Nice Guy Nordstrom

28:16There wasn't a lot of competitive issues. I mean, your point about verticals and stuff was true, but it's still pretty small then. And my impression, you know, I was a kid, but if you were listening to my dad talk about it, it was like they were able to go into places like Los Angeles and Chicago and Washington, D.C. and just absolutely go in and grab market share because the legacy heritage department stores that were there had gotten kind of lazy and not particularly relevant. And Nordstrom was able to come in and feel like a more modern version of that, of a department store and just take the business.

28:56And they did it really with a singular focus on customer service that created differentiation for them. And I remember being part of it. I was around in the 80s and all that. We're growing like crazy. And everywhere we went, I mean, it was all successful. And it was because people couldn't really figure it out. They're like, well, Nordstrom's coming, so let's redecorate our store. We'll put a new couch in the shoe department and paint the wall or something. That's going to do it. And I remember my dad and his cousins just saying, those guys have completely missed the point. What we're going to do is we're going to go in there and we're going to treat people well.

29:31and we're going to go earn that business, like just one customer at a time, and we're going to just get right after it and compete for this business. And it was a real badge of honor, I think, and pride around here for people. And that served us well for a couple of decades. I mean, if you think about the growth of this company from 78 through like 2015 or whatever. And we were just building stores like crazy and it all worked pretty much. And so I, I guess the tipping point came when things came more difficult is when the online business became a real thing and we were in it early. But if you look at those kind of early two thousands where all of a sudden there's, there's just another way to think about retailing.

30:19And there's a, there's another element here. And, you know, I think, you know, we embraced that and got in it early and in a way that I think has served the company well, but I don't know. I don't think we ever thought, well, first of all, my dad's generation, I think a tipping point for them is when they decided that they wanted to retire. And then, you know, my brothers and cousins, I mean, at that point it was the three of us, my, my two brothers and me, and we had three cousins that were all involved. So there's six of us. And this is the mid, late, mid nineties. And, um, we were young. I mean, our early thirties and we're big, you know, successful public company at this point.

31:05So I don't think it was easy just to throw us in there and say, we were running it. So basically what they did, my dad and his cousins, they hired a non Nordstrom family member to run the business. And then we, the six of us reported into this guy. I mean, and if you think about it, it's kind of a horrible situation for him to be in his, he's caught in his Nordstrom sandwich of third generation and fourth generation. And I'll at least speak for my dad. I mean, he was never really my boss, but in a way kind of was, but what he was, was my dad. And he thought we were great. We're his kids. So if the guy that was responsible for managing us didn't see it the same way.

31:45I don't think my dad and his cousins were very objective about how they might've been evaluating their kids. So that became a bit tense. And then, yeah, so that's, that's its own chapter, how we ended up getting the big job here. So how as a family, cause obviously I write about a lot of different families and someone in Hollywood was asking me about the Hermes family yesterday. And I was thinking about like, how have they managed through six generations? And all those people, and they still control the company and they seem to get along fairly well. But like, what do you think? Because family run businesses are obviously some pretty much every successful business started as a family run business, but they are very unique and they can, there are examples of it working really, really well.

32:46You become the richest man in the world. And then there are examples of it not working so well and kind of being a total disaster and the company kind of just dissolving. what has been the sort of key to making it work for you all over these years thank you well i think um look at if you're in retailing it requires a fair amount of humility in the first place if you're going to do it right because you got to be connected to what you're not doing well and that's usually played back to you from customers and if you're really going to be customer centric about it you got to be open to hearing what they have to say and and evolving so i don't know that humility is always, and that was just the way my dad and his cousins were.

33:28I mean, we came from, I mean, they were successful people and they were proud of that, but I mean, there was a hump, there was a humility about it, I suppose. And it was really imposed upon us that this is a much more of a hard work business than it is a brain business. And, you know, you work hard, you can be successful. And a lot of that value stuff kind of pulled us through. So I don't know. I mean, I think what made it successful for us is when we were in it, and over time, my three cousins peeled away, and it's really just Blake, Eric, and myself, for their own reasons. And it was all fine.

34:03It was not acrimonious. They said they wanted to do other things, and they had the ability to do that. So that was all fine. But for us, I mean, we just didn't want to be known as the generation of Norshams that screwed it up. I mean, at this point, the company's got a pretty big reputation. And that was made clear to us often. And so when it became our opportunity to run the business, it was, you know, things were getting tougher. I mean, that's when you, you know, the competitive issues you're talking about, the changing dynamics of the whole industry was really present. And we just didn't want to be known as a generation screwed it up.

34:42So, our work ethic around it and our humility about that. But, you know, business wasn't good. And then, you know, the guy that was responsible, you know, was working. My dad and his cousins were on the board. And then this guy was the CEO. And my brother and I were reporting him as co-presidents. business was not good all of a sudden. It was rough. And it's a public company. And while my dad and his cousins are on the board, I mean, they don't control it. I mean, what's different from our family than maybe other family businesses like this is even though it had gotten to the fourth generation, there wasn't that control element.

35:24So if you think like the Dillards or something like that, they own all the voting shares. So I mean, they have complete control, even if they don't own all the shares. It's a public company. We didn't have that. There was no preferred shares. So our company over time got diluted in terms of family ownership. And by the time we're doing this thing, maybe our family owned a third of it. And that's our extended family. That's everybody. And so we own enough shares to have seats on the board and be impactful and I think to be considered, but we weren't entitled to it either. That didn't really exist.

36:03So I remember really clearly when we got the job. So what happened was the CEO got fired and then the board had to decide what they want to do. And my brother and I decided we'd like to say, we want to do this. We want you to give us a shot. And the board, particularly outside board members, like, yeah, I don't know. You guys are pretty young and I don't know. It might be time to do something different, be more sophisticated and grow up and not just be a family company. So I don't know what those board meetings were like. I wasn't in it, but I'm sure that was a little rough in terms of how it went with my dad and his cousins.

36:34But they interviewed different people. I mean, they interviewed the guy from Neiman Marcus and they interviewed people from Basies and they interviewed all these guys. And then at a certain point, I think the family, my dad and his cousins asserted themselves as we are not hiring one of those guys. There's no way were doing that. So we think you should give these guys a shot. And the board decided to do that. And they, but I remember so clearly, like the three of us, they brought us and said, okay, look, I want to give you guys the opportunity to run this, but I'll be clear about something. You're not entitled to be here because of what your last name is.

