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Nordstrom finally arrives amid a wave of uncertainty
Sunday, October 12, 2008

Nordstrom spokeswoman Brooke White flew into town last week seated next to a fan who shops the chain's stores around the country. With the Seattle retailer set to open its first area site later this month, the shopper said she'd saved part of her fall budget to spend there.

"I was like, 'Oh, thank you,'" recalled Ms. White, as she related the story during a media preview of the Ross Park Mall store on Friday.

The retail industry isn't quite sure what to expect from consumers over the next couple of months. Shoppers sure shut their wallets last month as bailouts and stock market upheaval set off waves of fear.

Some luck. Pittsburgh has waited years for its first Nordstrom store only to have it arrive in the midst of all this rotten news. And it's not just the 138,000-square-foot department store showing up in time for what some retail consultants have projected could be the worst holiday shopping season in more than 15 years.

Mall corridors near the Nordstrom have taken on the sleek, expensive look that higher-end retail centers project as Michael Kors, Louis Vuitton, Kate Spade, Burberry and others crowd close to the new department store. A new Tiffany's jewelry store opened Friday.

"It's not a good time to open anything," said Rose Miller, a Shaler resident and faithful mall walker who has been watching the arrival of the various tenants. Friday, she was outside Tiffany's trying to get a peek inside even as that retailer's staff was strictly checking the list of guests invited for breakfast.

Julia Lion, of Bellevue, had an invitation because she has ordered jewelry off the Tiffany's Web site. She agreed the economy might keep some people away from high-end brands but said this jeweler might be fine because of its quality and mix of goods at different prices. "Tiffany's is a lot more affordable than Louis is."

From that point of view, Nordstrom, too, could have a few hedges against the economic travails. "Nordstrom lives in a kind of an interesting place," said Pam Danziger, president of retail consulting firm Unity Marketing in Stevens, Lancaster County, who closely tracks the luxury market.

The retailer carries a blend of higher end brands and more accessible lines, she said. In addition, "Nordstrom stands out among the crowd as the provider of service excellence. That's going to make a big difference."

Its results didn't look a whole lot better than those of its high-end rivals last month. While Nordstrom reported a 9.6 percent drop in sales at established stores in September, Saks slipped 10.9 percent and Neiman Marcus dropped 12.9 percent.

"Luxury retailers are not immune to all the challenges that are going on right now," said Ms. Danziger, who noted well-to-do customers may actually be more invested in the stock market than other demographics. A recent survey of 1,200 such consumers found many trying to avoid temptation by staying out of stores.

Even before the turmoil of the last few weeks, Nordstrom officials had been hearing the questions. "'Gee, why are you opening so many stores in a difficult period,'" as Michael G. Koppel, the company's chief financial officer described the queries during a recent presentation to analysts.

Executives note that finding real estate locations and building new stores doesn't happen overnight. Lead time is generally three to four years, Mr. Koppel said. The Ross Park Mall site was announced in March 2006.

"We can't perfectly time when new store opportunities come to us," he said. More than one of the eight new full-line stores being opened this year resulted from openings created by the merger of Macy's with May Department Stores, the parent of Kaufmann's.

Nordstrom experienced something similar back in 2002, he said, when new stores were under way before the tech bubble burst and the Twin Towers fell. Eventually, those locations built a customer base. "We still believe new stores are our best use of shareholder capital," said Mr. Koppel.

The new two-level store at Ross Park Mall is a scene of cardboard boxes, naked mannequins and empty clothes racks as the employees -- about 250 have been hired locally -- work to sort new goods and set up displays.

A tour led by Ms. White and store manager Carl Jenkins started in the signature shoe area where Nordstrom aims to serve up more than just designer brands such as Jimmy Choo and Cole Haan. Other names to be found include Dansko, Ugg, Ed Hardy and Nike. "We have something, we hope, for everybody, in different price ranges," she said.

That's true in other parts of the store, as well. On one upstairs rack hung a white, pleated and zipped top from Jones New York priced at $74 while on the other side of the escalator a pink-and-cream blouse from Leifsdottir could be had for $228.

A first-floor Ebar serving up coffees will have its own mall entrance and open before the rest of the store does, allowing Nordstrom an avenue to build connections to more people.

Upstairs, food was plated to show off dishes available at a sit-down cafe. Shoppers can have a lime and cilantro chicken salad for $9.25 while appeasing the kids with a $4.50 grilled cheese sandwich and tomato soup meal. "We know in retail that once a customer leaves a store they probably aren't going to come back to the store that day," said Ms. White.

A dressing room designed to look like an apartment out of a teen magazine, with a big couch, bright green table and funky mirrors, is seen as optimal hang-out territory for younger shoppers.

In his presentation, Mr. Koppel said cosmetics continued to be one of the strongest departments. Makeup needs to be replenished in a way that, say, clothes do not in an economic slowdown. This Nordstrom will carry 1,400 lipsticks and 800 ties, perhaps allowing men to freshen up their wardrobes in a relatively budget-friendly way.

It's all about building relationships with Pittsburgh-area customers over time. "It's really a long-term strategy for us when we site stores," said Ms. White.

Even as consumers freeze up, Nordstrom may be OK, said C. Britt Beemer, chairman of America's Research Group, a consumer behavior research firm in Charleston, S.C. "They may have some out because of their customer service levels. Their customers keep coming back."

Teresa F. Lindeman can be reached at tlindeman@post-gazette.com or at 412-263-2018.
First published on October 12, 2008 at 12:00 am