Breaking off its off-price business into a separate entity would be a remarkable reversal of Nordstrom’s efforts in recent years to weave its full-line, Rack, Local and e-commerce operations together — a seamless customer experience across channels and brands demonstrated most vividly in New York City.
Last month, Erik Nordstrom reiterated the approach’s contribution to the company’s overall performance. “The value of our interconnected model is evident as customers dramatically increase their spend when engaging across multiple channels, banners and services,” he said. “For example, the average customer that shops across both banners, in-store and online, spends over 12 times more than a customer utilizing a single channel.”
William Blair analysts pointed to such rhetoric in their criticism of the news contained in the Bloomberg report. “We would view a spin of Rack as counter to management commentary about the benefits of its broad ecosystem approach,” wrote analysts Dylan Carden and Phillip Blee. “Rack has long served as a key customer acquisition tool. As recently as December 2020 management noted the off-price channel was the largest driver of new customers, with one-third of those new customers trading up to full-price customers within a year. In the context of its Local strategy, Rack stores served as pickup points for roughly one-third of nordstrom.com orders in the third quarter.”Retail Dive