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Comment by chasebank | Hacker News Reader

I sat next to a Nordstrom exec on a flight once. He told me the proper Nordstrom stores are essentially loss leaders as high end branding for the Rack stores, where they make most their profits. Not sure if it was true or not but wouldn't surprise me.

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Per their releases, core Nordstrom sales are 2x Nordstrom Rack sales and growing faster, so it was probably a more nuanced point.

Nordstrom's overall Gross profit is basically equal to Nordstrom Rack revenue, so it's nearly impossible for the majority of profit to come from Rack, unless they get their inventory for free.

If I had to guess, this was during the days when Rack was just starting and growing like a weed (back when execs and management probably thought it would be the next TJX), so it was the focus and what everyone assumed would be the core in the future.

For a variety of reasons (particularly the recent resurgence of designer brands due to social media), that never played out.

It's always hard to make these determinations. Sure on paper Nordstrom loses money and Nordstrom Rack makes money, but if you take the line item for the advertising budget of Nordstrom and put it under Nordstrom Rack, the situation will be reversed.

Wow, that seems like such tail wagging the dog! Like, no one would shop at the discount store unless they had a luxury brand associated with it? Is that the reason for these department stores to exist now?

And I wonder what happened, as at one point the main store must have been a money maker. Just profits eroded over time?

This seems true: https://www.retaildive.com/news/nordstrom-leans-on-off-price...

Nordstrom can be overpriced but they are a good outlet for some quality brands. Plus the experience of clothes shopping in person beats online anyday.

That is interesting, I wonder if the same holds true for Saks and Saks off 5th.

Saks off fifth is notably the roughest outlet store I’ve been to. The one near me is dirty, all the shoes have been worn around already, and won’t even play music indoors. Where as the nordstorm rack across the street is lively and full every time I visit. I just assume Sakhs will disappear before I visit it next every time

My experience was the same. TJ Maxx on black friday was cleaner and more organized than Saks Off on any regular tuesday

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