Since 1991, Nordstrom Inc. has been content to keep its financial services activities to a minimum and has concentrated on promoting its cobranded Visa and private-label card.
But today the Seattle-based department store chain is expected to announce that it will offer banking services, including an interest-bearing checking account with debit card capabilities, in the second quarter.
Nordstrom, which had retail sales of $5.1 billion last year, will work with Fiserv Inc. of Brookfield, Wis., to make its financial services available through the Internet, telephone, and privately branded automated teller machines being installed in its 120 stores in 24 states.
Nordstrom FSB of Scottsdale, Ariz., which the retailer bought in 1991 and rechartered as a thrift last year, will provide the new services.
A number of other department store chains have eyed introducing financial services as an attractive way to strengthen customer ties and to enhance loyalty. Target, a discount retailer with more than 900 stores in 45 states, is testing a banking boutique and a financial services Web site, both cosponsored by E-Trade Group Inc. And Wal-Mart Stores Inc., which failed to meet the deadline for obtaining a thrift charter, has bank branches in about 250 of its more than 4,000 stores.
Kevin Knight, chairman and CEO of Nordstrom FSB, said the company is attempting not to introduce an Internet bank but to provide a range of payment options for customers. The Internets an important channel overall for Nordstrom, he said. Nordstrom.com is the largest shoe store on the Internet, so we know our customers like to use that channel. We want to offer as many convenient channels as possible.
Based on our learnings from our credit card business, we find that its a valuable service to customers, he said. Its an enhancement to the relationship with Nordstrom, being able to pay with a tender we service directly.
A link to Nordstroms main site will let customers access information about their checking accounts and view check images online. Eventually other depository products will be offered, but the company has no plans to expand into such areas as consumer loans or insurance, Mr. Knight said.
Leslie M. Muma, president and CEO of Fiserv, said the bank data processing company has had discussions with several retailers that are interested in offering financial services. He said that retailers feel they have an affinity group and that they can leverage that into financial transactions for the same group of customers.
But Nordstroms heightened banking efforts dont necessarily indicate an emerging trend, observers say.
After Sears Roebuck and Co. began to sell socks and stocks in the early 1980s, many retailers considered expanding into financial services, said Peter Carroll, a managing director at Oliver, Wyman & Co., a New York consulting firm. But the idea was largely abandoned when Sears effort failed, he said.
Another challenge for retailers is that shopping and banking are an unlikely mix in customers minds, Mr. Carroll said. On a week-to-week basis, most of your financial affairs are stable, whereas shopping is something people do on a weekly or monthly basis, he said. Theyre almost in different spheres. If people get confronted with financial every time they go to a store, it just seems out of place.
John C. Grund, a partner at First Annapolis Consulting Inc. in Linthicum, Md., said Nordstrom is entering a marketplace already crowded with competitors able to give consumers a wide range of convenient banking options.
Every mainstream bank now offers some version of home banking or Internet services, Mr. Grund said. It really comes down to what unique utility Nordstrom would be providing to its customers. If I had to go into a Nordstrom store to get cash, its just not going to have as much utility as the mainstream banks.
But Richard Speer, CEO of Speer & Associates, an Atlanta consulting firm, said that though banks have greatly improved their Internet offerings over the past two years, Nordstroms strong brand identity may give it an advantage.
There are very few companies that are positioned like a Nordstrom is. I dont think its a guarantee for success, but certainly they have an opportunity, Mr. Speer said. Many banks cant equal the high-quality service Nordstrom is noted for, he said.
In addition, he said, Nordstrom has better marketing capabilities than many smaller Internet banks. I expect theyre going to be very competitive. Its going to be interesting.
British retailers have had more success offering financial services than have their North American counterparts. The English supermarket chains Sainsburys Supermarkets Ltd. and Tesco introduced banks about three years ago in partnership with U.K. financial institutions. The two companies offer banking by phone, mail, and in-store kiosks and ATMs.
The British department store Marks & Spencer Ltd. began offering a private-label credit card about 18 months ago and has expanded into consumer loans, insurance, and investments.
Mr. Carroll said that Marks and Spencers banking venture, though relatively successful, does not necessarily bode well for Nordstrom.
At the end of the day, who is Nordstrom? Theyve a relatively small player.
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