Exclusive: Nordstrom permanently closing Sacramento mall store as COVID-19 hammers economy
In a major blow to Sacramento’s retail scene, the upscale Nordstrom department store at Arden Fair mall will not reopen after the coronavirus crisis has passed, mall owner Mark Friedman said Wednesday.
The decision will eliminate roughly 375 employees and about $5 million in annual sales taxes to area governments, Friedman said in an exclusive interview with The Sacramento Bee.
“This is a sad day both for the mall and for Sacramento,” Friedman said. “Nordstrom is a store that many people love, and it’s been an important anchor for Arden Fair for almost 30 years.
“We’re going to miss them.”
The move stems from a combination of the coronavirus shutdown and financial difficulties in general for department stores, Friedman said.
Major retailers nationwide have struggled with brick and mortar operations during the COVID-19 crisis, and the closure of the Arden Fair store is part of a Nordstrom plan announced Tuesday by the company to close 16 stores immediately.
The Nordstrom store at the Roseville Galleria is not expected to be affected, Friedman said.
Nordstrom, which did not respond to a request for comment Wednesday, said in a news release that the closures will save $150 million. The Seattle-based company operates 378 stores in 40 states under the Nordstrom, Nordstrom Rack and other labels, but did not identify the stores it plans to close.
Nordstrom Rack has three locations in the capital region: Howe Bout Arden, the Palladio in Folsom and at Creekside Town Center a block east of the Galleria.
Friedman said Nordstrom planned to announce the closure to its employees Thursday morning, and asked The Bee to wait until they were told before publishing news of the closure.
Mall closed amid coronavirus
Arden Fair shut down operations at 7 p.m. on March 17 in response to the spread of the virus that causes COVID-19, shuttering roughly 180 businesses and idling more than 1,000 workers.
Friedman says he has been told that Arden Fair was one of the first five malls in the country to make the decision to close, and that the economic fallout has been devastating.
He added that despite the federal government’s effort to prop up the economy with Paycheck Protection Program loans and other programs, there are no assistance efforts available to the mall.
“Most of the retailers in the mall are large national tenants that do not qualify for PPP loans, and there is no governmental assistance for large landlords and mall owners,” he said.
The mall has three other anchor tenants – Sears, JCPenney and Macy’s – and Friedman said both the Macy’s and JCPenney stores are among the most successful in the country.
“I have to point out that Nordstrom is not the only reason or the major reason why people shop at Arden,” Friedman said. “If you look at overall sales per square foot, Nordstrom does $400 per square foot in sales while the rest of the mall does $1,000 per square foot.
“We’ll just have to carry on without them.”
Friedman says negotiations to keep Nordstrom in its 150,000-square-foot space were limited.
“The decision was presented to us as a done deal,” he said. “We made a very, very strong point of identifying for them just how well Arden performs as a mall.
“Arden is in the top 5 percent of malls in the country in terms of sales performance. We attempted to persuade them to change their mind, but I think they reached the conclusion that the only way they’re going to survive is by shrinking their format and aiming for higher-end markets.”
Even before the coronavirus led to the closure of retail stores across the United States, large department store chains were struggling to compete with online sellers, and the crisis simply made matters worse.
Macy’s announced in February, before the closures, that it was eliminating 125 of its stores, about 20 percent of its total. Pier 1 filed for bankruptcy protection in February as part of a plan to sell the company, and J. Crew filed for Chapter 11 bankruptcy protection this week.
“It’s no secret that traditional brick-and-mortar retailers have been struggling and that department stores, in particular, have had difficulty evolving their formats to compete in an online world,” Friedman said. “I suspect that other department stores will have difficulty as well.
“It’s an industry-wide problem. COVID-19 affects businesses in the same way it affects people. If you have an underlying weakness, you’re much more likely to get sick and die.”
How shopping in a mall will change
Friedman said that even after malls reopen, certain changes will be required simply because of the way the virus spreads and the need for some distancing between patrons.
“I think we have to think creatively about what the future of the mall format is,” he said. “We’ve been doing that by investing in what people call ‘experiential retail,’ creating reasons for people to gather together, whether it’s arts events, cultural events, fashion shows, basically taking advantage of the ability for people to gather and affiliate.
“The cruel irony of the COVID crisis is that’s exactly what we can’t do right now, and that was the chief advantage brick-and-mortar had over the internet. That’s one of the enormous challenges that we have, is to try to figure out how to keep our customers safe while at the same time giving them a good experience.”
Friedman said he does not know when Nordstrom will vacate its property at the western end of the mall, and that replacing the store will require innovative thinking.
“I’m not minimizing this, this is a huge disappointment,” he said. “But we will rethink it.
“I think we have to think outside the box and explore different kinds of retail opportunities that typically we might not have. We might include housing into the project, or bring office or medical or university uses to the facility.
“It’s still a beautiful property, and there are 180 other beautiful tenants, so there are lot of reasons other users would benefit from proximity to other stores. But it’s not going to be easy.”
He also noted what a personal disappointment the loss of Nordstrom is because his parents, Mort and Marcy Friedman, originally lured the store to Arden Fair in 1989.
The three-level store cost $28 million to build at the time, and was the 23rd Nordstrom outlet to come to California.
The store opened Oct. 20, 1989, to shoppers, three days after the Loma Prieta earthquake devastated the Bay Area.
“If there is indeed a heaven, and if it has a department store, it’s probably a Nordstrom,” The Bee gushed at the time.
A black-tie event the night before the official opening attracted 2,000 people who paid $100 each as a benefit for the Junior League of Sacramento.
They arrived in limousine and horse-drawn carriages, snacked on caviar and salmon and admired the shoe department’s 50,000-pair collection, according to Bee archives.
“That’s one of the things that’s especially sad for me, is my parents had a big role in bringing Nordstrom to the community,” Friedman said. “I can remember they were so proud about having done so.
“It’s personally sad to see them go.”
This story was originally published May 7, 2020 at 10:00 AM.