Nordstrom Opens First Rack Store in NYC

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Nordstrom Rack on Union Square

New York—While Nordstrom Inc. continues to look for a suitable Manhattan flagship  location, its Nordstrom Rack division opens first store today in Union Square.

The 32,000-square foot Nordstrom Rack, the company’s 75th store, is situated in the former Virgin Megastore location on a busy 14th Street where Best Buy, Forever 21, DSW and Filene’s Basement have locations nearby.

Noting that the company signed a long-term lease for the space, Geevy Thomas, president of Nordstrom Rack, predicts the store will become one of the top sellers for the off-price chain. “We have high expectations for the store. It’s going to be one of our largest.”

In addition to offering 30 to 70% savings off merchandise found its upscale Nordstrom stores, the Manhattan store has been tailored to accommodate the hassled New York consumer. For instance, checkout lines mimic those at Whole Foods: TV screens direct shoppers to one of 19 checkouts. Also, the store is putting full pairs of shoes in its shoe racks, rather than its usual practice of putting one shoe in the box leaving customers to pick up the other from a “mate window.”

An estimated 25% of the merchandise comes from the Nordstrom division, which now has 114 stores. The rest comprises out-of- season and overstock merchandise purchased specially for the store from some of its longtime vendors.

Outlet Divisions on the Rise

Off-price outlet concepts like the Rack are being expanded at other department store companies, too. Macy’s Inc. plans to open its first Bloomingdale’s outlet later this year. Indeed, the Rack generates more profit and sales per square foot than the larger Nordstrom chain.

“Rack is an important part of our business,” Nordstrom Inc. president Blake Nordstrom said at a pre-opening press conference. “It’s a great vehicle to efficiently and quickly move our good. This particular niche of business is expanding in the industry.”

Overall, Nordstrom continues to rebound from 2009’s tough retail year. Last week, the company announced a 7.5% increase in April sales, beating expectations. And while executives say they are still looking for the right location to open a flagship Nordstrom, the Seattle-based retail brand is already a known entity in the city, boasting an estimated 20,000 Nordstrom credit card holder in Manhattan even though the nearest stores are on Long Island and New Jersey.

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