Name: Can Nordstrom thrive in the department store crisis? | Behind The Business
Uploaded: 2026-03-14
Duration: 11 min 4 s

With Barneys closed, Lord & Taylor gone, and Macy’s and Saks Fifth Avenue closing stores, the department store industry is in turmoil. Nordstrom's strategy? Going private. Less than a year in, they say the brand has never felt more focused, and it’s growing again. In this episode of Behind the Business, Fortune’s Phil Wahba goes inside the company's Manhattan flagship store to find out how they did it, and whether the success can last.

Can Nordstrom thrive in the department store crisis? | Behind The Business

Features

Today department stores are under siege. 2 dozen stores are now closing nationwide. Closures are part of their goal to shrink its footprint in the United States. Shoppers have moved online. Many brands have left department stores, and bankruptcies have slammed the luxury world. So in 2025, Nordstrom made a bold move, going private and returning control to the founding family. Customers don't care if you're public or private. They like to go where they like to go. And now Nordstrom is enjoying a renaissance, launching high profile brand collaborations and opening more stores. 125 years in, the department store has never felt more like a startup. Why does anybody need Nordstrom? That is the ultimate question. So what exactly is Nordstrom's playbook, and will it pay off? On West 57th Street in Midtown Manhattan, Nordstrom's flagship rises 7 stories with floor to ceiling glass cutting through the skyline. It's impossible to miss. Hey. This flagship opened in 2019, the same year Barney's filed for bankruptcy, and Henry Bendell shuddered after more than a century. Then came the pandemic. Lord and Taylor gone in 2021. Macy's closing 150 stores, and Saks Fifth Avenue closing more than half of its stores in 2026. The industry has been in turmoil for years. Faced with the broader retail disruption and mounting competitive pressure, Nordstrom made a decisive bet. Go private, take back control. What have you been able to do as a private company that might have been a bit tougher to sell to Wall Street as an idea? I would say customers don't care if you're public or private, and most of them don't know, and they don't even necessarily know what that means, but they like to go where they like to go, and I would say it's noticeably different for Eric and myself in that I think we have more clarity, more focus, and more speed, not having the other agenda of being a public company. We certainly save the time. We don't have to invest our time into. Communicating with the public markets and the time that goes into having a public board, that preparation helps us with improved focus as there's some noise that gets removed. What keeps you up at night about the business? It was all us. I mean, if it wasn't going to work, it was all us. It certainly wasn't a ramped up part of our responsibility and accountability that we took really seriously, and we still do. Nordstrom's started as a single shoe store in 1901. Today it's a multibillion dollar retail empire, and the family running it says they see an opening in the industry's upheaval. Where's the opportunity right now that you see for Nordstrom? I don't think the department store model in and of itself is something that can't work. I think it needs to evolve, and that has a lot to do with the symbiotic nature of how online and stores work together. Less than a year in, the results speak for themselves. Under co-CEOs Pete and Eric Nordstrom, the company is expanding, opening 22 new rack stores in 2025 alone, bringing them to almost 300 locations nationwide. Total sales grew to $15.9 billion in the same year, an all-time high of 7% from the prior year, says the company. There was only really one way to do business. You bought stuff from wholesalers, you brought it into the store, you, you displayed it, people came and they bought it. That was the whole recipe of how this worked in my dad's generation. All that stuff has changed in my lifetime, immensely. And so it requires some agility, and I think it requires some thoughtfulness and some curiosity to keep going. See, this all just got built up because we didn't have all the brands represented. I mean, it took a while to get this all filled in, and sunglass is a great example of people get a chance to get a luxury brand in a way that's something they can afford. It is the gateway to all of this stuff. You have an offering that goes beyond just high luxury. Can you dip your toes further into the true luxury market? The way we think about it is how a modern person dresses. And even the richest person around doesn't wear a head to toe designer outfit. People have different things for different occasions, different need states, and what we want to do is represent the best of what a modern person wants to have. Think about who the customer is, where they're going, what they're doing, and how we can be a top of mind solution for them. So what is your number one challenge? I think it's evolving. Customers define what good service is, not us. You go back to like 80s and 90s, that was all about one on one interactions, high-touch interactions in a store with people. And what's changed is the way technology and as it serves online business, the logistics of all that. It's really shown how speed and convenience can be an incredibly important factor in how people define good service. The department stores, they are evolving and going after experience. Stacy Whitlitz has spent her career tracking the retail industry. She says the rules of the game have fundamentally changed. Just like the restaurants, the beauty services, they also want self-discovery. Now the department stores that are successful are leaning into how do we reel them in and how do we keep them here, and then it's through excitement, experience, and services. Beauty is such an important part of the store, particularly as it creates traffic, and that's where customers can touch everything. They