How Close is Too Close for Similar-Brand Retailers?

The distance between Nordstrom Rack and Nordstrom will increase in the future.

FRISCO, TX—Declining retail sales in what has been a high-growth segment prompts a closer look at the department store off-price sector. Possible strategy changes including the distances retailers will put between off-price and full-line stores, as well as factors that could be contributing to falling sales were outlined in a recent report by Kroll Bond Rating Agency/KBRA.

Historically, the underlying assertion was that department stores wanted to ensure that off-price distribution channels didn’t compete directly with full-line business locations. This was intended to limit off-price stores cannibalizing sales from full-line offerings and avoid the dilution of brand identity.