The department store model isn’t dying. Instead, it is quietly reshaping itself. While headlines typically highlight massive retail contractions, including Macy’s closing 80 stores and Saks Global’s Chapter 11 bankruptcy, some of the legacy chains are executing strategic footprint adjustments instead of a full retreat.
Few retailers illustrate this survival shift better than Nordstrom. The legacy luxury retailer’s story is doubly challenging as it is not only a department store chain, but a mall retailer as well. As such it has to deal with the following trials:
- The shrinking mall: Projections from Capital One Shopping suggest up to 87% of traditional shopping malls could close over the next decade.
- Digital competition: IBISWorld data highlights accelerating market share loss from department stores to e-commerce rivals.
- Cautious consumers: Shoppers are planning to further pull back spending across most discretionary categories, according to recent surveys from McKinsey & Company.
To adapt and survive Nordstrom decided to make some major moves, including closures, layoffs, but also targeted investments.
Nordstrom closes another store in 2026, lays off 101 employees
Nordstrom recently confirmed the closure of its ultra-deep-discount clearance outlet store:
- Nordstrom Last Chance at Yorktown Center in Lombard, Illinois will close for good in September, a statement from the company confirmed to NBC Chicago.
According to a WARN Act notice posted by Nordstrom on August 7, 101 employees will lose their jobs effective October 5, 2026, as part of the Nordstrom Last Chance closure.
In a statement, the retailer said that the decision to close was “a result of successful efforts” to adjust inventory management, reducing the need for the Yorktown Center store.
Nordstrom’s previous closures in 2026 and 2025
Earlier this year, I reported on previous Nordstrom full-line store closures including:
- Nordstrom full-line store, Christiana Mall, Delaware, closed on April 30, 2026.
- Nordstrom full-line store at Galleria Dallas Mall in Texas closed for good on May 16, 2026.
These closures followed up on the January 2026 closure of a Nordstrom Rack store in Portland, Oregon, and several closures in 2025, including:
- Saint Louis Galleria Nordstrom store in St. Louis, Missouri, closed on August 24, 2025.
- Nordstrom store in Santa Monica, California, closed on August 26, 2025, reported Fox Business.
More importantly, these closures were revealed after the Nordstrom family reacquired the company in a partnership with Mexican retail giant El Puerto de Liverpool, in a $6.25 billion deal. The move was huge, as it marks the company’s return to private ownership for the first time in 55 years, writes The Detroit News.
Nordstrom’s closures are part of the company’s focus on off-price retail
In its final public earnings report for the fourth quarter of 2024, Nordstrom posted a 3.7% decline in net sales for Nordstrom stores and a 1.2% increase for Nordstrom Rack.
Nordstrom full-line stores have around a decade longer tradition than its rack division. Nordstrom’s story commenced in 1901 with a single shoe store. In the 1960s Nordstrom expanded into clothing and became a full-line luxury department store.
The first Nordstrom Rack, however, opened in the basement of the Downtown Seattle Nordstrom store as a clearance center, according to the company’s official history. Its original purpose was to clear out unsold inventory and end-of-season overstock from full-line department stores.
When the 2008 economic downturn caused consumers to seek out bargain prices, corporate leadership seized the opportunity by aggressively expanding stores, doubling Rack’s revenue within four years, according to the Robin Report.
“Off-price sales nearly doubled again by 2016, reaching $4.5 billion, and the segment’s sales topped out at $5.2 billion in fiscal 2018. By that year, Nordstrom’s off-price business contributed fully a third of the company’s revenue,” wrote the Robin Report’s Adam Levine-Weinberg.
At a time of significant industry challenges, and shifting consumer behavior, Nordstrom is once again betting on its off-price division. The retailer confirmed its plans to open 23 Rack locations in 2026, after opening 23 in 2025 and 22 in 2024.
Furthermore, the retailer has been heavily investing in and upgrading its online presence, which, according to experts, is one of the key moves to survive in the current environment.
Related: Popular shoe retailer closing dozens of stores after a costly mistake
Can digital sales and Nordstrom Rack keep the retailer afloat?
Betting on its off-price division has many potential benefits:
- Cheaper locations: Nordstrom Rack stores are typically located in open-air strip malls, meaning they are cheaper to operate.
- Lower overhead than multi-level department stores.
- Drive customer acquisition: Nordstrom Rack stores serves as a powerful force attracting new customers, according to CEO Erik Nordstrom.
“Rack stores continue to be a growth engine for our company as they are our largest source of new customer acquisition, accounting for over 40%. Growing our store count also supports long-term customer retention. In fact, roughly a quarter of retained Rack customers migrate to the Nordstrom banner within four years,” Nordstrom said during the fourth-quarter of 2024 earnings call.
However, retail analysts warn that relying too heavily on off-price growth comes with significant risks.
While off-price rivals like TJ Maxx and Ross thrive on sheer value, Nordstrom’s reputation was built on high-touch service, prestige brands, and luxury experiences. Expanding low-margin Rack stores while closing full-line flagships risks cannibalizing the parent brand’s luxury identity and alienating key high-spending clientele, according to GlobalData Managing Director Neil Saunders.
“It can be problematic with that cannibalization, but I think it’s fair game for department stores to become involved in the off-price sector, because it is a growing part of the market — and it’s also a channel through which they can clear out their own excess inventory. So it does make sense in some ways, but you have to execute very, very carefully,” Saunders told Retail Dive.
Saunders further stressed that Nordstrom Rack is ”a very distinct proposition. It’s very different from mainstream stores.”
Moreover, IBIS World suggests that department stores like “Macy’s and Nordstrom will continue to benefit from strong brand recognition, particularly as older customers become more comfortable with online shopping. Investments in online platforms will pay off for retailers, helping department stores become more competitive in a challenging business landscape.”
Over the recent year, Nordstrom has also been investing in converting its major distribution centers into automated, technology-driven “omnichannel centers.” Its e-commerce business accounts for 36% of total annual sales in 2024, according to the official report.
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