Pete Nordstrom on the Enduring Power of Retail’s ‘Best Mousetrap’

0:04Pete Nordstrom: Hi, this is Imran Amed, founder and CEO of The Business of Fashion. Welcome to the BOF podcast. It's Friday, March 6th. This year marks the 125th anniversary of Nordstrom, a company that began as a small shoe store in Seattle founded by a Swedish immigrant and has grown into a$16 billion retail juggernaut. At a moment when the American department store sector is under enormous pressure, with bankruptcies, consolidation, and changing consumer behavior reshaping the landscape, Nordstrom has taken a different path. Last year, the Nordstrom family partnered with Mexican retailer Liverpool to take the company private, a move Pete Nordstrom says allows the business to move faster and focus on the long term.

0:53Pete Nordstrom: Pete began working in the Nordstrom stockroom at age 12 and has held roles across merchandising, buying, and store management before becoming co-president alongside his brothers. Pete remains sanguine about Nordstrom and the future of department stores.

1:11Imran Amed: It's the best mousetrap. We've got the ability to have a curated breadth of offer. We have the ecosystem of online that's integrated with the store. And then there's scale. If you're big enough, you can be the first call for those brands. You can create enough scale and leverage to make your digital business profitable. We think we offer a good solution for a modern customer and how they shop.

1:37Pete Nordstrom: This week on the BOF podcast, Pete Nordstrom joins me to discuss the company's 125-year history, why he believes the department store model still works, and how taking the company private is shaping Nordstrom's next chapter. Here's Pete Nordstrom on the BOF podcast. Pete Nordstrom, welcome to the BOF podcast.

2:01Imran Amed: Thank you for having me.

2:02Pete Nordstrom: It's such a pleasure because I know you have your own podcast, which I've listened to on occasion. And I've been trying to figure out when's the right moment for us to have you on. And this feels like a really good moment for two reasons. One, it's the 125th anniversary of Nordstrom. Congratulations. Thank you. And two, there is a lot of conversation in the industry right now about department stores, their role in our industry, their role in customers' lives. And so I want to cover all of that today in a short period of time. Sure, let's get into it. But I want to start with Nordstrom as a family business.

2:44Pete Nordstrom: And for people listening in Jakarta or Johannesburg or Jaipur in India who aren't familiar with the storied history of Nordstrom, can you just tell us very briefly the history of the company that bears your name and the name of some of your family members?

3:05Imran Amed: Well, like I said, it's 125 years old, which just because you're old doesn't mean you're good. I mean, we've talked a lot about there's a difference between being a heritage company and a company with heritage. And I think for us, and this is grounded really in the culture that the company always has, trying to be a modern and relevant place. So leverage that heritage in a way that allows us to go into the future and evolve. So the business was started by my great-grandfather, who was a Swedish immigrant. It was kind of the typical American immigrant story. You know, came to this country at 16 years old with, I don't know, 20 bucks in his pocket or something.

3:41Imran Amed: He basically worked his way across the country.

3:44Pete Nordstrom: Not this country, though, right? Because we're in France.

3:45Imran Amed: Yeah, I should say it. We are in France right now. He came to the U.S. to be more specific. Yeah. And he worked across the U.S. doing manual labor stuff. I mean, he couldn't speak English. He didn't have any education. So he was he was a logger and did kind of manual work. And he ended up from Sweden to Sweden. Yeah, he was he was raised on a farm.

4:09Pete Nordstrom: Yeah.

4:10Imran Amed: And I think he felt like there's there was no future for him other than tending the farm. And I don't think that was very exciting to him. I think he had a few siblings and stuff. It was like, yeah, I need to go. and it was just again it was a typical u.s immigrant story willing to work hard and make his way and so he's doing manual labor kind of stuff and he he ends up on the west coast i think in california um doing logging and then at that time the alaska gold rush the klondike gold rush was on i think he read about in the paper says well i'm gonna go do that so he ends up getting to Seattle and getting provisions and stuff and getting on a boat and going up to the Klondike.

4:52Imran Amed: He had one, he was there a couple of years. He had one winter was so harsh, he had to eat his horse. I mean, you know, it was rough. Wow. And, uh, but he ended up getting part of a claim that ended up being a fairly significant claim. But I think his take on the whole thing was$13 ,000, which in those days, a claim meaning a claim to a gold, you know, they, they, they found gold in one spot i think what happens is like you stake a claim for the area this the finite area where they found it and whatever comes from that you get it so i think he was part of it and he sold his part he got the email he got thirteen thousand dollars which is like hitting the jackpot well i think for him that was a big deal so he bought a small farm he got married um he there was another swedish immigrant there he knew who was a shoe cobbler and he says we should start a shoe store my great-grandfather knew nothing about shoes other than well people need shoes that seems like a good business like you know has some longevity to it some consistency to it and um they started a small shoe store in seattle and it was called wall in the nordstrom and it was that way for i don't know 10 15 years and he bought out his partner and then um he had three sons and a daughter his three sons wanted to get into the business and i think this time they may They had two stores in the Seattle area.