37:07And if it doesn't go well, you'll be gone. So if you accept it under those conditions, great. And that didn't, that was like great bring it on let's do it and you know we got a lot of good support obviously from our dads and what have you and the board you know they in the way they were supportive us because they were kind of like mentoring us i you know they viewed us as young guys they were kind of wanted to see succeed and and it worked we had a really good run from like 2000 you know for quite some time we had a couple decades of really really good business and growth and what have you. And it all worked out well.

37:45So that's the story how that when it never really was like, oh, maybe it's time for us to bail or we want to sell out or we just want to be out that, you know, we were in it and we were into it. But it also feels like, and then I want to talk about your position in building those past 25 years. But I also feel like a lot of times at companies, and this happens at startups, but it also happens at family-run businesses, where there is this sort of interim CEO who comes in. And sometimes it works, and sometimes it doesn't. Hermes had that. They had a person from outside of the company that was a CEO until Accel, who was sort of the chosen one, became the CEO.

38:30So that is, it can work well. But as you know, though, Lauren, it's really rare to get into the fourth generation and beyond, which is your point about the Hermes family. That is a really rare situation. And it's rare for us. I mean, there's not many people like us. I mean, it's a point of interest for almost anyone I talk to. It's like, how the heck has that worked? And have you been able to work with your family and make this thing go? Well, honestly, it's the kind of thing that is probably some biological genetic stuff. Like it would be interesting for people like scientists to observe your family and the genetics.

39:10Because, I mean, some stuff is, it's nature and nurture, but some stuff is inherited. And it is, I'm sure some of it's luck, but there is clearly something fundamental about how you all operate as people that has allowed it to continue. and go through so many different phases. But let's talk about when you all kind of did assume more control. And my view of you is that you were sort of the brand guy that brought you the mix of product and how the product reflected that customer service way and brand, it feels like you were integral to developing that in the last few decades. But tell me what you kind of saw for yourself in the early 2000s and how you changed the mix that is available in Nordstrom day to day.

40:19Well, first of all, thanks for saying that. That makes me feel good. I mean, that's something that I have largely been involved with. And yeah, so thanks. But I think it starts when we were told the three of us were to get a chance to run the business. The first thing was that, first of all, our dads and those guys always ran it as co. They were co-presidents, co-everything. The board goes, look, we're going to give you guys this responsibility, but we're not going for that co-thing. Someone's got to be in charge. That's the way it's going to go. So Eric, Blake, and I got in a room. So, okay, Blake, you're the oldest, so you're the CEO.

40:51Eric and I are both executive or we're co-presidents or executive vice presidents, wherever we were. and but we're going to run this we're going to run it as a team but that's not how it's going to report up through you know or the public view of it but we're going to run this you know together and so that's fine so let's divide up i mean this literally took 10 minutes like let's divide up the responsibility so okay blake you're the ceo so all the board-facing public company stuff is going to be used so like the cfo is going to report to you blake and you're going to have you know, HR, you're going to have chief legal and you're going to, you know, all that, the functions of the business.

41:30Um, you know, Pete, you're going to have all merchandising, Eric, you're going to have stores. And that's how we did it. And some, I think with the benefit of hindsight, I think that suited our, our interests and our capabilities probably. And maybe we knew each other well enough where that all happened very easily. It wasn't like an arm wrestling match for who's going to do what. And none of the three of us were in competition with each other. We realized early on that our best chance to be successful is that three of us working together with complementary skill sets is the way to go. And we gave each other the space to do our thing.

42:10And it worked out great. And so, I mean, for me, I always enjoyed the more creative parts of the business. I really liked the merchandising buying part of it. I mean, we always had a big service thing that we hung our hat on, but my first thing was to say, I want to be as well known for what we sell as how we sell it. And so it gave the whole merchandising organization a thing to hang their hat on and to aspire to. And that worked out pretty well. And so So it was just really about trying to be paying attention, to be curious to the zeitgeist of what's going on so that we could be a relevant modern retailer and evolve our offer.

42:54And that's just something I've, I mean, to this day, I still perform a version of that role. But I mean, I had that chief merchant job for 20 years about. And how did you do it? How did you make it so Nordstrom was as well-known for what you sell as how you sell it? What were some of the changes you made early on to evolve it? Yeah, there's a couple big things that happened there. One of them is I think you recognize that if you're not actually trying to get younger, you're going to get older because all your customers get a year older every year. And if all you're trying to do is play to the loyal customer, I mean, that's a great, you want to do that and you've got to figure out a way to attract new people.

43:42So that was part of it. How to feel different maybe than the people we're competing most directly with. Like how could we bring some of the excitement of what a vertical could bring, you know, being a multi-brand store. And so we would look at what Macy's is doing or Sacks or Neiman's or Bloomingdale's and think about how we could be a more modern and relevant version of whatever they're doing. But we were really in tune with that. But I would say the big thing for me was not about me, but about my luck or skill and be able to bring people in here that had something we didn't. And the first thing that we did about that was bring in Jeffrey Kalinsky.

44:23So one of the things that I noticed is that we were in the design and the luxury business through my dad's generation. And when we were coming up and it was a bit haphazard and it was like, yeah, that's that part of the business is hard and people don't make money on that. And like, you know, that's not really, you know, my dad and those guys just didn't have a lot of interest in that. And so, but when I saw that our customers wanted to buy these things and we were forcing them to go somewhere else to do it, you know, we have these young customers that end up. over time having more money and more affluence and want to buy the best things the world has to offer.

44:58And we couldn't always offer that to them. So we didn't have people that had that experience or skillset. I didn't think. And so I, you know, I talked to Jeffrey Kalinsky and I, there was an article that about him in the New York times that came out and, you know, he's on all that success and meatpacking. And he said somewhere in there, he'd be interested in selling his business someday. And he owned two stores, Jeffrey and Atlanta. Yeah, that's right. Packing, which were cool multi-brand stores for people who didn't get to go. And he was, you know, like he's one of the most talented people I've ever worked around.

