Taking Nordstrom Private: The Future of Retail as an Exclusive Club

Retail as we know it is dead—unless it evolves into something radically exclusive, few brands have the flexibility, history, and prestige to redefine their futures with a bold shift. If I were Nordstrom, now would be the time to pivot in a direction that could not only save the brand but also establish a new frontier in luxury retail: exclusive, members-only shopping clubs.

The Death of Traditional Retail

Last Sunday, I wandered into two downtown Seattle malls—Pacific Place and Westlake—and what I saw was disheartening. These once-thriving hubs of consumer activity were, to put it kindly, soulless. Long gone were the sensory delights of bustling shoppers, the smell of food courts, or the hum of vibrant storefronts. In their place: empty corridors and a hollowed-out shopping experience.

And yet, there sits Nordstrom’s flagship store, a relic of a different era, seemingly untouched by time, but undeniably out of sync with the modern world. The “upgrade” a couple of years back was underwhelming, failing to restore its once-unmistakable flagship status. So, when I heard the Nordstrom family was considering taking the company private, my immediate thought was: Now is the time. Now is the time to make retail, retail again.

The retail apocalypse has forced us to reimagine what the shopping experience should be in a post-pandemic world. Department stores like Macy’s have vanished from downtown Seattle, leaving behind an aesthetic void. It wasn’t that people didn’t love Macy’s—many were saddened by its closure—but when pressed, these same people admitted they hadn’t been inside the store in over a year. This disconnection, a consumer apathy toward traditional retail, is symptomatic of a larger issue.

But what if Nordstrom could transcend this trend? What if retail isn’t dying, but merely evolving into something far more exclusive, experiential, and personal?

A Future in Exclusive Retail Clubs

Nordstrom has the potential to take the helm of a retail renaissance—by going private and converting to a members-only model. Not every brand can pull this off. The likes of Saks, Bergdorf Goodman, and Neiman Marcus could also make the leap, but retailers like Gap simply can’t; Abercrombie & Fitch might have a shot, but even that’s uncertain. Nordstrom, however, has the pedigree and the infrastructure to make this work.

The Membership Model: A New Way to Shop

Imagine Nordstrom introducing tiered memberships—basic access for $100 a year, premium levels at $500, and an ultra-exclusive tier at $1,000. What would customers get for their money? Access to curated goods, exclusive events, and even a transformative in-store experience. Picture walking into Nordstrom in 2024, but it feels like 1996 at Christmas. The buzz is palpable, the store feels like a special destination, and every item feels curated just for you.

Nordstrom would no longer be for everyone, not because of exclusionary pricing, but because the post-pandemic world demands a more sustainable and niche approach to retail. We’ve seen the alternative: empty malls, cookie-cutter selections, and a retail experience that leaves shoppers disengaged.

Shrinkage and the Rise of Experiential Retail

Interestingly, the key to this shift could be found in the unlikely world of warehouse clubs. Costco’s shrinkage rate—between 0.1% and 0.2%—is a fraction of the national average of 1.44%, a testament to the value of an engaged, paying customer base. In contrast, mass-market retailers like Target have seen rising theft levels and declining foot traffic. A members-only model could help Nordstrom control its own shrinkage while elevating its brand image.

A Multi-Experience Destination

Nordstrom’s membership tiers wouldn’t just grant access to better shopping; they’d offer a whole lifestyle experience. Imagine Nordstrom stores converted into mixed-use destinations: hotels, art galleries, and dining spaces that feel as exclusive as they are luxurious.

As a private company, Nordstrom could offer members access to these curated, exclusive experiences that no other department store could match. Art exhibits, private fashion shows, pop-up restaurants—these are the kinds of offerings that could transform Nordstrom into not just a place to shop, but a cultural hub.

With 33 million customers worldwide, even capturing just 10% of them in this membership model would generate roughly $330 million in free cash flow. And that’s before a single additional purchase is made.

Curated Goods and Local Experiences

Nordstrom’s shift to a membership model wouldn’t just change the customer experience; it would also revolutionize its product offerings. The brand’s reputation for curation has diminished in recent years, as its stores have begun to resemble mass-market retailers like Foot Locker, offering the same selection of shoes regardless of location.

But with a membership model, each Nordstrom store could become a bespoke experience, tailored to its specific market. Buyers—now more like gallerists—could cater their selections to local tastes, offering an unparalleled level of exclusivity. Nordstrom would no longer be about mass appeal; it would be about individuality, turning every store into a destination where members could find something unique.

Conclusion

Retail is at a crossroads. Brands can either cling to the traditional model that’s fast becoming obsolete, or they can innovate and create something new. Nordstrom is in a unique position to do the latter. By going private and adopting a members-only model, it could become a leader in the future of experiential, luxury retail. The pandemic has shown us that the days of giant department stores catering to everyone are numbered. But with a curated, exclusive approach, Nordstrom could once again make retail, retail.

And maybe, just maybe, we’ll walk into those stores and feel that old sense of wonder, just like we did back in 1996.

Rendering of a blended retail experience