6:16Imran Amed: The sons bought out the business. The business was like during the Depression, so that was tough. But there's three of them, so they needed more stores to be able to sustain them. They grew that business from, I think it was the late 20s through the early 60s into what was, in the 50s, it was the largest independent shoe store in the country. It was in Seattle. It was Nordstrom. Only shoes. Only shoes. We were only in shoes for the first 60-some-odd years of our existence. And, you know, they had a handful of stores around the Seattle area, I think. They had a handful of stores in Portland, Oregon.

6:55Imran Amed: Still not a really big business. They bought an apparel company, of which there were two stores. I think it was Seattle and Portland. It was called Best Apparel. And that was in the mid-'60s. and then that's when my dad's generation started getting involved and so you know there's four of them there's more ambition they wanted to be more than just the great shoe store in the seattle area okay they had the apparel the the second generation nordstroms of which there were three wanted to retire but everything they had was in the business and the business wasn't big enough to support them in the retirement and then the people in the business.

7:38Imran Amed: And so the choice was either they're going to sell the business or they're going to take it public. So, you know, they can create some equity. And my dad, his generation, decided to take the company public. And that was 1971.

7:54Imran Amed: And then just there was all kinds of growth from there. And it was really organic growth just across the country. It's like, okay, we'll build a store, you know, the next town away from Portland or Seattle, and they just started expanding gradually. The first big move they have is they built a store in 1978 at South Coast Plaza in California. That was the first, like, okay, now we're in the big time here, we're in California. And I remember that, you know, 16 years old. I remember being at that store opening and how nervous my dad and his cousins were because it was a big bet. um and on the opening day in those days they used to do like a ribbon cutting and stuff and so the mayor of the town was there and the press was there and there's a ribbon and so there's this little presentation happening before the store opens but there was no one else there and so someone went into the store and said all employees come out and act like you're the crowd.

8:53Imran Amed: And so, Bear's getting a lot of applause, a lot of enthusiasm for this. They cut the ribbon, the doors went up, everyone goes inside, it goes to their department, and there they were. And I remember, it started slow. There weren't many people coming in first thing in the morning, but of course the day it got really busy, and it was pretty much an instant success. And so, that became the catalyst for, like, we can expand this. And if you think about mall culture and retailing in the 70s and 80s and 90s. It was like there was new malls being developed. They needed anchor stores. We were kind of like the new sexy store and they just went across the country.

9:31Imran Amed: And that was the whole growth plan. I mean, there was only one way of doing business then. There was people that made wholesale products. There was retailers that sold them and they sold them in physical stores it was there was one play to run yeah and my dad and their generation they deserve a lot of credit it was took a lot of guts to grow the business but there was kind of a blueprint for what that would look like and um they're the ones that really established this idea that the point of differentiation differentiation had a lot to do with service which has become a big part of what our reputation is and folks on the customer and then that took it you know really until we came along i mean i started selling shoes when i was 16 years old i was in the stock room when i was 12 it was a summer job was it inevitable that

10:18Pete Nordstrom: you would join like or did you know did you make a decision at some because it's you know that's like i don't know maybe give us a little bit about what it's like to grow up in a family business and like kind of navigating this choice as a young person about how much how much of your identity and your professional kind of purpose gets linked into your family business and how much of it is like well no i want to do my own thing like i i love what my

10:46Imran Amed: family's built but it's a great question uh well when i was young i mean i think most young people aren't like young boys or I want to be a retailer. I mean, that wasn't what I was thinking about. I really like sports and I'm tall and I played basketball. If you would ask the 12 year old Pete Norchman what he was going to do, I said, I'm going to be a professional basketball player because those are big dreams and ambitions that young people have. I like basketball. I was pretty good at it, but I wasn't good enough at it to get paid. And that became clear as I got older. I started thinking I don't know really what I want to do but I worked there in the summers because it was the job I could get and my dad thought it was important that we worked he goes I'm not going to buy you guys a car when you turn 16 I'm not just buying you something you want to earn money here's an opportunity for you to do it so I went where I could get a job and it was a good job you know a teenager working in a store like ours and you know selling selling shoes and so I turned 16, I was able to buy a kind of a crummy car, but that's okay.

11:48Imran Amed: It was great for me. And so it was a means to an end at that point. There was no expectation from our family that you need to start doing this because you're training yourself to be the president or CEO. That never came up, ever. My dad and mom were like, just wanted us to be accountable people that worked hard and were productive. Yeah. So both my brothers and I, we all ended up in the business. But again, even if you'd asked me when I was probably 19, 20 years old, I don't know that I would have told you I was going to, I would have probably said I was going to be in business of some sort, but I didn't know what that meant.

12:26Imran Amed: I went to the University of Washington. I was an English major. I don't know. What am I going to do with that? You know, but I was working at the company still during the summers. And by the time I was 21 or so, I thought there's an opportunity here. I mean, And I admire my dad. I saw what he was able to do. I felt like he had a good life and he enjoyed what he was doing. And I like my family. I wasn't like, you know, I can't work with these people. That was appealing to me. And both my brothers were on a similar track. So that seemed appealing. And again, there was growth. There was things happening.

