Two months ago, in the middle of the busy Christmas season, shopping-center executive John Morgan came here to convince popular retailer Nordstrom Inc. to establish its first East Coast store in his company's Tysons Corner Shopping Center.
His pitch to persuade the Seattle retailer to move cross-country lasted so long that Morgan missed his flight home. Needing a clean set of clothes, Morgan went to the Nordstrom's men's department. "It was a very busy afternoon, and I was trying to figure out what I had and what I needed," he later recalled.
As he hemmed and hawed, a sales clerk approached and immediately figured out Morgan's problem. "You missed your flight, didn't you?" she asked. Then, she proceeded to list all the things he would need to tide him over for the night and quickly gathered the items in his size.
"I was very impressed," Morgan said. The prompt and friendly service helped cinch the deal that is to be announced today. Nordstrom's -- regarded by retailing executives as one of the nation's most successful merchants -- will be moving East, opening its first store at Tysons Corner. Groundbreaking for the 200,000-square-foot, $27.5 million store is scheduled for September, with the store opening slated for the fall of 1987.
"We want to get in as soon as we can," said company President James F. Nordstrom, one of the founder's three grandchildren, who serve on the management team for the 44-store chain.
"We think there is a demand for what we're doing, and Washington has all the things we need: lots of people, high income and good growth," Nordstrom said. "We'd like to grow a store a year" in Washington, he added, noting that the 85-year-old company hopes to open at least three stores over the next four years. Officials are negotiating for two more sites in the area, one in Northern Virginia and the other in suburban Maryland.
For Tysons Corner, Nordstrom's will be the first in a series of expected changes to be made by its new owner, Lehndorff Management USA Ltd. Inc. Lehndorff previously announced that it hoped to add at least two new major stores and double-decker parking as part of a major renovation.
Nordstrom's arrival in the Washington area is certain to heat up competition in a retailing market that already is regarded as one of the nation's fiercest.
Its first store is scheduled to open the same time R. H. Macy & Co. Inc. expects to unveil the first of at least two Bamberger stores planned for the area. That store will be across the road from Nordstrom's in the new Tysons II shopping-mall complex.
"Whenever Nordstrom's does makes an appearance, it is going to be a very, very powerful competitor," said Kurt Barnard, editor of the Barnard Retail Marketing Report. "Their stores do not bank on low prices; they bank on superb merchandise presentation and superb service. I can easily see a lot of consumers, who at first might have been disposed to saving a few dollars here and there, allow themselves to be beguiled into spending a little more for getting a fantastic assortment of merchandise and superb service."
Nordstrom's arrival will "make it very exciting for everyone" -- retailers and consumers alike, said J. Warren Harris, chairman of The Hecht Co. With a Hecht's already at Tysons Corner, Harris added, "we're delighted they're coming to Tysons. It should increase business for everybody."
Nordstrom's move to the East represents a dramatic and unexpected business shift for the Seattle merchant, which has done business only on the West Coast, from Alaska to southern California.
Initially, the company had planned to expand closer to its base, perhaps in Phoenix or Denver. But the opportunity to move to Washington came up unexpectedly, recalled company co-chairman John Nordstrom, Jim's brother.
"We were reluctant to come so far," he said. But a real-estate developer, after many conversations with Nordstrom executives, persuaded officials to come and take a look at a shopping center being built in Washington.
"I'll never forget my first visit," John said. "It was a Tuesday morning, traditionally the quietest time for a shopping mall anywhere you go in the country. But at Tysons, it was busy, really busy. And the customers were of high quality -- well dressed, a nice range of ages and a nice mix of men and women."
Within two days, John Nordstrom had visited "virtually every mall in the area," and returned to Seattle convinced that despite the distance, this area represented an opportunity the company couldn't pass up.
After similar visits here, the four other top executives agreed. They selected Tysons I as the first site because it is "established and the stores there do so well. The customers are used to coming there," said John Nordstrom, who has taped up behind his chair a special retail map of Washington, D.C., that highlights the local shopping centers. Self-Effacing About Success
Both Nordstroms -- John, 48, and Jim, 45 -- are self-effacing about their success, declining, among other things, to have their pictures taken because they say that would detract from the store clerks who are the chain's real success stories.
"We have no secrets," said Jim, hard-pressed to explain the firm's popularity. "We're just a bunch of guys that really weren't good salesmen to begin with. We got out of college and no one else wanted us . . . so we ended up being shoe salesmen" at the family-owned store, he said.
The chain was founded in 1901 by Jim's grandfather, John W. Nordstrom, a Swedish immigrant who had struck gold in the Klondike. With partner Carl F. Wallin, Nordstrom invested all of his $13,000 of gold earnings into a shoe store. Nordstrom eventually bought out his partner, and his three sons took over the store in the 1930s. Over the next three decades, they built it into the nation's largest independent shoe retailer, with 27 stores in the Northwest.
In 1963, the sons bought an ailing woman's clothing store and began to turn the chain into a specialty clothing store.
With the company selling shares to the public for the first time in the early 1970s, the third generation began expanding the store's operations even more, entering the highly competitive southern California market.
Within a matter of years, Nordstrom's has become the largest or second-largest volume store in each of the malls it is in, despite fierce competition from larger and older competitors such as The Broadway, Macy's California and The May Co.
