Dive Brief:
- Nordstrom will relocate its downtown Seattle Rack store to a nearby historic building. The 39,000-square-foot off-price store is scheduled to open in spring 2027, the retailer said Wednesday.
- The new location will have “convenient street access and an enhanced shopping experience," Nordstrom Rack President Gemma Lionello said in a statement.
- The expansion of Nordstrom’s off-price business has been a pillar of its growth strategy for several years.
Dive Insight:
Nordstrom’s off-price operation is on the rise and will now get a more prominent spot in hometown Seattle.
CEO Erik Nordstrom has called Rack stores “a growth engine for our company” and key to customer retention, and on Wednesday the company reiterated that the business is its biggest driver of customer acquisition.
The department store runs nearly 400 stores; that includes under 100 full-line stores and a handful or so of its merchandise-free Local stores, making Rack its dominant banner. Unlike rival Saks Off 5th — which recently announced the closure of nine locations, just ahead of parent Saks Global’s bankruptcy filing — Rack has been in expansion mode. The company in recent months has announced Rack store openings for 2026 and beyond, including for New Jersey, Florida, Maryland and Texas.
Off-price in general has an advantage at a time when consumers are keen on value, and major players TJX Cos., Burlington and Ross have consistently posted healthy sales and profits no matter the state of the economy. As the Trump administration imposed a series of tariffs last year, all three players kept a close eye on mainstream retailers in order to protect both their pricing advantage and their margins.
This approach has helped the off-price giants take share from department stores for years now. It can be tricky for a full-line department store to run an off-price business without undermining its full-line operation, according to GlobalData Managing Director Neil Saunders.
Nordstrom appears to be threading that needle, in recent years successfully creating some distance between its core offer and off-price offer, he said by phone. Macy’s, by contrast, has dedicated space within its full-line stores to its off-price Backstage business, which likely pulls some sales from full-priced merchandise, he said.
“It can be problematic with that cannibalization, but I think it's fair game for department stores to become involved in the off-price sector, because it is a growing part of the market — and it's also a channel through which they can clear out their own excess inventory. So it does make sense in some ways, but you have to execute very, very carefully,” he said. “Nordstrom Rack is a very distinct proposition. It's very different from mainstream stores.”