13:00Imran Amed: There was opportunity. I knew that if I did it, I had a chance to do something with it. But I had to do it. And I had to get started. I knew myself well enough that if I didn't get started, if I kind of screwed around for a few years, I might never, because it's hard work, I might never get back into it. And I just started. And I decided that anything that's a bigger job, anything that's a new job, they offered to me, I'm going to take it. I'm just going to go. And so, you know, my career trajectory, and I was an assistant manager in a shoe department, and I was a manager in a shoe department, I was a buyer in shoes.

13:36Imran Amed: shoes i got an opportunity to go to california i was a buyer down there i came back i'd be i was a merchandiser for shoes for multiple stores for women's shoes i am i became a store manager it felt like every couple years i had a new job and then i had opportunity to go to california i was in orange county well we're south coast and i was the regional manager in that area and then you know now it's in the mid 90s and my dad and their generation they're starting to talk about when they might want to retire what have you and at this point there was myself my two brothers and i had three cousins and we're all pretty similar in age all guys and they decided to make us co-presidents of the company i mean i'm six of you six of us i mean i'm 35 36 years old wow And I thought, well, I've had a ton of experience.

14:32Imran Amed: I know what I'm doing. You know, looking back on it, that was kind of a bold step. I mean, we were all within a couple years of age. And so the idea is my dad and his cousins became like on the board. They were more like in the chairs of the board. And they hired a president or CEO of the company. He was the first non-Nordstrom CEO. But he had the unenviable task of kind of being caught in a Nordstrom sandwich. which, I mean, his bosses were our dads, and then there's us. You know, our dads thought we were pretty great. I don't know how great the CEO thought we were. And then the business started to have a lot of challenges.

15:11Imran Amed: And our responsibilities, they would give us different responsibilities, but we all had a merchandising area. So, like, say I had women's apparel or something, and they gave us a region. Let's say I had Southern California, and they gave us an operational area. Let's say I had HR. And we would change that up occasionally, but the six of us had to work as a group. And as you can imagine, it was cumbersome, a little top-heavy company at that time. And then business started to get tough.

15:42Pete Nordstrom: What were the challenges that you alluded to right now? Give us a sense of what was happening in the market. Why?

15:48Imran Amed: I, we had kind of, um, we'd gotten to a size and a scale where it was difficult for us to create leverage in the business because everything was done in a very decentralized way. We didn't have systems. You know, when you get bigger, what you, you do is you scale and create leverage. We just, we had to spend a lot of money to get bigger and more and more people.

16:09Pete Nordstrom: So while your revenues were growing, your cost base was growing as well.

16:13Imran Amed: We were an attractive stock because we had growth, but our profitability was just kind of okay. And it was just everything was in the name of sales, sales, sales, sales, more, you know, grow, grow, grow. And that served us really well for a long time. But we were, at this time, we're now kind of bumping into, well, we're in most of the markets in the U.S. We're a pretty sizable company now. What year is this? This is like late 90s. Okay. So pre-e-commerce. Yeah, it's just starting to bubble up. And so you could tell there was opportunities to grow, but the business had to evolve. And so when I talked before about there was only one way of doing business, there were brands, there were retailers, there were customers, there were stores.

17:00Imran Amed: Now what you're seeing is the emergence of verticals. So brands became retailers. So they're starting to sell direct to customers. and then you had the verticals like the gaps and stuff. And so all of a sudden department stores didn't have the same, there wasn't the same need for a department store that was before. There was more competition, I'd say. There was more choices for customers how to buy things.

17:23Pete Nordstrom: Yeah, this idea of the department store being the one-stop shop where you could find multiple different brands across multiple different product categories. All of a sudden you have shopping malls.

17:34Imran Amed: Yeah, and you could still do that, but you had choices, right? I mean, you didn't have to go to the department store. So that put pressure, I think, on the business. And I think there was just the natural growing pains of a company that had a really successful arc and then kind of bumping into a maturity, which you see all businesses have. They have to figure out how to evolve. So this is kind of a long story. So the person that was the CEO ended up getting taken out of his job. So, you know, and we're a public company, so there's no entitlement program just because your name's Nordstrom, you get to have the job.

18:11Imran Amed: So the board was like, OK, we got to go find a CEO. And my dad and his cousins are on the board, but they don't completely control it because we didn't have like voting shares or something that gave us majority. It was just it was common equity for everybody. And I think at that time, you know, my family may be owned in the high 30s, mid 30s percentage of the company. So I remember my dad and those guys, they were interviewing different people. You know, the person from Macy's, the person from Neomarcus, the person from SACS, all these different people. And they were bringing them through. And at one point, and then my cousin, so there were six of us, a couple of cousins said, I don't want to do this anymore.

18:53Imran Amed: So it ends up getting narrowed down where it's really just me and my two brothers. And this was all kind of happened naturally. Nothing bad happened. There was no big dust up. People quit on a court, which actually worked out great. There was no drama really as far as that went. But then we said, well, we'd like the opportunity to run the company. You and your two brothers. Yeah, and the board's like, yeah, I don't know about that. And then they finally said, okay. And so they talked. They said, we're not going for this co-thing. Like your, your dad's generation, they were all like co-presidents and we're not going for that.

