It won’t be easy, it is going to take a grim seriousness like what we are seeing at Macy’s, but Nordstrom will survive. Geevy once reminded me that it takes a lot to end a retailer, as long as the brand is intact and there is income, someone can always be found to lend it money.
Figure the PE looters ate the first wave of weak retailers, then Sears, and now JCP is facing the music. Macy’s is digging in — closing their SF tech center was a bold but necessary move. Think of the managers who had built teams and projects out there, everyone proud of their West Coast tech hub. These are aspirational goals, things you brag about. And they closed it! Nordstrom will have to do similar things to survive. It once bragged about the ol’ Innovation Lab, but that was sc-apped. What will make the cut this time?
The shock from CV and the recession already making its slow roll will accelerate and reach a wicked crescendo, worse than 2008, but also faster because the cure is already known, even more QE and deficits from everyone. One last debt orgy. It will be nuts, but it will be just enough for one more cycle.
And Nordstrom’s balance sheet is strong enough to weather the 2020 storms. The stock might go to $5, and the company will be in a difficult spot. It will be forced to take on more debt, on usurious terms similar to those offered to the family in their buyout explorations this past year. Someone will lend to the solid Nordstrom brand, but on scumbag terms from the filthy financiers.
So its long-term fiscal health will decline, just as their customer base ages and finds itself less apparently wealthy than it had though. Oh, my house is no longer “worth” seven figures? And I can’t spend debt on consumption? Nordstrom will find itself increasingly in debt and increasingly vulnerable over time, just like the earlier waves of weaker retailers. The next cycle crisis then becomes a truly existential one, which will test whether the decisions made between now and then are the correct ones.
And that’s the final boss challenge to the company, because the broader crisis will be historic and tragic. It will collapse governments and scramble nations, it will spin off wars like thunderstorms off a hurricane. It’s not really fair to expect any large private organization to survive such an event.