Top-Shopping at Nordstrom: An Equation for Success?

If you’ve spent any time in Nordstrom over the past few years, you’ve probably noticed their efforts to integrate some younger, edgier product lines into their more conservative upscale fashion selections. It seems they’re taking these efforts one giant step forward with the announcement of their new partnership with Topshop.

According to news reports, by September, the hip British fashion line will occupy 4,000 square feet of dedicated space in 14 of Nordstrom’s select locations. Nordstrom will also sell Topshop apparel online, and the two brands will collaborate to develop and sell a range of specially designed products.

I think this is a great move for both companies. First of all, this partnership will help Nordstrom move forward with diversifying their offerings and appealing to a younger demographic, which has been a fairly successful effort by the retailer so far. In fact, I think the way Nordstrom has gradually become “cooler” without losing their core brand identity in the process has kept them competitive throughout the downturn. For Topshop, they have three existing locations in the U.S.: Vegas, New York and Chicago, with a fourth store lined up to open in L.A. next year. The Nordstrom partnership offers them invaluable brand exposure and a tremendous opportunity to establish a foothold in other major American markets without the expensive brick-and-mortar investment that would normally be necessary. They’ve used a similar strategy with The Bay department stores in Canada, with great success, and I expect they will have similar results here. In fact, I think we’ll see them expand rather quickly beyond these initial 14 to even more Nordstrom stores.

I think this partnership is a great fit even beyond the basic economic calculus. While some might look at this deal and see two dissimilar brands, I see two retail icons with a lot in common. As department stores go, Nordstrom occupies a relatively unique space right now in the marketplace, bridging the gap between promotional and upscale. I see that as an ideal fit for a brand like Topshop, which is similarly positioned with respect to price point and retail/fashion philosophy. I don’t think you can slap brands together at random and expect to have success. They have to be a good fit on several levels, and these two brands are.

I am surprised we haven’t seen more international brands adopt a similar strategy. Take Zara and H&M for example. While we think of Zara and H&M as hot brands today, it took both retailers years to gain brand traction in the U.S. Remember, well over a decade ago, H&M started out in small, Upstate New York markets in Pyramid malls and it almost derailed their whole expansion plan. Topshop can inevitably avoid that long, risky and expensive ramping-up process through their partnership with Nordstrom. This is definitely a strategy other international brands can learn from. It would have been interesting to see what would have happened if H&M had taken this same approach. Perhaps they would have gained traction faster.

What do you think? Do you think the Nordstrom/ Topshop partnership makes sense? Will we see more international brands partnering with U.S. brands in the near future? Please make a public comment below or feel free to e-mail me privately at jeff@jeffgreenpartners.com.


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