45:34An amazing merchant. I'm really good and really knew his thing. I mean, he knew his lane and he knew how to do it. And so I met with him and he says, would you like to buy my businesses? We're not really interested in buying. I mean, we're not an acquisition company and I'm not interested in buying a boutique store and meatpacking district. And like, I'm not even sure you guys make money. You're like, I don't know. And he goes, well, why don't you look at my book? So he showed us this whole thing and he made money. He was successful at, I mean, his gross margin selling designer stuff was like triple ours.

46:05Like, and I'm like, well, how does he do this? I mean, he was making good margins on stuff that we were like in the teens. It was hard for us. and so we just started talking and asked if there was a role he could play here he says yeah if you buy you know part of my business or you buy my business and maybe we can work together and and it was really unusual because he's i'm not moving to seattle i don't want a bunch of direct reports and stuff out there but i'll help lead your designer thing and i said done and we we did it it was a very i mean i had to do some convincing because people like what are we doing this is crazy.

46:44And I said, I'm telling you, I think this is going to be a big unlock for us. And it was. And he was great to work with. And just showing up in vendor appointments with Jeffrey Kalinske was powerful because he had a lot of credibility. And he said, I'm at Nordstrom now. And I'm telling you, there's a big opportunity at Nordstrom. And you guys should get distribution Nordstrom because you're missing out. And it was credible. And it worked. And it took a while. We had to slug it out. Um, but that really, I mean, I got a funny story about that. I mean, early on when he was, we were working together, I remember coming out of a meeting, uh, from Dior and I just met with, you know, Sydney Toledano, whatever, like, you know, we're talking to those guys.

47:28And I think we had like one point of distribution. Um, you know, it was like nothing. And as we're walking out, the Neiman Marcus people are walking in and you know, this Lauren from being there, we're like coming in and out of places. It's kind of awkward and weird sometimes. Sometimes we're sitting next to each other at fashion shows. We're coming in and out of meetings together and we're competing with each other. And so Bertanski's, you know, such a great guy. I mean, really, really an amazing guy. It was always nice to me, but he sees me walking out. He goes, what are you doing in a meeting in Christian Dior?

47:58And I thought, I don't want to talk to Christian Dior. He goes, we do more in markdowns than you guys do in business with us. And they're like, ha, ha, ha. And they all walked in, you know, Karen Katzen and Jim Gold and Bertanski. Oh, we had a laugh at our expense. Like, ah, you know. So we felt a sense of competitiveness, like, let's go get this. And we did, and that worked really well. So that was one big one. And the other big one, I would tell you, that was not so much about hiring people. We can talk about that because we had other stories there. But when we got in business with Topshop, and that happened.

48:32Yeah. When did that happen? That happened in the early 2000 teens, maybe around 2010. something like that maybe 2012 is that it top shop entered no the grace just fired off on a google press release from 2012 so what happened with top shop was we were in an executive meeting one day and we were talking about stuff that's going on in the industry and things we need and like how can we get our younger business to be more vital and relevant and i think my brother Blake says, well, I met this guy or I read an article about, you know, Sir Philip Green and Topshop. Like you should talk to him. And I go, well, I don't know him.

49:14I'm like, how am I going to get it? He goes, well, I mean, you should talk to him. And everyone goes, yeah, Pete, you should talk to that guy. I'm like, okay. So somehow I figured out how to get in touch with Philip Green, who, I mean, that's a, that's a colorful guy. And I love Philip. I mean, he was always really good to me, but he is a colorful guy. And he, so we met, they were, they were just starting to open stores in the U S and they, they had just opened, I think their first store, it was in Las Vegas. And he goes, I'll meet with you. If you come down, we're opening a store, come down and meet with us in Las Vegas.

49:51So we did that. And I met with him as like first thing in the morning. And we met at our store and they had had their opening party the night before And they were all a bit bleary coming in to meet with me first thing in the morning. Yeah. And so I'm talking to Philip and I said, gosh, you know, I think, you know, your brand would do great in our stores. And he goes, well, how are you going to treat it? What are you going to do with it? And I said, well, you know, we're going to buy it. We're going to stick it there in the department. It'll be great. He goes, I mean, like all that other stuff you got over there?

50:19And like, yeah. And he goes, no, not doing that. I go, because I want my brand to show up in a major way. And I said, well, we only do that for brands like Chanel. And he goes, well, then I'm not doing it. I'm like, oh my God, that didn't go well. So basically the hook though was, okay, you're going to come to the United States and you want to establish a business here. If you do it one store at a time, one mall at a time, one market at a time, running a bunch of marketing to get people to know even who you are, it's going to take a long time and it's going to cost a lot of money. Why don't you just open it up in our stores and you can learn all about the U.S.

50:54market. You can learn about the markets that are good or bad or what have you. Your marketing is just the fact that you have all these eyeballs on our brand. You're in your cell online and we're in our stores. We have all these customers. It's going to enable your whole thing to work fast. He bought that. So that's what happened. And that Topshop business for us for, gosh, probably six years or so, seven, eight years, it was really, really good. And it, I mean, that was a big feather in our cap. And then we became known as a place where people that are direct to customer, if you're going to be in a multi-brand store, Nordstrom is probably the place where you can do it.

51:33They'll nurture it. They'll allow it to happen. They'll work with you in a collaborative way. That was a big unlock for us that we're still benefiting from today with other new brands. Yeah. I feel like Skims is a great later example of that. Yeah, that's true. In many people's minds, and I don't even know if this is still true, but you can only get skims at Skims and Nordstrom. Or I remember when you all did it with Everlane. I think to me, and I don't want to harp too much, I do think you're very good at hiring people and understanding the kind of people that can bring relevancy to the fundamentals of the business.

52:16But I think what I see from you and what I like about Nordstrom is, did you realize at some point, okay, a good brand is a good brand and it actually doesn't matter what the price is? And you sort of convinced all the brands of that too. To me, the designers benefit because you have a really fun mix and it makes their product seem more exciting. And upstart brands benefit, obviously, because of the exposure. But it's so much about the mix that you're able to. And it reflects the culture of people shop at Target and they shop at Hermes and everything in between. And they don't care necessarily how much it costs as long as it's good.