Exact financial figures for 1985 are expected to be released this week, but financial analysts predict the company will report annual revenue of $1.3 billion, up 33 percent from 1984 and almost four times the amount of business the company did only five years earlier.
Profits, which last year were $40.7 million -- only a marginal increase above those for 1983 -- are expected to show some improvement for 1985. Family members still control 47 percent of the company.
Unlike its department-store rivals, Nordstrom's is almost entirely a clothing store, with a small but growing gift department. Its clothing, while very fashionable, emphasizes the classic, traditional lines over the flashy.
As its 1985 annual report pointed out, "instead of following the latest fads, the men's departments have focused on tasteful looks that offer the professional gentleman quality, comfort and style on a day-to-day basis." Similarly, for the most part store decorations are subdued: antique furniture and oriental art instead of flashy neon signs.
Although the chain has come far from its shoe-store roots, it has not abandoned many of its operating principles. Like a shoe store that maintains unusually deep inventories, Nordstrom's inventories are almost double those of a traditional department store. Each store's men's department, for example, carries some 6,500 ties and 7,000 shirts. Throughout the store, there are more than 70,000 pairs of shoes, varying in style and price. Shoes account for one-fifth of the chain's business.
Like a shoe store, the company pays all sales clerks on a commission basis, ranging from 6.5 to 10 percent depending upon department. The commission system makes Nordstrom clerks -- who affectionately call themselves "Nordies" -- some of the highest paid salespeople around.
"In Southern California, our retail clerks average 50 percent more, initially" than their counterparts at other stores, Jim Nordstrom said. The commission system is accompanied by stiff sales quotas that must be met, or an employe will be fired.
This system helps account for the company's high sales-per-square-foot ratio, financial analsyts say. In 1984, Nordstrom's sold $251 per square foot, nearly double the level for many of its department-store rivals. Similarly, its sales per employe were $89,330 for 1984, compared with May's $63,500, Carter Hawley Hale's $66,510 and Macy's $75,280, according to figures compiled by the retail consulting firm Management Horizons.
Unlike most other department stores, Nordstrom's says that its prices are not the key to its strategy. "We don't merchandise because of the price, but because of the fashion value," said Leeann Decker, the company's media relations manager.
The store's merchandise "should be good enough to be worth full price," she said. As a result, there are relatively few sales, and when there are, they are not usually advertised. In fact, Nordstrom's advertising budget is half those of its rivals, financial analysts point out. Customer Is King
Instead of price, Nordstrom's operating strategy, repeated over and over again by every employe, is service and the attitude that the customer is king.
"The customer is always right -- even if they are wrong," said Vickie Woo, the company's training director. Woo makes that point at the beginning of every training session, handing out a diagram of a corporate structure that is unlike that of almost any other company. An inverted pyramid, the structure places customers at the top. Salespeople are the second most important piece of the pyramid, while the board of directors is at the bottom.
Nordstrom's training sessions last only 1 1/2 days, while such sessions at most other stores run from one to two weeks. During the course, the clerk is taught how to use a cash register and then given a notebook to keep careful track of his or her customers' desires, making sure to call them when a special item arrives or a sale is about to start.
Beyond that, however, the store gives no tips on how to be a good sales clerk. "All we tell them is, 'We want you to take care of customers the way you like to be taken care of.' We get in the way if we impose too many rules," Jim Nordstrom said.
The bulky anti-theft tags found in merchandise at other stores, plus the rules limiting the number of clothes a customer may take into a dressing room, are noticeably absent. "We want to trust our customers," Decker said.
Mannequins also are absent because if a customer wants to try on anything on the mannequin, it is difficult to get the clothing.
Perhaps the most significant sign of the company's commitment to its customers is its return policy: It will accept anything, even if the store didn't sell it in the first place or even if the item has been worn thin. "If a customer thinks she has a right to a return, no request is outrageous," commented Bob Nunn, vice president for the women's shoe division.
Like the other top executives, Nunn began at the bottom of the company, as a clerk in the stockroom. "It's the only way to understand the company," he said.
That is one reason why Nordstrom's requires all of its merchandise buyers to be on the selling floor at least half of their days: That is the only way they know what the customer really wants, officials said. "If a men's suit buyer is on the floor and finds out that a man wants a sheepskin coat, then he will get him a sheepskin coat," said Jim Nordstrom. As a result, instead of a centralized buying department there are several decentralized ones to meet local customer needs. In California alone, there are three separate buying divisions for the chain's 15 stores in the state. Rule Sometimes Backfires
But this rule can sometimes cause problems for the company, as it did in 1984 when its buyers miscalculated the consumer's mood and overbought for its annual pre-fall sale. Inventories were even heavier than usual, forcing dramatic markdowns that accounted for the firm's negligible increase in profits that year.
Nonetheless, financial analysts unanimously call Nordstrom's a number-one organization. "If you're buying clothes, it is the only place to go," said Edward Weller, a New York analyst with E. F. Hutton Group Inc. "In fact, I am wearing Nordstrom pants as we speak," he said.
The Nordstroms themselves, however, are careful not to be too elated about their current popularity. "We can always do better," Jim Nordstrom said.