The Nordstrom full-line store at the Brea Mall. Buoyed by its commitment to customer service, Nordstrom has built a reputation throughout North America as a top-of-the-line clothing retailer. Photo from Wikimedia Commons.

How can you build a successful startup? Examining the successes of others is a great place to start. This post, the first in an occasional series on trendsetting companies, looks at Nordstrom, which for more than a century has been synonymous with top-of-the-line customer service. Businesses across many industries often speak of being the “Nordstrom” of their respective field. Providing top-notch service is one way entrepreneurs can set their concepts above the competition.

When Swedish immigrant John Nordstrom opened a shoe store in Downtown Seattle in 1901 with business partner Carl Wallin, he probably never dreamed that his upstart business would become a global clothing retail icon. Since 1928, the company has remained in the hands of the Nordstrom family, currently under the direction of fourth-generation company executives. Despite a positive reputation in the Seattle metropolitan area, it was not until 1963 that the company expanded to sell women’s clothing in addition to shoes. In 1978, Nordstrom made company and Orange County history by opening at South Coast Plaza in Costa Mesa, its first venture outside of the Pacific Northwest. Today, Nordstrom has 123 full-line stores and 215 Nordstrom Rack locations, the chain’s off-price retail outlet.

The Customer Service Focus

“Nordstrom has seen consistent success throughout the years because they maintain a high level of focusing on consumers,” says Abbey Doneger, CEO of retail analysis firm the Doneger Group. Robert Spector, the coauthor of the 2012 book, The Nordstrom Way, notes, “Every store talks about customer service, but very few actually get it, so it becomes a cliché to mention it. But Nordstrom actually believes in it.”

Very liberal return policies, empowering employees to address customer concerns, a balanced product assortment including both high-end and more modestly priced clothing, and a contemporary yet classy ambiance are among the concepts that Nordstrom has pioneered for the retail clothing world.

Past Success and Present Realities

Virtually all economists and industry observers recognize that clothing retail is changing dramatically. Consumers are much more value conscious, one of the enduring legacies of the Great Recession, while online retailers make up an ever-larger share of the industry each year.

Department stores such as JCPenney, Macy’s and Sears have announced the closure of many stores in recent years, yet Nordstrom so far has been able to avoid a similar fate, largely through staying on top of industry and consumer trends.

Nordstrom began its e-commerce business in 1998, years before many of its competitors. The off-price Nordstrom Rack concept, which began as a bargain basement at the main Seattle location, has seen phenomenal growth, with 215 locations, up from only 86 in 2010. There are plans for as many as 300 Rack locations by 2020.

Nordstrom expanded to the East Coast in 1988 and now has a presence in 40 states, but only in the past few years has the company expanded outside of the United States. In 2012, the company announced an expansion into Canada, while a full-line store opened in Puerto Rico in 2015.

To the Future

The future of retail is far from certain, but Nordstrom can look back on a history of innovation and customer service to meet the demands of tomorrow’s economy. Like many retailers, value is likely to be a more important concept than in years past, but that does not mean that Nordstrom will give up its commitment to the high-end.

Nordstrom plans to open a 363,000 square-foot flagship store in Manhattan in 2019, which company officials hope will showcase the brand to the world, potentially setting the stage for expansion into Europe.