53:00and I'm sure that took a lot of convincing, but it feels like a mix of you hiring the right people to persuade and then also being willing to take these risks for something like a Topshop or one of the, you know, Warby Parker or whatever, one of the DTC brands that came out of the US. Yeah, well, there's a couple of things. First of all, one of the things I really enjoy about your article and your podcast and everything is that you've got an appreciation to your point of If something's good, it's good. And it's appealing to rich people or not rich people. And a modern person, that's how they shop.

53:38They buy whatever they want that suits their lifestyle and is part of the cultural zeitgeist to what's going on, right? So I think you're really good at telling that story. And that's what we tapped into. We said, you know, a modern person does not dress in head-to-toe Chanel. They just don't. The richest people I know have Nikes in their closet or, you know, a Viore shirt or, you know, whatever the top shop jacket that they might carry a sleen bag and like all this stuff, how it worked together. That was really an emerging thing. And so we used to go and talk to the brands, the designer brands, like, do you really want to be in the luxury ghetto where it's just nothing but pure play luxury?

54:21And the only people you're going to get there is increasingly older people that view the world through that prism. And I'm telling you, we have all these customers. They want to buy the best things the world has to offer. They can afford it. and they're going to be more comfortable coming into our store than the name of Marcus or Saks or your standalone store. You're going to get new and different customers you would not otherwise get if you sell us. And our gateway for that was by that time, we had the biggest beauty business with all those prestige guys. And so they all had a beauty business.

54:57Like, you know, we're the number one seller of Chanel beauty, for example. I said, you know, that customer is now interested in the sunglasses. And I think at that point, we were the number one seller of Chanel sunglasses. But I said, but you stop it there. We can sell the shoes. We're good at selling shoes. We can sell that all day long. Now, is it hard to sell the apparel? Yeah. I mean, is it hard to sell the handbags? Yes. But I think we can get to new customers. So it'll be complimentary. It'll be accretive to you. And we started on that path. And Jeffrey was really instrumental in helping tell that story.

55:33And, you know, once we brought it in, we had success. But yeah, I think your point about a person's closet has all these different things in it. And if nothing else, and you know this well, Lauren, I don't care what the brand is. They don't want to be viewed as old. They don't want to be viewed as irrelevant. They want to be viewed as modern and young. And so our average customer age is younger than these people we compete with. It's younger than what they have. we have good salespeople. We have nice environments in our stores. That was it. That's how we did it. Yeah. I remember, I feel like I did a, I, when I was doing reporting on a story about you all at some point over the years, I forget what, but it was something about for most consumers, their first luxury purchases at Nordstrom or something.

56:24It was like a stat like that. Yeah. I think it's because we're big, right? Yeah. And we do carry these things and Shoes is a pretty good gateway for that, and we sell a lot of shoes. Yeah.

56:40I want to talk about the last 10 years and how everything changed, but I would also just say, like, just thinking about the way I didn't grow. I grew up in Pittsburgh. There were no Nordstroms in Pittsburgh when I was growing up. I'm sure there are now, but I didn't experience a Nordstrom. I don't think until I went to the store in Seattle, I was reporting a story about Filson and I came to visit your team and got to go and was just a story. just like so blown away but then you opened the store in new york it was it in when when was that we opened that i think two or three months before covid broke out 2019 oh my god our timing so but you but you signed the you like announced in 2013 or something right yeah and then we built it and we had the men's store that opened up a year and a half or whatever before the women's store so we we had a bit of a running start into it right yeah and and i want to talk about how that's all been for you.

57:37But the thing that I remember from that store opening was the Burberry installation that Olivia Kim did, where it was Ricardo Tisci, who was the designer of Burberry. You don't have to say this, but I can say it was a really tough fit from the beginning. He didn't end up working there for that long. And it was a challenge. The runway, people really wanted to like it. They loved his work from Givenchy. They really respected him. And I just remember thinking, this is such a benefit to Burberry, what she has built out here. I'm sure in collaboration with him and their team and everything, but what you all built to sort of display that first collection was unique and felt like this is why a department store, this is why a store needs to exist because it gave the context of why this thing was interesting.

58:33And, you know, is Nordstrom going to save a brand's business? Actually, maybe you could, but the, the point being that the, the, you contextualize things. And that is what I think is missing in a lot of retail today, especially multi-brand retail is there's not any contextualization. And so what is the point of even going if, if you, if you're not like making it feel special or judging it up or giving it a little magic or what have you. Yeah, I think you're right. Well, part of the New York thing, and we can talk about this, but there was also the reality of that situation. It was harder for us to get all the distribution there because everyone's there, right?

59:14They've got their own store two blocks away and they're in Bergdorf's and they're in SACS and, you know, Neiman's was just going to Hudson Yards and there was like, you know, they're everywhere. They didn't need Nordstrom 2. And that was one of the challenges for us is we were kind of the last one as a multi-brand retailer in the game you know Bloomingdale's got a big designer presence there too so we had to be creative about it and one of the Burberry idea you know and we still do that today where we've got that corner space that is often used to you know be a showcase for a brand and that idea pretty much lifted from spending time in Europe and looking at the store so before we opened New York you know i always obviously spent time in paris and milan because of market but we went to all the big kind of flagshipy stores to see what they were doing but my takeaway was both print and bain-marche in particular and selfridges to a degree with their corner shop thing they always had this space that was kind of like dry powder that they would do something that was interesting and something they could distort and amplify that felt very of the moment it was nimble it was cool it wasn't always expensive it could be it was just really interesting and i said you know we need to do that we got to have our version of that so that was you know we let off with the burberry thing and i think somewhat to your point there was a lot going on with burberry it was kind of buzzy it was you know this was kind of an interesting to interesting thing to amplify and to distort and we have we had a good relationship with them you know still do and so we are able to do it.

1:00:46So that's kind of what that was about. So yeah, I don't know that I've ever invented any of these good ideas, but I'm pretty good at plagiarizing a good idea when I see it. Well, you're good at identifying things and you're curious, which is, I mean, I want to talk to you about your podcast and what you feel like you've learned from all the people that you've interviewed for it. So you signed this lease or whatever it was in 2013 to open in New York and you all were sort of like, I wrote a story, I think in 2016 or 2017, the last great American department store, it was kind of seen as you really got the site.

