After 25 years, the old Rack at Second Avenue and Pine Street in Seattle closed for good this past weekend as part of its move to Westlake Center, just one crosswalk over from the Nordstrom flagship store.
When she wants not just any shoes, but rather the latest by her favorite brands, Erin Farquhar heads to the Nordstrom flagship store in downtown Seattle.
And when she feels less picky — not to mention less flush — she’ll walk a few more blocks to Nordstrom’s discount Rack store.
“I come here to browse for deals,” said Farquhar, a 27-year-old nurse who surveyed the Rack’s shoe selection one morning last month. “If you want something, you have to commit to digging for it.”
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Starting Thursday, when the Rack makes its debut in a new location at the core of downtown’s retail district, Farquhar no longer will have to walk more than a block to visit both stores.
After 25 years, the old Rack at Second Avenue and Pine Street closed for good over the weekend as part of its move to Westlake Center, just one crosswalk over from Nordstrom’s flagship.
By putting them side by side, Seattle-based Nordstrom is challenging the conventional wisdom that a retailer’s full-price and off-price stores cannibalize each other.
President Blake Nordstrom recalls how retail experts questioned the company’s decision in the 1970s to launch the Rack business inside its downtown store.
Nordstrom has since opened 105 stand-alone Racks nationwide, and “what we’ve learned,” he said, “is that our Racks do well when they’re closest to our flagships. We think there’s a great synergy.”
Indeed, what Nordstrom is doing does not appear to be the norm among its competitors. Neither Neiman Marcus nor Bloomingdale’s puts its outlet stores next to its flagships.
“The old theory was why, if you have a core consumer who loves you, would you erode her respect for you by showing her cheap stuff? Why would she ever go back to paying full price?” said New York retail consultant Kate Newlin.
“But the Rack is a well-enough presented experience that they’re pretty confident the two can coexist without eating each other’s lunch.”
With nearly all of its merchandise on one floor, the new Rack is designed to make shopping faster and more convenient, reflecting a major corporate emphasis over the past few years.
Gone is the old “shoe mate” window, where customers had to wait in line for the other half of a pair to complete their purchase. Now, shoe boxes are filled with both halves so that customers can grab and go.
The new Rack also will put 16 mobile checkout devices into the hands of sales clerks to cut down on lines at the register, and there are 10 more dressing rooms than in the old location, possibly eliminating another source of frustration for time-strapped customers.
“It’s all about customers being able to get in and find what they want quickly,” Rack President Geevy Thomas said in an interview at the store.
Unlike the old location, which was spread across four floors, the new location is contained to the basement of Westlake Center, though it does have a street-level entrance connected by an escalator and elevator.
To pull in passers-by, the Pine Street entry will have a flower stand with $10 bouquets, what Thomas calls an homage to Pike Place Market.
Another entry is off the transit-tunnel corridor at Westlake Station.
The new layout gives the Rack a third more selling space than before, even if its total square footage, 42,500, is virtually the same.
During an hourlong tour, Thomas pointed to an array of discounted merchandise, including women’s Vince cardigan sweaters for $89.97, down from their original price tag of $195; Sofft magenta flats for $54.90, down from $89; and a Trina Turk decorative pillow for $69.97, down from $140.
The Rack’s move to Westlake Center is part of an aggressive growth strategy for the discount business.
Nordstrom plans more than a dozen additional Racks this year, bringing the total to 119.
By contrast, the company plans one additional full-price store, for 117.
That means Nordstrom is poised to operate more Racks than flagships for the first time in its 111-year history, a milestone not lost on retail-industry experts.
Consultant Jeff Green recalls that the Rack was a bright spot for Nordstrom during the darkest days of the recession.
While sales plunged at Nordstrom’s full-price stores, the Rack posted much-needed gains.
“The minute the economy turned south, Nordstrom said, ‘No more full-line stores except for the ones already under construction, and let’s focus on the Rack,’ ” Green said.
“They had a backup for the downturn, and it was the Rack.”
Analyst Richard Jaffe, who follows Nordstrom at Stifel Nicolaus in New York, predicts the Rack will win over new customers in a slow economic recovery.
“The consumer has grown more frugal,” he said. “At the same time, the off-price business is becoming better managed. As a result, it’s not only getting respect, but it’s also getting product.”
Thomas says 49 of Nordstrom’s top 50 vendors sell directly to the Rack. That lessens its reliance on private-label merchandise or excess inventory from Nordstrom stores.
What’s more, he estimates that 60 percent of Rack customers also shop at Nordstrom stores, supporting the notion that it helps rather than hurts the mainstay business.
“Many of our customers who’d like to try a new brand have the opportunity to do so at 40 to 60 percent off at the Rack,” Thomas said.
“And when they get accustomed to certain brands, they want the newest, latest, greatest thing. That’s when they go across to our full-line store and get it the day it comes out.”
Farquhar, the Nordstrom shopper, says she’s looking forward to visiting the new Rack. Even so, she’ll continue to go to the flagship for must-have brands.
“You can’t find everything at the Rack that you can at the normal store,” she said. “And at the regular store, they’d give me enough help so that I could be in and out in 10 minutes — I’d just have to pay double the price.”
Amy Martinez: 206-464-2923 or firstname.lastname@example.org