19:31Imran Amed: So someone's got to be in charge. And, and so they put Blake, Eric, and myself, they said, you're going to have this opportunity, but I want to be clear about something. First of all, you're not entitled to be here because what your name is. If it doesn't go well, you'll be gone. So if that, you don't like that, now's the time for us to get clear about, but that's how this is going to go. And I didn't, we found that as kind of like motivating, not as a bad thing. And, you know, we were like, yeah, we're going to get this thing going. And so we sat in a room. I couldn't have taken more than about 10 minutes.

20:03Imran Amed: Okay, Blake, you're the oldest case. So you're going to be the interface of the board. You're going to be the president. Pete, you're the guy that's mostly been involved with merchandising stuff. So you're the merchant guy. Eric, you got stores. Okay. That was our, and we did that. That was that way for, you know, 10 years or so probably. But we did operate as a team. We had different titles. But the way we operated, and I think if you ask anyone in the company, it's like, well, I don't know. They're kind of interchangeable in terms of outcomes.

20:30Pete Nordstrom: So according to the board, you all had these clear responsibilities. But when it came to the data—

20:34Imran Amed: And we did have direct reports that lined up that way. But I think in terms of strategically how decisions were made, we were a group.

20:41Pete Nordstrom: And in that 10-year period, what changes or strategic shifts did you and your two brothers enact to deal with, you know, that 10 years from the late 90s to the early aughts, late aughts? That was a big change. Yeah, all the online stuff came on board.

21:01Imran Amed: So we had to, and there's no blueprint for any of this stuff, for any company. Yeah. So we had to figure out how to get the company healthy. and a lot of that just had to do with creating some clarity and focus around the differentiating factors and you know i talked about service before and that was we really leaned into that um we we tried i mean i running merchandising i talked a lot about we want to be as well known for merchandise as we offer service which was a good rallying cry for the merchandising division so we we had our thing going but then we had to figure out the online deal and i think But luckily, we decided to try to do an integrated approach to how online works.

21:43Imran Amed: You remember back in those days, people say, okay, we're going to create the online division, then we're going to spin it off. Early on, we decided to have one view of inventory. And so the access across both those channels, online and stores, was seamless, which made it kind of seamless for customers. So it allowed us to expand into that frontier of online in a way I think that was better for customers. It didn't feel cumbersome. as cumbersome perhaps as it would have in other places but that was just pretty much luck no one

22:11Pete Nordstrom: knew well it's kind of logical from a customer perspective yeah it's nordstrom like i don't care if i'm dealing with nordstrom online or nordstrom in seattle or nordstrom in um south coast plaza like for me it's nordstrom so to try to separate those two things even from a customer perspective felt i never really understood the strategy to do that but then also thinking about having a shared inventory all of that we know now is really important um because you want

22:41Imran Amed: that inventory yeah i just don't want to pretend like we knew something other people didn't i mean we did have the center of gravity around what however this works for the customer is what should drive the those strategic decisions i think to your point no customer doesn't care about all this back of the house stuff they just want what they want and they want to be convenient and seen what so that drove our decision making and we did well um we continue to grow and expand and i can't remember how much the business was when we started was maybe a five billion dollar business and it's a 16 billion dollar business now so we we figured out even though we didn't have a big runway about more full line stores we did have this online part of it and then we had the rack part of the two which is this whole story about how this all works together but we had an ecosystem of how it all worked and we did pretty well and so after several years of doing that job as i described it we were all named co-presidents and we all did at equal pay we had at least in the view of the public and the board was like okay these guys are equals and that was a great run too we and i'm you know i love my brothers and it was super gratifying working with them and we got along well and we're different people but we figured out how to you know three of us was better than one of us and we could leverage that we could divide and conquer in a lot of ways that was helpful yeah and none of us were trying there was no it was no competition wasn't like i'm fighting for the ceo job and i'm gonna show these guys i'm better than that guy we we trusted each other because we needed each other and that's the way it went and then my brother my older brother died unexpectedly a few years ago.

24:27Imran Amed: And that created a moment for us. And I think, you know, for the board, they kind of felt like, well, Blake's the guy. He's the guy we interact with most. I don't know about Pete and Eric. We might have to go outside and get some other leadership. So we kind of had to sell ourselves all over again. And then, you know, the future department stores looks kind of tough and you know we're a public company and when you're a public company your market cap or market value has a lot to do with the sector you're in so we may have had good results or whatever but we're still considered a department store and you would know this the multiple of department stores is kind of less and less and less and we're pressured because it didn't have that growth arc anymore you know when we were a young company we were growing like crazy because they're opening stores yeah and now it's like well now what are these guys going to do They've got all these existential threats just because, again, how competition has changed, how online has changed.

25:26Imran Amed: And we went through that a few years. Well, physical stores aren't going to be around anymore. It's like a bunch of dinosaurs trying to run a department store. It's all going online. Well, you know, so we're trying to figure that out and navigate it. And then we ended up at this place where, you know, the best mousetrap probably is the OmniView where it's a seamless thing where all the different touch points were there for a customer. And that's how we saw it. And I think that created a vehicle or avenue for us to go and build. And so, you know, Eric and I were running it, but the stock price was low.

