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From Klondike gold to a national retail legend.

It's a classic rags to riches story. In 1887, a handsome Swede set foot in America with $5 in his pocket and a dream for a better life.

Never mind that John W. Nordstrom couldn't speak a word of English. With the dream guiding his course, he worked his way west in mines and logging camps. On a Sunday morning in 1897, Nordstrom read blazing newspaper headlines announcing gold had been discovered in the Klondike. It didn't take him long to decide what to do. Nordstrom headed north the same day, joining other hopeful prospectors in the Alaska Gold Rush.

There is a nugget of truth to the claim that the Last Frontier launched this successful entrepreneur. Nordstrom struck enough gold during the adventure to begin a small business of his own. In 1901, he opened the door to his first shoe store in Seattle. Little did Nordstrom know that he had begun a legacy in retail that would one day span four generations and employ 40,000 people in 11 states.

The company survived the Great Depression under the management of John's sons Everett, Elmer and Lloyd. The company faced further challenges during World War II. Critical shortages left inventories depleted, and ration stamps were used to purchase the limited shoes available. Military needs claimed all leather supplies, and shoe manufacturers were forced to use rubber soles.

It was during this period that Nordstrom's nationwide quest for shoes earned the company a reputation for varied stock and a large inventory. In 1961, at age 91, founder John W. Nordstrom was honored as the "Shoe Man of the Century."

Not content to be the largest independent shoe chain in the country, the Nordstrom family expanded its dreams and enterprises. The company purchased Best's Apparel stores in 1963, diversifying into women's clothing. It wasn't long before the store's inventory included men's wear, children's wear, accessories and eventually cosmetics.

To this day, Nordstrom continues to be a family-owned business. The third generation Nordstroms assumed management of the company in 1970, and currently seven great-grandchildren are employed by the company.

A Legend in Customer Service. Over the years, Nordstrom has become famous for its customer service. The company's liberal return policy prompted a joke that has become a cliche -- the one about the man who went into a Nordstrom store wondering if he could return his wife ...

The company takes its reputation seriously, though. Blake Nordstrom, great grandson to founder John and general manager for Washington and Alaska, says that customer relations is a fragile thing. "Our reputation is built one customer at a time. We either enhance or hurt our reputation with each interaction."

Nordstrom opened its first Alaska stores in 1975. The stores in Kenai and Fairbanks have since closed, but Blake Nordstrom says the company plans on keeping the Anchorage store open indefinitely. The company has backed those intentions with a $1.4 million project remodeling the first floor of the Anchorage store in 1992. Another $1 million will be spent in 1993 remodeling the second floor; third floor renovation will be completed in 1994-95.

"We're hoping that our Alaska customers and employees will see this as a commitment that we're here to stay," says Nordstrom.

Doing business in Alaska is not without its challenges, however. "We have a stigma in Alaska as being too expensive. Our current focus is to take care of a wider range of customers," Nordstrom adds. He says the company's strategy is to keep each store's fashion buyers as close to the stores and customers as possible. "We make sure we have items for the Alaskan customer."

Selections at Nordstrom range from impulse items to basics in men's, women's and children's apparel, shoes, cosmetics and accessories. The emphasis is on fashion impulse items, keeping up with current styles, and offering customers a variety of products.

Key to Success: Decentralize. One contributing factor to the company's success is its decentralized structure. That structure is best represented by an inverted pyramid, with the customer being at the top as the most important person, followed immediately by salespeople and support staff, continuing on down to the board of directors. Employees are encouraged to be entrepreneurs in their positions, and are given the freedom to make decisions on the customer's behalf.

"People say, 'You must have a great training program,'" Nordstrom says. "But the truth is, we can't teach basic principles of being nice, helping people and working hard. We can only teach the mechanics of operating the cash register. It's a very simple business. It's a culture, a momentum. You hire the right people, give them the tools to succeed and empower them to make decisions for themselves."

That momentum suffered a setback when a class action lawsuit was filed against the company in King County Superior Court, in Washington state, in 1989. The suit, filed by the United Food and Commercial Workers Union, alleged that Nordstrom failed to keep accurate records of time worked and therefore did not compensate employees properly. Nordstrom reached a settlement in the case in January. The union, which represented six Seattle-area stores, had to withdraw its representation after Nordstrom employees voted overwhelmingly in a 1991 election to decertify the union.

"We're excited to have this behind us so that we can get back to doing what we do best -- serving the customer," Blake Nordstrom says.

Lisa Hornbuckle, sales promotion director Nordstrom in Anchorage, agrees that decentralization is a key strength of the company. Every store is different, appealing to the community in which it does business. Stores have their own department managers, and buyers make decisions for their particular store or area. For example, the Northwear brand of men's clothing is not carried by any other Nordstrom store except the one in Anchorage.

"The ambience of the store, the attitude of employees and the fact that Nordstrom gives employees the responsibility to take care of customers first give us a 'This is my store' attitude," Hornbuckle says.

Alaska Challenges. One of the difficulties faced by almost all retailers operating in Alaska is the long distance from suppliers. It can take up to two weeks to get merchandise, and that can be frustrating, Hornbuckle notes.

Another challenge is finding employees committed to staying in Alaska. The Anchorage Nordstrom store averages 300 employees, with that number increasing to 500 during busier retail seasons. "You have to really, really like Alaska to stay here," Hornbuckle says.

Evan Johnson, a former men's shoe merchandise manager in Seattle, is currently the Anchorage store manager. His wife attended Bartlett High School, and Johnson says their transfer to Alaska "was a homecoming for both of us."

He says his long-term and short-term goals for the Anchorage store are the same: "That is, to offer the best customer service anywhere. Each day is a new day, and we have to remember to take care of customers first. We are only as good as the last customer we've served.

"The company is very committed to being successful in Alaska," he adds. "That means getting the merchandise for the Alaskan community."

He finds his biggest challenge is in getting feedback from customers and then communicating what that merchandise should be to buyers in Seattle. The Anchorage store has 20 buyers working in Seattle and 20 buyers working directly out of the Anchorage store. "We love to hear from our customers. We want to know if there's anything we can do different. We want to take care of everybody in Alaska, and our policy is not to be undersold."

Alaska offers a unique niche for Nordstrom, where customers can find a cultural reprieve from the hardships of the Last Frontier. From the piano music, selected personally by John Nordstrom, to the aroma of an espresso bar, to the ambience of hospitality, customers can steep themselves in an atmosphere of cosmopolitan gentility.

As one Alaska customer relates, "When you're out in the rain on the banks of the Little Susitna with your husband, and you're baiting your hook with dripping salmon roe, your lips are blue from the cold, and your hands are trembling to get the eggs on the hook so you can wade back out into the frigid water -- that whole scene lends new credence to the thought, 'I'd rather be shopping at Nordstrom's.'"
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Corporate 100 Profile
Author:Johnson, Kaylene
Publication:Alaska Business Monthly
Article Type:Company Profile
Date:Apr 1, 1993
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