Nordstrom to Add Two Mini Stores in Its New York Expansion

Nordstrom waited decades to expand in Manhattan, but now it’s making up for lost time. It introduced its men’s store last year and is opening a seven-story flagship store this fall.

And the upscale department-store chain has more up its cuffed sleeves. In September, it will open two small Nordstrom outposts in New York, in the West Village and on the Upper East Side, as part of its new Nordstrom Local chain, the retailer announced Wednesday.

The two smaller stores will not carry merchandise. Rather, they will be hubs for online pickups and returns, as well as services like tailoring and personal styling. Unlike the Nordstroms in American malls and the colossus the company is erecting in the middle of the city, the size of the new shops will be comparable to a Lululemon or a Dunkin’ Donuts.

The company’s research showed that many Manhattanites don’t particularly want to leave their neighborhoods if they can help it, a crucial reason for adding the hubs.

“What we’ve heard from customers is that by and large, outside of getting to work, they do like to stay in their neighborhoods and it’s tough to get around,” Shea Jensen, Nordstrom’s senior vice president of customer experience, said. “We want to use this as a way to complement our footprint, not double down, where we know we have customers.”

The new locations add to the ambitious push that the Seattle-based Nordstrom has been making in New York after decades of contemplation. The city is the retailer’s biggest market for online sales, but its physical presence has largely been limited to its Nordstrom Rack discount chain. By the end of 2019, there will be six Nordstrom locations in Manhattan: the flagship, which will include women’s merchandise; the men’s store; two Nordstrom Racks; and the two Local hubs.

Of course, with the Local chain, shoppers will have to get used to the idea of walking into a Nordstrom that doesn’t sell anything.

The retailer introduced Nordstrom Local in 2017 in Los Angeles, where it now operates three shops. Some offer individual services, like manicures or shoe repair, based on their location. But their biggest appeal seems to be the convenience they provide for online orders and alterations. The company said customers who visited a Local spent on average two and a half times what other Nordstrom shoppers did and made returns earlier, which allows the retailer to turn its inventory faster.

Building Local hubs in New York and Los Angeles makes sense, said Oliver Chen, a retail analyst at Cowen, because the locations are so important. Nordstrom’s top 10 markets account for more than 60 percent of its business. The New York and Los Angeles markets in particular are expected to make up more than 25 percent of Nordstrom’s sales of full-price merchandise in the future, the company said last year.

“It’s really just about convenience and Nordstrom trying to be where customers are, and also doing it economically,” Mr. Chen said. “Clearly, a flagship is a big commitment, so spreading out within the same market is an interesting idea.”

Nordstrom considered data about its current and potential customers, along with neighborhood density and demographics, when selecting its new locations, but would not disclose the length of its leases. The West Village hub will be on Seventh Avenue near 12th Street while the Upper East Side location will be on Third Avenue close to 73rd Street.

The retailer is still deciding what services it may offer at the shops based on residents in the area. For example, Ms. Jensen said, the amount of families on the Upper East Side might lead that location to offer services like shoe-tying classes.

“What the data showed us in L.A. is this really activates customers,” Ken Worzel, chief digital officer of Nordstrom, said of the Local chain. Their presence can prompt customers to make more online orders, like shipping numerous shoes to the hub, knowing that they can easily return those they don’t want, or have clothing altered. The locations, which will have fitting rooms, will accept returns of both Nordstrom and Nordstrom Rack merchandise.

Visitors to the Local stores in Los Angeles have been younger than the chain’s average consumers, Mr. Worzel said, adding that was in line with demands for convenience from young people around a variety of services, like ride-sharing and food delivery.

Nordstrom is trying to cater to New York customers in a variety of ways. It’s not the only newcomer in town — Neiman Marcus, which hails from Dallas, just opened in Hudson Yards. But it also wasn’t long ago that Henri Bendel closed its flagship store in New York, and Lord & Taylor gave way to WeWork, the office-sharing start-up.

“It’s the fashion capital of our country and the retail capital,” Mr. Worzel said. “There’s lots of options and lots of established brands, and it’s really incumbent upon us to help people understand what it is about Nordstrom that’s different and how we can fit into their lives.”