26:03Imran Amed: We had tried to take the company private before, but we couldn't quite get it across the finish line. You know, it was expensive. We needed private equity money in there. That creates risk because you've got debt. You know, there's all that. It's complicated. And we said, we don't have to do this. So it ended up not happening. But, you know, a couple of years ago, it's like, our stock price is low. Our family owns a third of this. We don't have to borrow a lot of money to buy it. I mean, and we knew what our cash flow projections looked like. They looked good. It just wasn't a sexy business for people to invest in as a stock.

26:41Imran Amed: So you needed to find the right partner? Well, yeah. Yeah, I mean, we couldn't do it on ourselves because everything our family had was in the business. It wasn't like we've got this big family foundation with a whole bunch of money and, like, let's come in and do this. That's not how it was. We started thinking about we need a partner. We had considered private equity people. We went to the board and said, we think we'd like to try to do this. And let's do this out in the open so it's not like a surprise attack or something. It's like that. And the board said, okay. I said, but as a result of that, we're going to vet every choice.

27:14Imran Amed: Selling it? buying it, merging strategically.

27:18Pete Nordstrom: It's that whole thing, like we're evaluating our strategic options.

27:22Imran Amed: You got it. Yeah. And we never really said that literally, but that's exactly what we did. I think for us to have any credibility with the board, we had to, we had to have an openness to all of it. Yeah. So, you know, taking a company private is a complicated process. And I think what's important for us is we didn't have to do this. I mean, I've only ever worked at a public company. And if that's the way it was going to be for the rest of my career, that's okay. I think we saw an opportunity to do something for the long-term health of the company, but it was important that we did the process right.

27:56Imran Amed: And again, if it wasn't right for us, and if it wasn't right for the shareholders, we shouldn't do it. And I think where it all ended up was great. I mean, we got pushed hard to a higher price than we wanted to pay. and you know i i think the board felt like they had a and rightly so responsibly do the best they could for the shareholders and i i think what history is going to show is that that turned out to be a good situation for everyone a good outcome for everyone so and then it came along where uh liverpool which is a big department store out of mexico that's family run very similar to us shared values yeah i mean we didn't know these people particularly well we'd met them over the years um but they approached us and said would you mind if we invested in your company we said well that's sure that's fine but like is there some motive or other agenda here and they said no we just he says we're in the retail business we're a business in mexico it's nice to diversify and get your money out of mexico and so we generate a lot of cash we'd like to invest something we understand.

29:06Imran Amed: We think you guys are undervalued. We think you're a best in class retailer in the world. We'd like to invest in you. And so we said, well, do you guys want to run it? Are you trying to buy the whole thing? They said, no, we don't want to run it. We don't want to buy the whole thing. We're not interested in buying it if you're not going to work it. We're not going to want to run it. We got our own thing we're doing here. We're just looking for an investment angle for the excess cash for our business and our family. And so we were able to work out with them that we'd be 51 % and they'd be 49%. So I think one of the things people misunderstood about us going private and them being an investor is they're an investor.

29:46Imran Amed: It's not a merger. You know, most companies emerge and the first thing is, okay, we're going to have back of the house synergies we're going to be able to. That's not. We're going to like combine

29:54Pete Nordstrom: teams and reduce costs and all those management consultant words.

29:59Imran Amed: Which you could only imagine a cross-border would be next to possible anyway. Totally. But we have none of that. If there's natural things that come along, that's fine. But they have no expectation of it. We don't necessarily either. And so we were able to figure out a deal that worked for them, worked for us. And then we proposed a price. We made an offer. And as those things go, the offer gets rejected immediately. and so we went as far as we could and the board went as far as they could it was it was exactly a textbook way of how these things should go and then finally you know they voted to accept that and then the the shareholders overwhelmingly approved that and it happened and it was so weird and this was last spring we're on a conference call i don't know you know all these different lawyers and bankers and there and then they said okay here's the vote of the shareholders here's the deal okay congratulations in order to you guys own the company goodbye and it's like is that it i mean we own the company like yeah we own the company we often talk in our industry

31:04Pete Nordstrom: about the impact of public market expectations on the way companies are run and if you look at some of the big conglomerates like LVMH and Caring and the way those businesses are scrutinized. Even newer companies like Farfetch when it was growing and like the way, or Burberry, like the markets just really are so focused on like quarter by quarter growth metrics around revenue and profit. And, you know, I can see a certain value in that because there's an accountability that comes with that.

31:43Imran Amed: Of course, of course.