1:01:24You were in the zeitgeist. You got the mix by 2015, all of these luxury brands are selling more and more stuff direct to consumer. It's that business has changed. Prada has 90 % of their revenue is direct. They're only doing shop and shops. They're only doing, they're doing fewer and fewer multi-brands in the U.S. Multi-brand retail in the U.S. just like goes through tremendous changes pre-COVID Barney's opening ceremony, things that were like, you can kind of your competitor, especially because you were playing in this sort of mix. You weren't just for fuddy-duddy. You weren't just for people who buying salmon Libby, you were for everyone.

1:02:09So they are brand companies that, you know, people are comparatively shopping against your yours. They close, then COVID happens, all these bankruptcies, all this stuff happens. It's just, there's marketplace stuff, Farfetch is doing really well. And then it implodes all the stuff that happened with sex, everything like you the you three are sitting there and what are you thinking about like what do we do about this because people don't go into the store for the same reason they did even 10 years ago like they're the the the walking in there are different motivators than there were back then. Like, what do you see?

1:02:56How do you see the ecosystem? How has it changed? And how did you all sort of tackle it? Or are you, how are you tackling it? Because it's not, the transformation's not over. Yeah, no, that's an ongoing thing. And frankly, it's never going to stop. I mean, you know, when my dad and that generation and hit their dads, the second, third generation Nordstrom's, the business was the same. I mean, they had to take big risks. They, they grew the company and they're amazing merchants and all that. But there was only one way to buy stuff. There was wholesalers and they sold the multi-brand department stores like us.

1:03:30And then we sold it to customers. And that's how you did it. And you grew your business by building more stores and people were developing malls and we were an anchor in a mall. So we were appealing some malls. We got good deals. That train was on the tracks for a while. And it wasn't really until the internet it came along that that game changed. But, you know, my dad and those guys were pretty much out of it by then. And that all fell to us. So, I mean, you could just, you could feel it happening and it was either going to happen to you or you're going to like try to get in front of it. And so, I don't know, that requires courage at a certain point.

1:04:11It requires curiosity and not being stubborn about how it's done. Again, some humility about how you approach this business. We're going to have to really lean into this. It's been really interesting. I mean, it's been hard. I'm sure we could have picked something easier to do, but academically, it's been pretty interesting because the thing has changed. Here I am at 63 years old, and you would imagine at this point in my life, I'd like, okay, I've been doing this a long time. I know the train's on the tracks and I just show up every day and enjoy that. And it's not that at all. It feels like I wake up every day and like, geez, we better figure out a new way of doing this or an improved way of doing this.

1:04:56So I think it's become part of our institutionalized culture of how we think about the business. At least I hope it has. I mean, that's how Eric and I think about it. And the other thing I'd throw in there is you talk about that timing of 2019 or what have you, That's when my brother Blake passed away. And that was rough. I mean, at a time when business was challenging and Blake was in so many ways recognized as a cultural leader of this place. And it was so well loved internally and externally. And I mean, that was a bit of a crisis of confidence, I think. I mean, not so much internally, but I think for the board, at this point, my dad and those guys were off the board.

1:05:37We have mandatory retirement of 72, a rule that they implemented and thought was great until they turned 72. So they were all off the board, and then Eric, Blake, and myself were on the board, and then Blake dies, and then we're like, what are we going to do? I mean, that was a rough moment, and it actually contributed in some way to the go-private effort because it was pretty clear to us at the end of the day, we don't have control over what's going to happen here. We're a couple of people on the board and we have a lot of influence, but we do not have control. And if you're a public company and your scoreboard is stock price and stock price is driven by revenue growth and we're kind of a mature, steady state.

1:06:20I mean, you know, that that there was a lot of discussions about what are we going to do? How's this all going to work? How is Eric and I going to fit into this? And yeah, that was a challenging time. Would you say that the way investors approach the market has changed and that it has become more driven by growth than it used to be? Because it just feels like to me, I remember when there were first reports about the company wanting to go private. and I believe the investors voted against it, which ended up they would have made. No, the board voted against it. The board voted against it. The shareholders never got the chance to vote.

1:07:06And by the way, they turned down, what was it,$52 a share? Yeah. They would have made way more money. In hindsight, that doesn't look great. So anyway, yeah, that happened. Yeah, but the point being that I just think I don't understand. I understand why people go public to raise capital when you need to open a bunch of stores or whatever. I understand that it makes sense to me. And there are early gains. And also, you know, some retailers, Abercrombie & Fitch is a great example that's had a lot of success recently because they had shrunk so much that they were able to make a lot of people a lot of money.

1:07:43But I think what it comes down to is that retail is such a cyclical business. Do you think that it's gotten harder to be a public company if you're a retailer? Of all kinds of retailers, but especially in multi-brand apparel than it was 30 years ago. I don't know. It's kind of a nuanced answer. Not really, because look, we benefited a ton from the growth trajectory that we had for a long time. So it's not like we never got our bite at that apple. We did. It was only really when things kind of started leveling out. We went to Canada, and that ended up not working, largely because COVID just made it impossible, and we had to make tough decisions.

1:08:25I went to one of your amazing stores in Canada. Did you go to Vancouver or to Yorkdale? Oh, actually I've been to both. I've been to the Vancouver one. That was a great store. I got a great pair of Celine pants that I still wear constantly on sale that were so good. And then I went to the Toronto, the one at the mall, the really nice mall. Yorkdale. Yes. Yes. And I covered it. And I think Jamie, was Jamie the head of stores at that time? Yes, he was. And I interviewed Jamie for it and I wrote about it. And it was also, they were amazing stores. I love them. But anyway, that, so when that, the writing was on the wall then that there really wasn't an international opportunity.

1:09:06And frankly, if you look at it, Lauren, you'd probably know this. There's never been one multi-brand store like ours that's been successful in another country in the world. Not one. I believe it. I mean, every time you hear like, oh, so-and-so is going to come to the United States. It never works. it you know there's a couple you know there's a that least franchise thing that sacks and bloomingdales do in the uae or what have you there's a couple of those but i you know i don't know how much growth potential that adds i mean we've been offered those things but it just doesn't really work i mean england doesn't need us you know japan doesn't need us they've got stores like you know there's we just don't have a reason for being there so So all of a sudden, the prospects of us having a big growth trajectory were limited.

