The following may strike you as an unusual business model: Secure a high-rent piece of real estate in Manhattan’s SoHo neighborhood, position it to compete with the Bloomingdale’s on Broadway, don’t attach your iconic retail brand name to it and donate all the proceeds to charity.
This is precisely what Pacific Northwest retail giant Nordstrom plans to do when it opens its philanthropic store (which has yet to be named) in the fall of 2011. According to Nordstrom spokeswoman Pamela Lopez, the concept is based on Nordstrom’s “general spirit of philanthropy,” though it hasn’t announced a merchandising strategy, won’t use Nordstrom credit cards or credit cards and hasn’t revealed its nonprofit partners. It will, however, operate as a wholly owned subsidiary.
So what’s the point (besides goodness and responsibility)? Perhaps that’s it. For-profit ventures testing the waters to see if people actually do desire to do the right thing is a concept that seems to be catching on lately. Panera, which operates 1,400 franchised and corporate-owned bakery-cafes across the country, started a pay-what-you-wish store in suburban St. Louis earlier this year that was such a success the company decided to expand its honor bar concept to locations around the country. Men’s retailer Geoffrey Beene now donates 100 percent of its net profits to various nonprofit organizations ($145 million to date).
Does Nordstrom have ulterior motives? Maybe, but some would just call it good business. Earlier this year, Nordstrom opened its discount Rack concept store in Union Square, ostensibly to gauge buyer preference in a market that’s new to Nordstrom. According to this story in the Seattle Post Intelligencer, the retailer also stands to gain an edge – if not directly by sales, then at least by reputation – by demonstrating its goodwill right down the street from established New York retailers. And by keeping the location relatively small, notes the article, the new location is another relatively safe “toe test” into the difficult Manhattan market.
There is research that bolsters the theory that consumers like this kind of concept. A recent study from strategy and communications agency Cone found that 83% of consumers “want more of the products, services and retailers they use to benefit causes.” But as Olivia Khalili, founder of CauseCapitalism.com, writes, “the concept is rife with potential, public sand traps.” She recommends that the retail chain heed some advice, including being “obsessively transparent” about its partnerships with nonprofits, avoiding the pitfall of thinking that “whoever has the money calls the shots,” and not exploiting causes or marking up prices.
Without knowing specific details on what you might buy at the new store, what it will cost or who it might benefit…do you like the idea of shopping for good? Would it make a difference if you could get better deals elsewhere?