31:45Pete Nordstrom: But the luxury industry, the retail industry, you know, an industry now that has sustained a business with your name on it for 125 years, it's also great to think long-term. True. So is it true, Pete, that when a business is taken private that you feel now that you and your brother, when you think about the decisions you're making, are you feeling like you can take a much longer term perspective now that the investment analysts and you know public markets

32:15Imran Amed: are breathing down your throat i think we always took a long-term view i think what's changed is the clarity the focus that you can bring with this there's not multiple agendas to serve there's one agenda to serve and when you're a public company there's all these different expectations that go with it that that aren't always about the core business if you have customers you have price you're trying to sell them you're trying to sustain something here so i i think it's just provided clarity and with that goes speed and ease of decision making we don't have to run through real cumbersome processes to make strategic decisions i mean it's literally my brother and i and my cousin james like what do you want to do let's do this okay and then we do them and and we'll we'll have a a weekly call or monthly call with our friends at liverpool and say we we think we want to do this what do you think they say that sounds good they trust you well yeah i mean it's like they yeah i mean it's nice to be able to bounce things off them because they're retailers and they have a they have an informed opinion about stuff that is value but at the end of the day they invested us because they trust and believe in us and that's worked out i mean it's early days but it's worked out really well and so our business has been really good we We just came off the best year we've had, probably 12 years.

33:34Imran Amed: But it's not because we were pride. I mean, customers don't care. They don't know what that is. I mean, we have this podcast we're describing kind of the whole process. That's kind of an academic thing that's behind the scenes. Customers just want to show up someplace and get what they want and have good value and good experience. And so our business is better not because of the trappings necessarily that, but because of, I think, the way we're able to lean in with more energy and focus around customers in that proposition.

34:02Pete Nordstrom: so that is an amazing segue because you know you've mentioned service a couple of times at being kind of the core of Nordstrom's success for 125 years I just want to break that down a little bit because if you talk to customers they say the same thing it's like there's something about the way the company is run where the customer is really at the center which is probably why although you don't want to take credit for the decision to keep the one inventory in one base well we'll take credit for it but a lot of it was luck that thinking of like the customer first you know if you were going to explain it in like a harvard business school case study which i'm sure there will be one if there isn't one already like how what is that nordstrom customer service motto i think of companies like four seasons you know these like customers these companies where the there's almost like a manifesto around the way the customer or the guest is treated can you

35:13Imran Amed: just encapsulate that for us well again i think if you approach the business from a merchant point of view, I think that becomes a little clearer, more obvious. You know, we were raised in this business, selling shoes and doing all that and having that experience. It informs every decision you make. We don't come at it from an academic point of view or like a finance point of view, or we're trying to create a lot of financial gymnastics to create some other outcome. That's just not what we know how to do. So, I mean, I think the purity and clarity of our focus on what makes a successful retailer is perhaps different.

35:55Imran Amed: If you look at most people we compete with, they may be run by a real estate person or a finance person or they've been sold and bought or whatever, they've merged, they've consolidated. We don't have those things. I would say what's clear to us based on, and this is based on experience, is that we don't determine what good service is, customers do. And it's hubris to feel like if we're sitting there and we define what good service is, and if you think about just in our lifetime of how the business has evolved, good service was measured 25 years ago by the most high-touch thing you can imagine.

36:34Imran Amed: You mentioned something like Four Seasons. That's a very high-touch, you know, quality experience that's very human. But if you ask customers about what they value in service, it's changed over this last 25 years. There was always polls about who's the best service provider. And we were always on these lists. Well, we noticed our name started to go down the list. We're still on it. But all of a sudden you saw all these digital people, Netflix, Amazon, people like that are up at the top. And so why is that because customers value speed and convenience and the high tip so our thing is like we've got to be able to do all these things we can't say oh that whole speed and convenience thing is not what we do because it's that's not important what's important to us is what customers value and so our ability to be able to flex into whatever a customer need state is is what's going to ultimately make us successful i mean if you come into our store and say look i i don't have time for a big high-touch thing.

37:34Imran Amed: I just need to buy a gift for my mom. She likes this thing. I know what it is. I'm going to buy it. I want to go. That's one thing. Or if you come into our store and say, oh my God, I've gained 35 pounds and I'm going to my high school reunion or something. I need something new to wear. I mean, I need to try some stuff on. I need some input and some help with this. That's a different thing, but it's all, it just, it's, customers have different need states at different times. And if we can meet them where they are, then we're onto something here. So I think our ability to approach it with more humility about how good service is defined and that the customer makes that choice and not us is liberating and then creates clarity.

38:20Your other competitors are independent retailers.

38:25Pete Nordstrom: You know, I know we think about Nordstrom alongside, you know, Saks and even Marcus and Bloomingdale's and, you know, other, other department stores. But there are a whole host of independent retailers, which actually, that's where I love to shop nowadays because I go in there and I feel, yes, speed and convenience and all that stuff is important. I also like something that feels personal, human, curated, and special.

38:56Imran Amed: So give me an example when you talk about retailers that you like.

39:01Pete Nordstrom: There's a retailer in, oh no, you're asking me the questions. I love it. There's a store called Mookie Moo in London on Chiltern Street. Okay. And they recently, incredibly well curated by a very, very highly respected woman named Maria Lemos, who actually had a showroom of young brands and has an incredible eye. Right? Because when I go to a store, I want to discover new things too. I want to find things. Like for me, retail is an experience of, yes, shopping and transaction, but also discovery and inspiration. And so when I walk into it, Mookie Moon has opened a new men's store just down the street from the original store.