1:09:52But the thing that we did have going for us, but we never really got any credit for, is the multiples of, first of all, off-price businesses. If you look at the stock multiples of the TJ Maxx's and the Ross Marshall's people, it's huge. Now, we're in that business. We have a very large off-price business with RAC that is successful. but when people looked at Nordstrom stock, they viewed it as a full price department store. The other thing is if you looked at the multiples of online only pure play guys, those multiples up until very recently were really big. We have a very large online business.

1:10:30Matter of fact, high 30s percent, maybe near 40 percent of our business is done online. Oh, wow. But we didn't get any credit for that either. So our multiple is the same as dinosaur-like department stores that really had nothing going on. And we felt like the company's undervalued. I mean, this is, to your point, it's just not, we don't need to be in the public space because it's a morale buster for everyone. If your scoreboard is your stock price, and that's languishing in the teens. And even we announced a good quarter and the whole sector wasn't good. Our stock would go down. I was like, this is not a good way to run a business.

1:11:09And so it wasn't until we were at a place where can we actually pull this off without putting the company in jeopardy because of over leverage? Can we do that? And then that came along. We can talk about that if you want, but that, yeah, then it happened.

1:11:30now that you all were able able to take it private what is the plan like how has the sort of customer profile and the way they shop changed fundamentally to you and how do you how do you make it like the thing that i i keep always get tripped up on is just how do you make the stores as productive as they once were? I guess you can't, and maybe that's supplanted by online sales in the region, but it costs money to operate an online thing too. So it's just, I guess, how is the clearer way to say it would be, how is the business model changing and how are you all sort of managing that now that you can do it privately where there isn't as much pressure on quarterly profits and all that stuff?

1:12:22Well, first of all, the private thing was enabled to work for two reasons. The stock price has gotten really low after COVID, and it was hard to rebound out of that. And our whole sector was beleaguered in some way. And we got described by most people, investors, as the best house on a bad block in a bad neighborhood, which is flattering in one level, but okay, we're still in that neighborhood. So we want to try to figure out how to break away from that bit so but the stock price is down the teens you know activists start swirling around the boards you know anxious about what are we going to do so it lends itself to a discussion about what are we going to do so we're not reacting to something we can proactively do something that's in the best interest of shareholders in the business and but if not for the fact of liverpool coming along i don't know how we been able to do it we would have had to go down a traditional route of you know private equity money and you know expensive money that that is and the high leverage game and that just wasn't super appealing to us um we wanted to really play the long game but when we met you know the guys uh the family that runs liverpool which is a family fourth generation family you know big successful department store in Mexico, they were looking for a place to invest money outside of Mexico for all the reasons you might appreciate.

1:13:44But they didn't want to run a business in the United States. They just wanted to invest in something they knew something about and thought might be interesting and perhaps helpful to them. And they were really nice. They were flattering to us. like they thought we were good at what we do, that we were undervalued. They approached us and said, if you guys ever want to go private, we would like to be your partner. And so then it was kind of on and that created a path for us to do it as common equity. It's not a merger. It's not like Sachs and Neemah is trying to bolt together two companies and create synergies and take costs out.

1:14:22They're an investor. We own 51, they own 49. They just want the business to do well. They don't want to run it. They want us to run it. That was one of the conditions. We don't want to buy it if you guys are going to bail and just trying to cash out. So we didn't want to bail and cash out. So it all worked out as well as it possibly could have. And while it's early days and everything, it's, I mean, we're just so grateful for them and the partnership we have. So anyway, so that that all happens okay how does that inform what our go forward plan is and their thing is you know most private equity guys would say okay let's if your capex budget is 400 million dollars a year let's just take that down to 50 million for the next three years and just put that money in our pocket that'll be great you know like they're not that they're like hey i think we want to maybe we want to invest more in capex so that there's this moment in time we can create a competitive advantage because we're investing in these stores and we are making and more relevant and what have you, and part of a better ecosystem that includes online and what have you, all this stuff.

1:15:26So that's really inspiring. That's fun stuff to talk about, not how you can wring the last penny out of it by doing all these terrible cuts and stuff that customers don't like. None of that stuff's in the best interest of customers. None of it. That's all financial engineering. And what we want to do is be in a situation where we're talking about what would be something customers would like and appreciate. How can we evolve our business to be more compelling to customers? That is a lot more fun conversation and business to be involved in. And at this stage of my life, and I know I'd speak for Eric and Jamie the same way, it's like, it's awesome.

1:16:01It's great. What do you think customers want? You're going to ask that. If I had the perfect answer, we would do that. I think part of it is how it all works together. And you can see this, Lauren, from where you said how all the different companies are trying to figure it out, but it's the ecosystem of how the convenience of online, the transparency of online is combined with the physical store experience. Because everyone that's a pure play online player, that doesn't work particularly well unless you've got the scale of Amazon. It really doesn't work for almost anybody that I can think of in our space.

1:16:40But even Amazon, what are they always trying to do? They're talking about opening up physical stores and having these spaces because, like, for example, for us, the large majority of online returns that we take, we take at a store, not because we force people to do that. They just find it more convenient. They're like, oh, man, I don't want to deal with the post office. I don't want to go to the UPS store. I don't want to leave it on my doorstep. I live on my way to work as the whatever mall, and I'm just going to drop it off there. And so a good guy for us is that creates a trip to a store, and it creates...

1:17:14again, a reason for being about a store. And the other thing a store does that online does not do as well is discovery. Bumping into something you had no expectation of wanting or considering, but you bumped into it, you saw it in a store and it's compelling and it caused you to stop and try it on or something. You know, if you're just searching for stuff online, like let's say you're looking for a black dress, you're going to a Cajun, are you going to scroll through 6 ,000 pages of black dress to discover the one you want? Like no way. So to do a curated thing in a store, that might be a much better alternative and perhaps a more enjoyable one.

1:17:53And then the last thing I would say is there's still a huge swath of the consumer that wants to have that physical experience. They like the tangible aspect of a store, the aesthetic of it. They like the social part of it. They, the discovery there's they like it and so our thing is let's do both let's have convenience let's have that ecosystem let's have the high touch thing i mean let's do katherine bloom let's go full bore like with you know the dream stylist in-person experience and let's go with a transactional experience about i just want to buy this thing for 20 bucks and i just want it sent to my house.

