With major retailers -- including Nordstrom, Macy’s and Gap -- announcing plans to gradually reopen some stores, observers are getting a closer look at how dramatically different the brick-and-mortar experience will be.
Digital and omnichannel solutions look to figure even more prominently in the new normal, instead of consumers packing into fitting rooms and crowding around makeup counters.
Nordstrom’s announcement contained a bombshell: it will be permanently shuttering 16 of its stores. The retailer also says that as it phases into store openings, cooperating with regional requirements, it will give masks to shoppers and employees, conduct health screenings and limit the number of shoppers to maintain six feet of space in between them. And like other retailers, it will quarantine all returned merchandise to minimize infection.
Nordstrom will also continue to offer contactless curbside services at full-line stores. “We’ve been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations,” says Erik Nordstrom, CEO of Nordstrom, in its announcement, adding that COVID-19 is accelerating the importance of omnichannel efforts.
“More than ever, we need to work with flexibility and speed,” he adds. "Our market strategy helps with both, bringing inventory closer to where customers live and work, allowing us to use our stores as fulfillment centers to get products to customers faster, and connecting digital and physical experiences with services like curbside pickup and returns.”
The closures, which represent about 14% of the retailer’s full-price stores, are reassuring some observers that Nordstrom is sturdier than others in the troubled department store category.
The announcement “reinforces our view that Nordstrom is a survivor, though with low near-term earnings visibility,” writes Mark R. Altschwager, an analyst who follows Nordstrom for Baird. He continues to rate the company as neutral, and predicts the company will see a 15% drop in sales. “These aggressive actions should help provide a clearer path toward profitable growth as the demand backdrop normalizes.”
Wedbush Securities, which also assigns a neutral rating to Nordstrom, believes it is the “best-positioned in department stores to weather through the COVID-19 pandemic,” writes analyst Jen Redding, in a recent note. With ecommerce generating 33% of Nordstrom’s sales, she says it has “a competitive edge monetizing online consumers relative to peers. Meanwhile, we see the off-price Rack business as an attractive channel to clear unsold store inventories in the future, particularly after the reopening of the economy, given people may have less money to spend on fashion and apparel due to furloughs.”
Gap, which is planning on reopening 800 stores by the end of the month, is also explaining its strategy. The retailer is temporarily closing fitting rooms and restrooms. And like other stores, it’s investing in plexiglass shields at registers, reducing hours and implementing widespread cleaning efforts.
Macy’s, which says it is looking at plans to reopen its entire fleet over the next six to eight weeks, is making similar adjustments. It’s adding sanitizing requirements at beauty and jewelry counters, and ending some up-close services entirely, such as bra fittings.