39:44And I walked in there recently and I was like, wow, I've missed this kind of experience.

39:48Pete Nordstrom: Because the challenge with a lot of department stores, frankly, is you go in and it's the same brands. and it's the same type of merchandising and the same adjacencies and the whole, they can feel a little interchangeable. So how does Nordstrom compete with that special experience?

40:07Imran Amed: That's a great question. Well, first of all, it's not easy because you're right. The best stuff's kind of the best stuff. And so there is going to be a lot of common things there, but there's a difference between what happens online, what happens in a store. In a store, you have to have an edited thing. It's not an endless aisle because you can't fit everything in there. And our stores aren't giant. But online, selection is really king. You kind of do need the endless aisle. So you have to figure out how to do both. I think curation is really important. But it's all part of a recipe that there's a lot of ingredients to go with that.

40:43Imran Amed: I mean, there's the service element. There's the curation element. There's the speed and convenience element. There's all those things that go in there together. I think for us, to answer your question more specifically, and you use these words, but there's a balance of relevance and inspiration. Relevance would be the stuff you would expect to find at a department store. Like, look, I need underwear or I need to buy a pair of jeans or something. I know these guys have this stuff. I can get it. The inspiration is the discovery part of it where you had no intention of buying that sweater, but you saw it and like, that's awesome.

41:17Imran Amed: I'm going to try that on or someone maybe recommended or suggested or brought it into you in the dressing room. That's where the magic really happens. And we need to be able to do both well. We need to be a dependable, relevant, modern place. But we also have to be a place that has discovery. So it forces us and our merchandising teams to continue to evolve and keep going. If we look at the top 10 brands 10, 12 years ago, they're pretty different than today. Things do change. What are the top brands today? Our top brands? Yeah. I guess I can say that. We're a private company now. Number one brand last year at Northam was Chanel.

41:59Imran Amed: But that includes beauty. The majority of that's fashion, but beauty is a sizable, sizable chunk of it. What's our number two brand last year? I think it was Ugg. And we sell so many Uggs during holiday time. It's kind of remarkable. Number three might be Nike. Our own label is in there. It's an interesting mix, right?

42:24Pete Nordstrom: Chanel, Uggs, and Nike. You kind of get a sense that you're catering to a customer that has so many different needs.

42:31Imran Amed: I mean, you've got brands like Vince would be in the top 10. Still. But so is Christian Louboutin. And I think to your point, it's how a modern person lives. Very few people dress head to toe in one brand or even one price point. They have different, they mix and match things. And if we went and looked at people's closets, you would see a pair of Nikes and you might see a Chanel handbag and you might see a Vince jacket and you might see a Christian Dior shoe or something. Like we, we can kind of uniquely do that. The pure play luxury guys can't really do that. I mean, on running's a top five brand for us.

43:09and you know that's because we're locked into the zeitgeist of what's happening not only from

43:16Imran Amed: a performance aspect of what an athletic shoe is but when you walk around airports like i do a lot of people weren't on running shoes and not because they're running a marathon yeah i mean they're comfortable and they like them yeah um and so i think for us just to be connected to how customers see things and what a modern person's closet looks like and how we can be the best solution for that is what's going to work.

43:43Pete Nordstrom: Imagine you were still a public company and you had to explain to the public markets why you still believe in department stores. And I ask this because the narrative around American department stores is quite negative at the moment, right? With the closure of Barney's, the crisis at Saks Global with the post-merger integration that didn't work and not enough cost savings in too many locations, poor vendor relationships, declining reputation.

44:22Imran Amed: They may have had enough cost savings. They didn't have enough sales. That was part of the problem. That was also the issue, right?

44:27Pete Nordstrom: So, I mean, I think they're still trying to get the cost savings in there. But the reputation, you know, issues that they have, which you know, they are working on. But there are success stories, you know, alongside, I think, you know, a very strong Nordstrom business like Bloomingdale's Ascendant. They're good. What is your business case for the department store in this landscape when there's so much change, where the customer behavior is changing, where things are moving online, where direct-to-consumer is rising? Why do you still believe in department stores?

45:01Imran Amed: It's the best mousetrap. we've got the ability to have a curated breadth of offer um we have the ecosystem of online that's integrated with the store we have an off-price division where you know there's a there's a practical exhaust element to that things that we don't sell in the full price nordstrom banner ends up there it's a more efficient way of being able to liquidate every brand we work with has stuff they can't sell and so they have exhaust too they'd probably rather sell it to us than someone they don't do a full price business with i say that all the time to brands like you know if you're going to sell stuff tj maxx they don't do anything if you're a full price brand we do sell it to us yeah and i go yeah that makes sense and so and then there's scale if you're big enough you you can be the first call for those brands you can create enough scale and leverage to make your digital business profitable.