1:18:34You're like, we're going to do both. That's the mousetrap. Yeah. So I want to ask big picture, but really quickly on the Catherine Bloom thing, because I thought that was a really interesting hire for you and obviously a great get. She is a very important personal stylist who worked at one of your competitors for decades and you were able to convince her that you were the right place for her to be. She's based in Los Angeles. And that Nordstrom local shop that you had on Melrose is becoming sort of her center of the world, which I think is really smart because most of the designer stuff you all sell is in Calabasas at the location there or near there.

1:19:19Well, yeah, Topanga's got a big offer in the South Coast Plaza. It's kind of those two places. Yes. And so for the customer who doesn't go to those places and really does shop on Melrose or would like to be closer to West Hollywood, it creates this new opportunity. But why was she an important hire for you? And what do you think at the high end level, the personal stylist and the one-to-one shopping experience means for stores today? well i think it goes back to this idea that um if you're open to it uh and you're curious about what good looks like at other places that you want to figure out how to get that in your store so i mean you heard me talk about the jeffrey thing and then katherine thing that was that's the most recent version of that i mean and i know katherine because we went to high school together so oh that's funny i didn't know that yeah she's much younger looking than i am that's awesome but so and we'd stayed in touch over the years because i would see her like in market you know she'd be at the whatever fashion show sitting there and i'm there and it always just kind of freak the neiman's people out because um we talked to each other and like maybe we'd go have dinner or something oh my god what's she doing talking to beat but she told me a long time ago i'd ask hey you should work for north and be great she goes you know i neiman's a tree treats me really well.

1:20:46I have a huge business. They've got everything that my super wealthy customers want. You don't carry all this stuff. I'm staying here. And like, okay. And so we never talked about it again until all the issues that kind of came up now that have a negative impact on her. And I think, you know, when those two companies merging together, the unintended consequence of that is it probably was disruptive or continues to be disruptive for salespeople and people work on the floor and the flow of inventory, all that stuff. I mean, I'm not telling anything you don't know, or the general public doesn't know, but I think at a certain point she lost confidence in her ability to be able to serve her customers well with that.

1:21:27And she was open to Nordstrom. And so basically we started talking about it here and there was like, Oh, I don't know. I don't know. It's going to cost us money. We're going do this, we're going to do that. And what about our other stylists? We don't do that for them. And I don't know. And I go, you guys, you're thinking about this all around. I think we got to approach this, like what wouldn't we do to get Catherine Bloom? I mean, she is a huge difference maker, not only just for, first of all, a bunch of new customers she can lift and shift over to our business, how to do personal styling in its absolute, you know, most excellent representation of that and her credibility with the brands we do business with who know who she is and if she's on our team that is a big feather in our cap and it's a competitive advantage so what wouldn't we do and so that's how it started and Catherine was great and we figured it out and she started and I it got it sent some shockwaves through the business but that was a proud moment.

1:22:32And it's, you know, so far so good. She's, I mean, she's a lovely person. I don't know if you know her, but she's, she's great, easy to get along with and, you know, work with people, love her and customers love her. By the way, you brought that up. Um, you're in LA. Do you want to go visit her there? Do you want to see what she's doing there? I, yeah, I would love to there. They had an event. I think you all did an event where, when she first came to welcome her and I was out of town. Yeah. Well, we're going to have another event because there's work still being done that place. But even if you wanted to be there, just you want to go in and spend some time with Catherine or maybe the next time I'm there, you know, I can meet you there and introduce you to her.

1:23:11And I'm first, she's lovely. I think you'll find her really fascinating how she does her thing. But to me, again, it represents the spectrum of what we do. She's, she's selling the richest people in the world, the most expensive stuff in the world, full stop. And she also has customers who live a modern life that wants Nike or Skims or these things that you can't really get at some of those other pure play places. And so in a lot of ways, her customers are really happy. They're able to get everything they want and some things that was harder for them to get through Catherine. And Catherine's happy.

1:23:49she's got a bigger closet to sell from so to speak yeah um yeah so that's that's what that was about it's just it's part of our hopefully something we've institutionalized is just our quest to keep going and so if we can add katherine great if we can add some like ricky de sole to our team great we're gonna do it if we can add olivia kim to our we're gonna do it yeah i'm i am too i mean these are great people i mean ricky is amazing i'm she's myself every day i get to talk to her about, you know, being on her team and what she's working on. She's terrific. Yeah. She's so great. Very hard worker.

1:24:25Yeah. She's, she's serious about what she does. I mean, she, she, she definitely is into it and wants to show up well. So tell me, I, I will let you go at some point. Two more questions. Okay. One is you were talking about all these people who you've brought into Nordstrom and that have been, you're very curious. You mentioned curiosity. You're a curious person. You clearly, it's important. You said institutionalizing change, essentially. You have this podcast you've been doing for a couple of years, right? You were very kind and had me on last year or earlier this year. I don't even remember at this point, but it was, I really enjoyed chatting with you, but I think you've had a really interesting mix.

1:25:11You'll have Tory Burch on, but then you also have on Catherine or someone who does something very specific within the business. And I feel like I'm sure you get a ton of customer feedback, but what has having, because a lot of brands launch, launch and retail, I don't know if any retailers, but a lot of brands launch podcasts. And like, I think people really listen to yours. Like they they care about it and become a part of their sort of media diet. And also, like, what has it taught you about the industry? And and as you all make all these changes in the world around you is changing, has it been a good way to sort of, you know, compile anecdotal evidence or what have you?

1:25:57Well, first of all, I got to tell you, and I'm not just saying this, but when you said at the end of one of your recent newsletters that I have a genuinely good podcast, I think those were your exact words. That made my day. It's true. It's very true. Well, you're nice to say it because when you do this thing, it's hard to tell. I mean, there's so many choices out there for people with podcasts. I was like, why isn't this bigger? I mean, it's a competitive space. And for you to give it some credibility was really nice. So I appreciate that. But I don't know. I mean, part of it is I'm doing it on my terms.

1:26:31So I talk to guests I want to talk to about subjects I'm interested in. I'm not the paid host, just interviewing. I'm not a professional interviewer. I'm talking to people I know, or I have some reason to talk to because we're in the same business or something. um so i i think for our for the business what it hopefully does is i think it just lends a a view into what we do and how we do it and why and so you know people like shopping with with a company that i think they feel is run by people and there's a humanity to it and to the extent I'm able to be transparent enough that people feel like, wow, I think I like the sounds of what they're doing and why they're doing it.

