Jan 20, 2022
Pete Nordstrom, president and chief brand officer at Nordstrom, said the luxury retailer’s adoption of non-traditional types of selling partnerships, marked by collaborations with Asos and Fanatics, came about partly to keep up with online’s “endless aisle,” but also as part of a more open mindset around selling arrangements.
Mr. Nordstrom, speaking at a session at the NRF Big Show, recalled the days when previous generations of his family would question why the store was selling a “competitor” like Brooks Brothers.
“The fact is, customers don’t look at it that way,” Mr. Nordstrom said. “Customers look at it like, ‘I like that brand.’”
He cited Madewell, which first began selling inside Nordstrom in 2015, as an example. “One of the common things we heard from customers that just validated the whole idea was, ‘Wow, now I can buy my favorite brand in my favorite store,’” he said.
E-commerce growth has also opened up expansion opportunities. Customers may find a full range of a brand’s offerings online, but minimal or no stocks in store due to space constraints. In early 2021, Nordstrom predicted its online assortments could potentially expand to 20 times that offered in its stores, up from three times currently, as it leans into drop shipments, concessions and revenue share deals.
Such alternative arrangements have to be a “win-win” for both parties, according to Mr. Nordstrom.
In its online-only partnership with Nordstrom, Fanatics fulfills and ships all orders and owns the inventory to reduce risks for the department store retailer. In the Asos arrangement, the U.K.-based online retailer retains operational and creative control, but the two companies share ownership to ensure collaboration.
Nordstrom has numerous partnerships with DTC brands likewise aimed to be complementary.
“The perfect scenario for us is to have a well-known, highly-sought brand that you can’t find in a lot of places,” said Mr. Nordstrom. “I don’t think we are great at making an unknown brand known. But we are good at making a known brand bigger and better.”
The retailer is also counting on personalization to deliver a curated experience to online browsers despite the broadening offerings. “It’s good to have lots of choice count, but it’s not good to have something overwhelming,” said Mr. Nordstrom.
DISCUSSION QUESTIONS: Do you see more benefits or risks to Nordstrom’s moves to secure brands through non-traditional wholesale arrangements? Do such flexible selling arrangements make much more sense today than 20 years ago?
“Retailer partnerships with DTC brands is a model where I suspect we will see a lot of experimentation and subsequent success for all parties.”
