Public Spaces: Battle Ground of the Brands

by Piers Schmidt

How many people noticed Nordstrom’s announcement that on October 3 2017, the first Nordstrom Local will debut in Melrose Place, Los Angeles? This may not sound like much of an event but look closer at what Nordstrom have planned.

Opinion Piece

In 2017, Nordstrom announced that the first Nordstrom Local would debut in Melrose Place, Los Angeles.

To most, this may not sound like much of an event. Supermarket chains have been flexing formats for years so it’s no great surprise that a luxury department store would follow suit and try out smaller modules that allow them to serve customers closer to their homes.

But if you look closer at what the luxury department store has planned, you will learn that its loyal customers who are hooked on a peerless brand of customer service, won’t be able to shop at a Nordstrom Local.

The 3,000 sq. ft store will offer personal styling, manicures, a tailor and a collection of beverages including wine, craft beers, cold-pressed juices and a barista bar but will stock no physical merchandise.

Nordstrom Local is a store without the shopping.

According to Nordstrom, their new offering is both a “service-focused concept store” and a “neighbourhood hub”, a brilliant idea that should have the hospitality industry thinking hard about its business model. Here’s why.

If you review the list of amenities again, you’d be excused for thinking it described the lobby experience of a trendy, new lifestyle hotel concept.

Nordstrom is not the first nor the only brand moving beyond conventional retail to enter a territory that has traditionally been preserved for hotels. Apple’s next-generation stores will be even more lobby-like than their present format.

Preceding the announcement of the iPhone X, the company released details about its new store concept: “public spaces, complete with outdoor plazas, indoor forums and designated boardrooms for local entrepreneurs.” Going one step further, the “public spaces” terminology of hospitality has been appropriated to describe what they are no longer referring to as a “store” but rather as “town squares”.

All of which sounds like not only the lobby but also the first floor and basement of many hotels.

According to Angela Ahrendts, former CEO of Burberry and now head of Apple’s retail operations, the idea is “to create spaces where people can relax, meet up with friends or just listen to a local artist on the weekend.” Sounds like a hotel, doesn’t it?

As Nordstrom and Apple both make moves towards models that are effectively hotels without bedrooms, where does that leave hospitality in this battleground of the public spaces?

Although the hotel sector enjoys a considerable advantage in both size and wide distribution of hotels around the world over department stores, the direction of travel indicated by their thinking presents a threat to conventional hotel models.

Powerful brands such as Nordstrom, Apple and Samsung- whose 55,000 sq. ft technology playground in New York City doesn’t sell a single product- will fuel a winder trend in retail. Physical locations will become less about merchandise and more about immersive brand experiences.

This could very quickly threaten the exclusive position that hotels have enjoyed as community meeting places- one that could disappear overnight if this industry fails to innovate and stay competitive.

By slowly encroaching on the ‘public spaces’ model, there’s nothing to stop a myriad of strong brands with excellent service credentials from making their next move into bedrooms. This is something that has already been tried and tested by Selfridges and their own branded hotel between 1972 and 2008.

The future of hospitality?

If hotels are not vigilant and proactive, there is a chance they find themselves relegated yet again to merely bedroom factories. And with this model itself under threat from industry disruptors such as Airbnb and Homestay, will they have a purpose at all in a few years?

Hotels are facing real dangers to their monopoly. If they lose their positioning in the market, travellers could become comfortable sourcing their lodging peer to peer. The whole game as we know it could be up.

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With a unique blend of ‘calculated creativity’, Luxury Branding helps ambitious organisations to define and express how they are special, different, and better: special for their affluent customers, different and better than the competition.

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Piers Schmidt and Ian R Douglas of Phoenix Global are the co-founders of Kingham Leigh. This dynamic new partnership has been created to design, develop and operate innovative hospitality projects in Europe and beyond.

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