Friday, June 23, 2000

New snag on Nordstrom deal

Store resists council input on what to sell

By Robert Anglen
The Cincinnati Enquirer

        Nordstrom officials say they will have no problems covering any cost overruns on their planned $48.7 million downtown department store. But they are balking at merchandising restrictions Cincinnati City Council members want tied to any con tract with the Seattle-based retailer.

        “The wording of the merchandise clause needs to be worked on,” said David Mackie, Nordstrom vice president of real estate. “We merchandise stores to serve the market. ... We serve to the taste level of the community.”

        Local retail development expert Stan Eichelbaum says Nordstrom has a right to be concerned — and that officials have no business dictating marketing strategies to a department store.

        “This comes under the category of "get real,'” he said.

        Council members, who will vote on a preliminary contract with Nordstrom next week, say they can't afford to budge.

        “The worst thing council could do now is start making concessions to Nordstrom,” Councilman Phil Heimlich said Thursday. “I have no doubt it will be worked out. All of the details will be worked out. But if we make concessions now, we'll put ourselves in a box.”

        On Wednesday, a five-member majority of council conditionally OK'd a preliminary motion to finance the construction of a Nordstrom at Fifth and Race streets.

        The conditions include capping city contributions, requiring the developer to pay for any overruns and hiring lawyers specializing in retail to negotiate final terms with developers and Nordstrom.

        The motion also mandates

        the store to stock merchandise “as high or higher” in quality than a Nordstrom proposed for a new mall in Deerfield Township.

        “We're in the business to sell stuff,” Mr. Mackie said in a phone interview Thursday from Seattle. “It's about selling what the customer is looking for.”

        Council members say the merchandise clause is the only way to ensure that Nordstrom will not leave the city with a store that would be eclipsed by a suburban store about 20 miles away from downtown.

        They point to other downtown department stores — including Saks Fifth Avenue and Lazarus — where they say the quality of merchandise is different than those same stores in other locations.

        “I am certainly not interested in a second-hand store,” said Councilwoman Alicia Reece, who signed Wednesday's motion. “We have got to have top-of-the-line merchandise, especially since we are paying top dollar.”

        Mr. Eichelbaum said this shouldn't be a concern for council after years of trying to find a major retailer to locate downtown.

        “This is an absolute win for downtown,” he said. “The issue isn't better quality, it's bringing a leading retailer downtown.”

        Mr. Eichelbaum, president of an international development, planning and consulting firm on retail and entertainment, said Nordstrom will be more of a catalyst for downtown than either of the two new stadiums. And Nordstrom isn't going to “bastardize” the store's reputation as one of the most sought-after retailers by selling poor quality merchandise.

        Yes, merchandise might differ from store to store. But it is the market that determines what sells, he said.

        “Cincinnati has had experience with overshooting the market,” Mr. Eichelbaum said, noting fail ures of B. Altman and Bonwit-Teller department stores in the Forest Fair Mall. “They were high price, high-end stores that couldn't acclimate.”

        He also questioned how the city would enforce a merchandise clause.

        “I don't think any of us on council are experts in retail,” Mr. Heimlich said. “These are details that need to be fleshed out in negotiations between their experts and ours.”

        That's why, he said, the clause should remain unchanged until after council votes on the preliminary contract. Then lawyers can craft acceptable language for a final contract that will be voted on in September.

        Mr. Mackie suggested council was overreacting and dismissed concerns that Nordstrom would deliver second-rate merchandise.

        “Our goal in life is to provide excellent service,” he said. “We're building businesses, not destroying them.”


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