well-established retailers and succeed so handily? At face value, its com-
petitors had formidable advantages – knowledge of local tastes, wages that
are typically 15–20 per cent below Nordstrom’s rates, real estate that was
long since paid for and largely depreciated fixed assets. Notwithstanding,
Nordstrom prevailed. States one industry expert: ‘All retailers in America
have awakened to the Nordstrom threat and are struggling to catch up.
Nordstrom is the future of retailing ... it is the most Darwinian of retail
companies today.’^1 Analyst Margaret Gillian of the First Boston
376 Relationship Marketing
In the late 1880s, 16-year-old John W. Nordstrom left northern Sweden for the
United States, taking with him a small inheritance from his father and his first real
suit of clothes. He arrived in New York over two weeks later with five dollars in his
pocket, unable to speak a word of English.
The young immigrant’s determination to succeed would lead him through many
trials and adventures. He laboured in mines and logging camps across the United
States to California and then to Washington, before heading north to the Klondike
gold fields in 1897. Two years later he returned to Seattle with a $15,000 stake,
ready to settle down.
Carl F. Wallin, a Seattle shoemaker he met in Alaska, offered him a partnership
in a shoe store. The young Nordstrom had invested some of his money in a few
parcels of property in the city, and eagerly accepted the opportunity to go into busi-
ness. Together they opened their first store in 1901, with a 20-foot frontage on
Fourth and Pike streets.The first day’s receipts came to $12.50.
In 1929,Wallin sold his interest in the company to Nordstrom and in 1930, John
W. sold the company to his sons: Elmer, Everett and Lloyd.These three men built the
single shoe store into the largest independent shoe chain west of the Mississippi –
a 27-unit operation grossing $12 million by 1963.
At this point, the brothers expanded into the fashion specialty business, with the
purchase of Best’s Apparel. By 1971, the company, now in the hands of the third gen-
eration, had seven full-line fashion specialty stores, and sales of nearly $80 million.
Today, Nordstrom is the largest fashion specialty store in the nation, with nearly
60 stores in operation, and annual sales over $2 billion. These stores include the
Place Two and Rack stores. The Place Two stores are smaller versions of our
Nordstrom stores.They are located in the Northwest.Their merchandise is prima-
rily men’s and women’s apparel and shoes, with a small representation of accessory
merchandise.The Rack stores are our version of a ‘self-service’ retail concept, pro-
viding the customers with marked down items from the regular stores, as well as
off-priced items from our manufacturers. You will find at least one Rack store in
almost every one of our regions.
Surely if John W. Nordstrom were here today to see what his modest shoe store
has become, he would be amazed. But despite the modern and efficient business
practices and buildings, he would still find the same philosophy he practised back in
1901: offering the customer exceptional selection, quality, value and service – the
principles that have built the Nordstrom tradition.Figure 5.3.1 Nordstrom history.