September 26, 2021

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Nordstrom, Eyeing 20-Somethings, Strikes Deal With the Online Giant Asos

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Nordstrom, one of many national retailers battered by the pandemic, has added a new arrow to its quiver as it fights an uphill battle to get customers, particularly young ones, back: It is teaming up with Asos, the online fashion behemoth.

Nordstrom will announce on Monday that it is buying a minority stake in the Asos unit that owns Topshop, Topman, Miss Selfridge and HIIT, which Asos acquired out of bankruptcy this year. Nordstrom will also start a partnership with Asos that will bring the retailer’s brands into department stores and allow Asos shoppers to pick up and return products at Nordstrom and Nordstrom Rack stores. The financial details of the deal were not disclosed.

The partnership comes as national chains, especially department stores, scramble to attract a generation of shoppers who have a world of shopping options at their fingertips and are increasingly likely to watch the 1990s movie “Mallrats” through an anthropological lens. Nordstrom has been trying to shed its association with other mall-based department stores. It has been shrinking its full-price store locations while rapidly expanding its off-price Nordstrom Rack chain, whose stores are often in strip malls. Nordstrom has also been making investments to better link its digital operations with its physical stores, through initiatives like establishing locations where customers can pick up and return online purchases.

The deal secures a physical foothold for Asos in North America, and it will help Nordstrom improve its assortment and services for millennials and a growing cohort of Generation Z shoppers, Peter Nordstrom, the president of the namesake chain and its chief brand officer, said in an interview.

“There’s a big opportunity for us to be more meaningful to 20-something customers and to young customers,” he said.

It also makes sense, after a year of retail dislocation, to strike a deal with an online-only fashion company like Asos, he said.

“Particularly with the pandemic, what we thought was going to happen with the online business over time ended up happening very quickly because stores were shut down,” Mr. Nordstrom said. “What we continue to believe is that the main ingredient for success in the future is how these things work together.”

In the past, Asos has not had a physical store presence. The company targets customers in their 20s and carries more than 85,000 products on its site. It is based in England, but North America accounts for about 13 percent of the company’s global sales and is home to about 3.3 million active customers, according to Nick Beighton, the chief executive of Asos.

“One of the most-asked questions I often get is, ‘When is Asos going to have a store?’” Mr. Beighton said in an interview. “We’re not great at running stores; we’re great at innovating through digital and creating amazing brands and products.”

With Nordstrom, he added, “I’ve now got a perfect answer for North American customers.”

The makings of the deal stem from late last year, when the pandemic forced the British retail company Arcadia Group into administration, a form of bankruptcy. Two of Arcadia’s brands, Topshop and Topman, had been carried at Nordstrom since 2012 and have long been popular with consumers, so Nordstrom was keeping tabs on who might acquire the labels.

“We wanted to make sure it landed in good hands because we were worried about that business going away,” Mr. Nordstrom said.

Asos agreed to buy brands including Topshop this year for roughly 265 million pounds ($365 million at the time). Mr. Beighton said that Asos had plucked the best labels from the proceedings and planned to “put some sizzle back in these brands for customers who want them and want them to be better.”

Once Asos acquired the brands, Mr. Nordstrom was introduced to Mr. Beighton, and the two began discussing ways in which their businesses could work together. When Nordstrom first brought Topshop into its stores years ago, it made a big splash with younger shoppers, who still love the brand and “aren’t hung up on the issues with Topshop relative to its financial issues,” Mr. Nordstrom said.

Asos is tapped into the lifestyle of today’s 20-somethings, who can be fickle consumers compared with other demographics. It plans to stay focused on that specific age group. “We don’t want to grow old with our customers,” Mr. Beighton said.

Asos will offer products across its brands at a lower price point than other Nordstrom wares. It will also allow Nordstrom to tap into the pipeline that already exists between young North American shoppers who buy clothes from Asos and view apparel through a far wider aperture than previous generations.

“We want to make sure we can bring in relevant fashion at a good value to customers, but I think there’s also the whole point of discovery and new things that are piquing their interest,” Mr. Nordstrom said. “They get exposed to so many more things. It’s not just ‘This is my local mall, this is my selection.’ They know their selection is the entire world.”

For Asos, the partnership was not related to the pandemic outside of the opportunity to acquire brands like Topshop, according to Mr. Beighton. Nordstrom, on the other hand, is looking for new ways to drum up business after a tough year. Its sales fell 32 percent to $10.4 billion in the year that ended on Jan. 30, compared with a year prior, and it lost $690 million.

“For me, the pandemic created an opportunity to think about the business differently,” Mr. Nordstrom said. “It accelerated the idea that a legacy way of approaching business and customers probably wasn’t going to work.”

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