Nordstrom finds freedom in alternative wholesale pacts – RetailWire
January 20, 2022
Pete Nordstrom, president and chief brand officer at Nordstrom, said the luxury retailer’s embrace of non-traditional types of retail partnerships, marked by collaborations with Asos and Fanatics, came in part to follow “the endless aisle” online, but also as part of a more open mindset around the terms of sale.
Mr. Nordstrom, speaking to a session at the NRF Big Show, recalled the time when previous generations of his family wondered why the store was selling a “competitor” like Brooks Brothers.
“The thing is, customers don’t see it that way,” Nordstrom said. “Customers look at it like, ‘I like this brand.'”
He cited Madewell, which started selling inside Nordstrom in 2015, as an example. “One of the common things we heard from customers who just signed off on the idea was, ‘Wow, now I can buy my favorite brand at my favorite store,’” he said.
The growth of e-commerce has also opened up opportunities for expansion. Customers can find a full range of a brand’s offerings online, but have minimal or no inventory in-store due to space constraints. Early 2021, Nordstrom predicted that its online assortments could potentially grow 20 times more than those offered in its stores, up from three currently, as it looks to drop-shipments, concessions and revenue-sharing deals.
SSuch alternative arrangements must be “win-win” for both parties, according to Nordstrom.
In its online-only partnership with Nordstrom, Fanatics fulfills and ships all orders and owns the inventory to reduce risk to the department store retailer. In the Asos arrangement, the UK-based online retailer retains operational and creative control, but the two companies share ownership to ensure collaboration.
Nordstrom has many partnerships with DTC brands that also want to be complementary.
“The perfect scenario for us is to have a well-known, highly sought-after brand that you can’t find in a lot of places,” Nordstrom said. “I don’t think we’re good at publicizing an unknown brand. 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 expanding offerings. “It’s good to have a lot of choices, but it’s not good to have something overwhelming,” Nordstrom said.
DISCUSSION QUESTIONS: Do you see more benefit or risk in Nordstrom’s steps to secure brands through non-traditional wholesale agreements? Do these flexible sales agreements make much more sense today than 20 years ago?
“Retailer partnerships with DTC brands are a model where I suspect we’ll see a lot of experimentation and subsequent success for all parties.”
“As more and more (DTC) brands emerge, traditional retailers will benefit from developing partnerships.”
“Aligning with brands that have a point of difference is part of Nordstrom’s merchandising strategy and that’s what I’m here for.”