If you think top fashion retailers are thinking of coming to Louisville, sorry, don’t hold your breath – and here’s why.
There’s renewed interest in getting national, high-profile retailers to commit to Louisville after reports a deal may be brewing to lure Target Stores into the old Borders bookstore space in Fourth Street Live.
After all, we have the new arena, all these great restaurants, a revitalized NuLu/East Market Street and a revitalizing Main Street.
People who can afford a University of Louisville basketball ticket, a Lady Gaga concert or dinner at Morton’s would certainly shop in Nordstrom, right?
At the risk of throwing cold water on that sentiment, a vice president at the Seattle-based department store chain explained to me how arduous the site-selection process is and why – at least in Nordstrom’s case – downtown Louisville is not high on the list.
“We need a store to do at least $45 million in (annual) business,” he said. “If it’s less than that, our salespeople aren’t making their desired commissions and it begins costing us too much money when we should be making profits.
“It also makes it difficult for us to attract top-level personnel, which is the cornerstone of our business.”
That’s why Nordstrom recently closed its downtown Indianapolis store.
“We can’t live with a $20 million store environment,” said the executive, who asked to speak anonymously because he does not have permission to discus internal policy.
(Suffice to say, he’s deeply involved in choosing locations and getting stores built.)
The fashion retailer has also closed stores in downtown Cleveland and Pittsburgh and a few years ago – in a highly publicized action – backed out of a deal for a downtown Cincinnati store. (“We had never signed anything,” he insisted.)
Nordstrom has since opened a mall store in an affluent Cincinnati suburb.
Nordstrom casts a jaundiced eye on most downtown sites.
“There are only five viable downtowns for us in the country,” he told me, “New York, Chicago, Boston, San Francisco and Seattle [which is Nordstrom’s headquarters city]. Every other city, active and bustling as it may seem, has the wrong kind of activity at the wrong time.”
What my source means is, cities where people may work downtown, or may come downtown to eat or see a game, but then get back in their cars and immediately flee. Which sounds unfortunately familiar, but only makes Louisville like most other American cities – including the nation’s capitol.
“Washington, D.C., is constantly chasing us,” he says. “But if you examine it closely, nobody shops down there. We don’t want the tourists, we want the locals.”
In fact, when Nordstrom announced its downtown Indy closing, Erik Nordstrom told the Indianapolis Star, “For us, that visitor market isn’t as important. Our business is much more built on a local customer who becomes a regular customer who has a relationship with a salesperson and has repeat visits.
“So the conventions are certainly a plus [but] I don’t think they are as meaningful for us.”
My Nordstrom source enumerated four key ingredients to Nordstrom’s site-selection process:
- No. 1 lots of people with
- No. 2, lots of money who are
- No. 3, highly educated and
- No. 4, professionals who tend to wear what Nordstrom sells.
The four elements must interact.
Any one of them is not enough.
“We’re struggling in Jacksonville, Fla., a market of 1.25 million people,” he notes. “And in Menlo Park, N.J., we’re in a high-income area but it’s a lot of electricians and plumbers. You’ve seen how they dress for work.”
On the other hand, Santa Barbara, Calif., has more than the necessary income level and the fashion and taste levels but not the density of population.
Finally, he says, to go into any urban downtown today requires “an enormous subsidy” from the city.
“It’s an obvious question we ask ourselves,” he says. “ ‘How much will it cost us out of pocket to get into any market?’ The costs these days are just too high without the financial support of the city. And not many cities are throwing money at us these days.”
Okay, so forget Fourth Street Live.
What about our two lively St. Matthews malls, one of which has one of the most productive Macy’s stores in the country?
“They’re reasonable malls, but neither one says to us, ‘Wow, we have to be in there.’ They’re nice, but just that,” said the source.
Besides, he says, they’re directly across the freeway from one another.
“It bifurcates the market,” he says, “which is not particularly desirable to us.” I pointed out to him that lots of people consider it one mall, one shopping trip, moving readily from one to the other.
“Not our customer,” he retaliated. “For us, Nordstrom has to be the destination, not a stopping point between Forever 21 and Chico’s. Our store has to be in the dominant center in any market and draw easily from a 35-to-40-minute radius.”
And it has to have the right tenant mix.
“It’s often pointed out these days how in this economy the same person shops Neiman Marcus and Target, or Costco and Nordstrom – but they do so in different trips,” says the executive. “We don’t want to be close to a Costco; we want to be with our other best competitors in the same mall.
“That way, we know we’re always getting the desirable traffic.”
What would not play a part in the decision is the proximity of other stores in other towns. Louisville often moans that it’s caught in the cross-hairs, too close to Cincinnati, Indianapolis and Nashville.
“Not so,” said the Nordstrom exec. “If Louisville had the demographics, we’d be there!”