don't have to be behind a counter, and there's so much more kind of open sell here. It allows customers their own sense of discovery, but then you've got all the help too. But the experience doesn't stop at beauty. Nordstrom has woven food and beverage throughout nearly every floor of the New York City flagship, including a shoe bar tucked among the designer footwear. It's giving people just a chance to dwell and hang around, and people like drinking. When we introduced bars, it turns out people like that. That's what brings people in. And if you think about it, if a customer is shopping in a high-end experience, they may be with their partner. Great, so their partner has somewhere to sit, have a drink, have a coffee, go to a restaurant. It's all about creating and curating these experiences where you want to hang out and that create an actual destination more than this one-off experience. Nordstrom has made brand relationships a centerpiece of its comeback, cultivating partnerships that go well beyond the shop floor. You're a brands guy, so let's talk about that for a second. You also have to treat brands well. Has those difficulties a couple of your competitors have faced given you the opportunity to attract new brands that you might not have had before? The relationships are important, and we invest a lot of energy in that. What's most important to brands is that they show up. An environment that reflects their brand, whether it's the aesthetic of what they're going after, the other brands they might be around, the kind of customers we're trying to serve, how we serve them. They want to show up in a way that is value add to their brand. And then obviously there's the business part of it they want to get paid. I mean, that's, you know, who doesn't? They're looking for a trusted multi-brand partner. They're probably not going to sell everyone. Let it be us. How do you feel about generally the fleet? We are where we need to be. We do have a capital plan to keep investing in stores. We want to keep up with them. We want every store to feel like it's a Nordstrom that's representative of our brand. Could they do fewer of their larger full-line stores and have more local stores for fulfillment, which has been one of their strategies? Absolutely. I still think the business in general is overstored. There's room to right size, including for Nordstrom. And then there's Nordstrom Rack, where the same designer brands cost a fraction of the price. It's been a bumpy ride, but now the rack is back. Formula that works best for rack is when we can bring the kinds of brands you'd find in a store like this into that off-price market. So while our average price went a little higher, the value is still there because the percentage off what it is from regular price is fantastic. And then that whole ecosystem works together in a complementary way. We get more new customers coming into the rack channel than anything else we do. It introduces more people to Nordstrom and the brands that we carry, but the challenge is you don't want to flow that stuff too much down to the stores because you're competing with yourself in the full line stores, and also you are not making your vendors exactly thrilled if you're selling your stuff on discount. So there's a lot of challenges with it. That's kind of the hole in the market, filling in somewhere between resale and full line. There's also Bloomingdale's, which is stronger than it has been in a very Long time. How does Nordstrom compare now to Bloomingdale's in grabbing this market share? I think there's room for both of them. Nordstrom has two purposes in the market, and again it is about luxury, but it's also about giving the customer something at price points, whether it's giftables or something that a mid to high-end luxury person can come in and find something for them without spending thousands of dollars, and that is, I think. A space that they're really leaning into with a private label. I'm going to the shoe section. I'm going to the shoe section. I'm getting shoes. Behind the business strategy is something more personal a family name on the door and 125 years of legacy to protect. What does it mean to you for the company to be doing better again? I think we feel a lot of responsibility. It's hard for me to separate our name being on it and being part of the family from the job that we do because it's always been that way. Eric and I have been working together for so long that it doesn't feel complicated or feel different, and frankly, if he decided to leave tomorrow, I think my job would become a lot less enjoyable and a lot more stressful. You know, our dad was very much a values driven person, and one of the values that was high on his list was family and loyalty, and I can hear him saying, Support your brothers, support your brothers. I would hope our ancestors would be proud of what we're doing. I think this is a really crucial time and it was the best decision for them to be able to fix their model, whether it's right sizing or inventory issues or figuring out what the rack is going to be to the American consumer to put all that together. Repackage it and come out stronger 3 to 5 years later. It looks to me, it appears that if they get all these things right and have the right leadership, there's no reason why in several years from now we don't see them go back to the public market. It sounds like the department store of the future you're describing is very much like the department store of the past. It was the destination for everybody and a special place to go, right? In a sense, very much it's like what's old is new because we used to go to the department stores, you would go with your friends, you would go with your parents. It was a huge feeling. You remember those things in your childhood growing up. We're going to the mall, so maybe taking a hint from the past to make it that special connection day with your friends or your family, some of that needs to come back in order for the department stores to succeed.