1:27:24They meet people, whether it's Catherine, whoever's on our team, like, wow, that sounds like an interesting person. Maybe I should shop at Nordstrom. I mean, if you just can get anybody to feel compelled to shop with us based on how we come across and that, I think that's great. I think in the industry, it's helpful. If, if particularly if I have guests that are, have a lot of clout or authority or credibility, I think that reflects well on us. I can get people to come on, you know, getting someone like Anna Wintour to come on and be in the show. That's, that's not a trivial thing. It comes up all the time because I can't believe you got Anna Wintour.

1:28:00Like, you know, I know her, she was willing to do it. And that was awesome. Yeah. So I don't know. But the last thing I'd say about it, and this is self-serving, but it's taught me how to be a better listener. I think it's helped me stay on the forefront of the curiosity. And I mean, I think if you've listened to the episodes, you know a big theme for me is I'm really interested in the entrepreneur story, people that have created something out of nothing. I'm super inspired by that. And I love hearing stories of success that come from a real grassroots place. and we're a big company that I don't want to lose the feeling of what that is, of what it takes to kind of earn the business.

1:28:43Like someone said to me recently, it was Kenneth Cole said to me recently, I'll give him credit for this on episode I did with him. He's such a good guy. I've known Ken a long time, but something like we have the right to be considered, but you have to earn the right to be chosen. And that has really stuck with me. And so hopefully what I'm getting through interactions like this with different people is I learn stuff. I don't have to invent all these things, but if your antenna's up and you're listening, you're learning, and you're curious about stuff, it's practical and helpful for me in what I do.

1:29:21So I've benefited a lot from it. Final question I'm not going to ask you to comment on all the disasters and non-disasters happening in multi-brand retail in the u.s. Right now But I am curious to know How do you think the current situation? Is gonna net out like do you think and i'm talking about nordstrom, too Do you think that we're gonna live in a world where there are fewer physical stores? Do you think? That more brands are gonna go away I hear about smaller, you know, multi-brand boutiques that have just a couple locations are expanding right now. On the other hand, it feels like many of these retailers are overstored.

1:30:06Like, what do you see happening in terms of, because I talk to brands every day and, you know, they don't know, they're afraid to sell to a lot of multi-brand retailers. They're nervous. I have a friend who has a sandals line and she will call me and be like, do you think they want to do a$500 ,000 order? Do you think it's? And I said to her, I think when the matches thing happened, I said, look, I think you're just going to have to bake into your business model that this is going to happen every couple of years because it keeps happening and it's been happening for the last decade. But just more broadly, like where do you think the market is moving?

1:30:46And do you think we're going to see more consolidation? Do you think we're going to see more brands go ending? Like what, what do you think is going to happen? And how does Nordstrom, how does Nordstrom fit into the, the new ecosystem that will emerge? Cause they're stores are not going away. Like, like you said, it's, it's just that they are changing. The need for them is changing. Well, somewhat reluctant to answer that cause I don't want to display hubris. Like I know everything that's happening and where it's all going because it's not an easy business. And, you know, we've had our own share of tough endings and stuff, too.

1:31:26So I don't know. I mean, I think it's I yeah, I think there'll be consolidation. I mean, just if you look at the Sacks and Neiman thing, I mean, I'm hard pressed to believe there'll be this equal number of Sacks and Neiman stores, physical stores, X amount of years from now. I mean, I think just for practical sake and efficiency, particularly if you only have one buying group, why do you need two different nameplates in the same market? Like, I don't, I mean, that seems logical, but I guess we'll have to see how that all, I'm sure if you had Mark, I need a bit of a different answer for that. And I guess we'll see.

1:32:03But the way we tend to think about it is that represents an opportunity for us because they're not all going away. There's always room for the best of anything. And if we can be the best of what we do, then there's room for us. I don't know. Bloomingdale's, Macy's, Saks, Neiman's. I mean, that's really, and us, that's really kind of the group. I mean, there's others, obviously, but those are the big guys. I don't know. I think it's tough. If you're a public company, you don't have a growth story to tell, it's going to be tough. I know that from firsthand knowledge. and you know if you can't figure out a way to make whatever it is you you do relevant and appealing to young customers so you have a customer acquisition strategy that's going to be tough too um so our thing is be the best of what we do let's be the best possible partner for brands so if they need one we're the one how can that be the case and you know opportunistically this is a really good moment in time for us because of the uncertainty at other places.

1:33:10It's again, it's just, it is what it is. And we're leaning into it. And I have a lot of discussions with brands about, look, we don't need to have an exclusivity or anything like that, but we want you to have more eggs in our basket. I mean, we want, we want to be more important to you. We want to be more important to customers about whatever the best brands are. And that That could be a new discovery brand or it can be a brand with heritage that, you know, everyone just loves and everything in between. So I don't know. It's not a very pithy answer. I'm sorry about that. But we have a sense of optimism about our ability to carve out our place in multi-brand retailing and hopefully be best of class.

1:34:01That's the goal. Wherever that takes us, you know, in the next several years. Pete, you're definitely best in class. Thank you for doing this. Hey, it's a fragile thing, man. There's superstitious people out there that'd be like knocking on wood and stuff. But I mean, you got to go out and earn it every day. That's all we're focused on. I mean, if anyone leaves the conversation with anything else other than that, it's like, look, the humility has been beaten into us in this. We deal with it every day. And we've seen businesses that we really admire, like Barney's and some go out of business. Like, man, if Barney's can go out of business, geez, I mean, you know, we all have to be on our toes.

1:34:39So we're just trying to do our thing. That's all. Thank you. Well, thank you. That was fun to do. It went over time, but I enjoyed it. It was so fun. Fashion People is a presentation of Odyssey in partnership with Puck. This show was produced and edited by Molly Nugent. Special thanks to our executive producers, Puck co-founder John Kelly, executive editor Ben Landy, and director of editorial operations, Gobby Grossman. An additional thanks to the team at Odyssey, J.D. Crowley, Jenna Weiss-Berman, and Bob Tabador.