Nordstrom has been a strong performer in the challenging department store space. It continues to innovate by focusing on what's important to customers. While competitors such as Macy's and J.C. Penney struggle with ongoing same-store sales declines, Nordstrom's fiscal third-quarter earnings easily beat consensus estimates, helped by solid results from its anniversary sales event and an improvement in promotions. Shares are up 28% in the last six months. Customer experience and service has always been at the core of Nordstrom's strengths, but the consumer discretionary company also offers newness and brand discovery thanks to its partnerships with strategic brands, many of which are digitally native and direct-to-consumer. This helps differentiate it from its department store peers.

Working with small brands that have little brick-and-mortar presence creates an incentive for consumers to visit their nearest Nordstrom in order to experience those products in person. The strategy has also helped transform Nordstrom's image from an average upscale department store to one that offers sought-after brands that aren't widely available. Examples of strategic partners include Topshop, Allbirds, Greats, and Reformation. More recently, Nordstrom has hosted "pop-up" shops featuring jewellery brand Stella and Dot and cult beauty company Glossier. All of these brands sell through few or no other retailers. Nordstrom has bolstered these efforts by giving partners creative flexibility and sharing data with them. Many brands that gained popularity through carefully cultivated connections with customers do not want their image or presentation altered by an outside company.