffic and is now rolling out the program nationwide. To their competitors, Macy’s and Kohl’s customers would be introduced to a service-focused retailer like Nordstrom Local. If services is where Nordstrom’s headed, their services could be a great addition to other retailers’ return and pick-up options. Especially given their emphasis on building relationships and great service. On the other hand, Nordstrom benefits from this by establishing them as a one-stop post-purchase service. This is paving a way to secure their position as a “service store.” Returns could be a starting point, wherein the long run customers can pick up, return, repair, and alter goods from any retailer. Nordstrom can offer its services to other retailers at a fee, and this could end up being a new source of revenue that plays to their strengths. The new retail environment requires fresh strategies and Co-opetition… Read more »
Sid Mookerji

By allowing customers to return Macy’s and Kohl’s merchandize in their stores, Nordstrom is capturing an important metric that most retailers ignore — customer demand. In other words, what are customers buying (and what they are returning and why). Assortment planning is a huge problem for all brick and mortar players especially in the world where prospective customers will pull out their phones at the slightest sign of not finding what they came to look for. Nordstrom may have found a creative way to solve it.

"Interesting idea ... pulling people into a store that the shopper might not ordinarily have gone to, due to perception of priceiness and unawareness of the new concept."
"I am not sure if this is going to work, but this is the most customer-centric idea to come out of retail in a long time."
"Nordstrom is focused on relationship-building over direct ROI, which is exactly what it takes to compete in today’s marketplace."

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