What: The Robin Report discusses Nordstrom’s Rack strategy and its impact on the brand value.

Why it is important: Is the future of department stores to go upwards, or to compete on the lowest prices possibles while maximizing territory coverage?

The article discusses the challenges faced by Nordstrom and Kohl’s in the evolving retail landscape, focusing particularly on the rise of discount and off-price retailing. It highlights how Nordstrom, traditionally known for high-quality service and products, has increasingly relied on its off-price Rack stores for growth, raising questions about brand value and strategy. Similarly, Kohl’s, under the leadership of Tom Kingsbury, who has a background in off-price retail, may also be leaning towards this model.

The retail industry is described as being in a "race to the bottom," with consumers demanding lower prices, forcing retailers to adopt low-price strategies or risk failure. However, this strategy leads to a devaluation of perceived value, pushing retailers to constantly lower prices.

Nordstrom's expansion of Rack stores, despite their underperformance compared to other off-price retailers, is seen as a possible misstep. There are concerns about Nordstrom losing its unique value proposition by diluting its brand with a focus on discount retailing. The Rack's declining sales, attributed partly to merchandising and management issues, further complicate the situation.

The article also reflects on the synergy between Nordstrom's full-price and Rack stores, suggesting that the Rack's growth could negatively impact the Nordstrom brand as a whole. It questions whether Nordstrom can maintain its reputation for superior service and customer satisfaction while expanding into the more competitive, lower-priced retail space.

In summary, the article raises concerns about the strategies of Nordstrom and Kohl’s in an increasingly price-driven retail market, highlighting the challenges of maintaining brand value and customer loyalty in the face of the industry's trend towards lower prices.

Is Nordstrom slipping into the vortex of deflating value?