Going private would be the best way for the iconic Seattle department-store chain to survive a tectonic change in retailing.
News comes that the Nordstrom family is weighing taking the company private. I hope they do.
It would provide the best chance to survive the epochal shift in retailing because of e-commerce and changing tastes. Department stores are especially vulnerable, as seen by the closing of hundreds of locations in recent years by Macy’s, Sears and J.C. Penney. In Seattle, Macy’s is keeping that rarest of the rare, a downtown store (the old Bon Marché), but selling floors in the building to be developed into tech office space.
I admit I don’t get it. I am that rare male who loves to shop, even window shop, and do it in physical stores. Something about the combination of the social, tactile and theatrical is irresistible. But, then, I come from a different century, a different millennium. I’m such a freak that I prefer wearing suits and ties.
But another threat to traditional retailers is Wall Street’s insatiable appetite for short-term profit gains and ever-rising stock prices. Nordstrom, with its popular Nordstrom Rack, a decent online presence and unique brand, is better positioned that most. But the drag of meeting The Street’s “expectations” often doesn’t align with sound business decisions, much less serving customers and ensuring the future. Too much of Wall Street since the 1980s has been about looting the productive enterprises it took a century to build, all for quick profits.
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Nordstrom was founded in 1901 with its founder’s roots in the Klondike Gold Rush. For old-time Seattleites, Nordy’s was a shoe store. The epitome of a department store was Frederick & Nelson — such grand retail palaces once graced every city’s downtown. The Bon was a second choice for many, but also beloved (I’m told it had a special elevator to the fur department so the wealthy didn’t have to mingle with the hoi polloi). But by the 1990s, Nordstrom was on its way to becoming an icon. We were also lucky that Nordstrom took over the majestic Frederick’s building after that store closed.
Going private is no guarantee. The family, which owns 31.2 percent of outstanding stock, must avoid a conventional leveraged buyout at all costs. These typically load companies down with so much debt they can’t ever recover. Continued retrenchment will likely be necessary. But going private is the best way to ensure survival of this great institution.
Today’s Econ Haiku:
Key Arena goal
The NBA still hates us
So, nothing but air