46:02Imran Amed: We can do that. That's, I guess, how I would pitch our thing is that we think we offer a good solution for a modern customer and how they shop. I'd say the other thing is, you know, we're largely a house of brands and people love with the hot brand and if we have the discipline to stay focused on that and present that to customers and offer that to them that's that's a pretty evergreen formula that's that's appealing we just have to you know we have to have discipline on how we do it we have to evolve and we can't just buy more what we bought last year we may have to buy differently and that's not easy we make steaks i don't i mean i it's it's it's not an easy business but it's doable and i and i do think our orientation to it and our approach creates some competitive advantages for us i mean those people you talk about i mean we've competed with all those guys forever and it's it's strange for me to see barney's not around anymore sacks or neiman's bankrupt that's that's strange for me to see and that's not it's not great for us because you think about most of the malls that we're in those guys are there too and if that creates a whole, like all of a sudden we're at a mall by herself, that's not good.

47:25Imran Amed: You want to be a mall where there's a lot going on. There's a lot of activity and a lot of choices for customers. That's a good thing. Um, so I don't know, we're just trying to, it's a humbling business. We're just trying to do our thing every given day. We, we make plenty of mistakes and stuff, but we stick with it. I think we show a lot of, uh, urgency and, and being earnest about just being in it every day and doing our best.

47:51Pete Nordstrom: Well, congratulations, because it's, you know, it's a real feat to kind of navigate these challenging waters. Before we conclude, imagine today you were advising a future Nordstrom. I don't know if you have kids.

48:14Imran Amed: The next generation? Yeah. My kids are 14 and 15 years old. So, yes, okay, I can imagine that.

48:18Pete Nordstrom: So like imagine they were thinking about someday joining the family business. Okay. Or imagine it was some other young person who has some kind of inner spark when it comes to retail. Okay. What advice do you have to offer to those young people who are thinking about a career in retail? Like what is it going to take to be successful in the next 20 years?

48:44Imran Amed: well retail probably like a lot of businesses but this is what i know because it's all i've really ever done um you're valuable as a returner because you've had experiences and i think sometimes what young people don't see very clearly is they want to be able to get from wherever they are to like you know i want pete north from his job or i want yumi shin's job or you know olivia kim's job or something that seems really kind of exciting but the reason any of the three of us would be effective is because we have experiences. We've done things. So my advice to young people is you got to go out and have experiences.

49:21Imran Amed: And there's really not a shortcut to it. I mean, you're valuable to a company because you've done things. And things that have worked and things that haven't worked and different categories, different, a broader perspective. I mean, a real narrow perspective is not helpful. And I tell like students all the time. They don't like hearing this. I said, you know, no one's ever going to ask you about your grade point average again. Once you get done with college, you're going to want to know about what jobs you've done and how that's gone and talk about your experiences. So you got to go have experiences.

49:52Imran Amed: So I, that's kind of the advice. And I, and I also think that young people put a lot of pressure on themselves to, I only want to have a job that fulfills my total life's ambitions and hopes and dreams that's a that's a lot of pressure on your job i think it's it's possible to have a job that's fulfilling and you enjoy it but it also enables other parts of your life that you can have interest and do things you know it's it's okay um i i really like my job but i have other interests in things that i do which makes me a more well-rounded person you know having a family and i think that ultimately probably makes me more effective in my job but i i just encourage people to you got to start and you got to start doing things and you'll find what works and part of it is does this work for me personally does the culture of this place resonate with me personally and then there's like the money and there's but there's all those different things that matter and people just have to figure that out and the only way to do it is to get in there and start working that's great advice people don't like hearing that by something yeah but how do i have

50:58Pete Nordstrom: your job like well it's really good you gotta go touch a few bases out there you know i think young people sometimes think because we're in this like instant gratification culture where everything moves quickly the value of experience the value of multiple experience the judgment that you develop because of that experience and the exposure you have to so many other people that help to inform your experience and that you know mentor you and shape you like that makes you valuable you know so i think that's that's excellent i mean you think about your time

51:32Imran Amed: doing what you've done you've talked to a lot of people you've done a lot of things you've seen a lot of things happen that it informs it just informs your worldview and your ability to actually add value to what it is that you guys do a business fashion because you have experience and you have a point of view yeah um i i enjoy reading your publication i think it's well informed i think it kind of it finds the right balance and not being too dirty about insider fashiony stuff but there's also a business perspective to it i think there's there's a customer perspective of why this stuff matters to people i think you guys are really good at it

52:08Pete Nordstrom: well thank you uh we have an excellent team all of whom are working very very hard um but you know pete thank you so much for sharing that story i didn't know a lot of that story before we sat down today and I've long been an admirer of Nordstrom, but now I can get a little bit more insight into how it all happened. So congratulations on the anniversary and I look forward to, you know, toasting you on Saturday at the celebration.

52:35Imran Amed: Well, I appreciate it. You're a patient listener. It was kind of a long story, but we're proud of what we've accomplished, but more than anything else. And I think it's, it's been revealed a little bit this, you know this season here in in paris and in milan is there's a lot of opportunity out there and that's really motivating and interesting to us like it's a great time for us to be nordstrom there's market share to be gained i think we can be a more important partner to brands in the u.s and we're here for it good luck thank you

53:45Pete Nordstrom: We'll be right back. Call 1-800-GRANGER, click grainger.com, or just stop by. Grainger, for the ones who get it done.