Count Nordstrom as another marketer that believes in the power of “.com.” The department store retailer/cataloger announced in August the creation of a separate company for its direct marketing businesses – and even though it includes the catalog operations as well as the online division, the subsidiary is named Nordstrom.com.
Because the systems created for Nordstrom’s six-year-old catalog will serve its Internet division, it makes sense to include the catalog operations in the new subsidiary, says spokeswoman Shasha Richardson. Nordstrom.com’s first order of business is NordstromShoes.com. This new site, slated to launch this fall, promises to offer an astounding 20 million pairs of shoes. It will complement Nordstrom’s current Website, which despite selling only a limited selection of men’s and women’s apparel and footwear generated $1.3 million in July.
Although Nordstrom.com has no plans to increase catalog marketing efforts (catalog sales are currently about $200 million annually), the company expects the planned advertising campaign for NordstromShoes.com to indirectly benefit cataloging and retail sales.
A little help
The new subsidiary will be partly owned by Menlo Park, CA-based Benchmark Capital, which receives a minority stake in the venture in return for its $15 million investment. Benchmark Capital has invested in high-profile Internet launches such as Web auction site E-Bay.
According to Laurie J. Breidenbach, a retail analyst with Ragen MacKenzie in Portland, OR, the financial investment may be less important to Nordstrom than Benchmark’s online track record. “Nordstrom doesn’t have much experience in the Internet side of the business. And there’s no more financial commitment scheduled from Benchmark, so there will be no control issue in the future.”
The creation of the catalog/ Internet subsidiary did little to boost Nordstrom’s stock price, which slid from roughly $32 to $29 in the week following the Aug. 24 announcement, despite the company’s allowance that shares in the new unit could be offered publicly in the future. But Breidenbach was not surprised by Wall Street’s lack of interest. “Retailers have traditionally struggled outside of their established distribution channels,” she says. “I look at Nordstrom’s catalog division, and it’s evolving but still not profitable.”