SAN FRANCISCO (KGO) -- Nordstrom is planning to close both of its Downtown San Francisco stores, choosing not to renew its lease inside of Westfield Mall, the store confirmed Tuesday.
It will also close the nearby Downtown Nordstrom Rack.
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The Nordstrom Rack on Market Street's last day of business will be July 1, and the Nordstrom inside Westfield Mall is slated to close at the end of August.
The company's chief stores officer wrote in an email to staff that "the dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully."
The shuttering comes amid a slew of other announced retail closures in the area including Office Depot, The Container Store, Anthropologie and Saks Off 5th.
Our media partner the SF Standard created the map below which shows store closures near Union Square and the surrounding area since 2020.
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The San Francisco Whole Foods flagship which opened along Market in March of 2022, also announced a temporary closure last month, citing worker safety.
The Westfield Mall said in a statement that the closure "underscores the deteriorating situation in downtown San Francisco."
"The planned closure of Nordstrom underscores the deteriorating situation in downtown San Francisco," said a mall spokesperson. "A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area."
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However, there's more to this story than just crime.
The National Retail Federation says many retailers are focusing on more budget-friendly, attainable options.
Nordstrom's strategy appears to mirror this shift in consumer trends.
While the San Francisco stores are closing, they are opening 20 new "RACK" stores, their discounted brand, this year including one in Pinole.
VIDEO: How Nordstrom's closure could impact downtown SF, Bay Area
Mark Mathews, the Executive Director of National Retail Federation Research says consumer spending across the country was up during the pandemic. However, our current economic situation is affecting consumer spending in a different way.
"We've gone through a pretty inflationary period in the past year and a half, so things cost a lot more and what tends to happen is the consumer will change their behavior. They'll start trading down. If eggs cost too much they're going to buy something different. What they're doing is going to discounted retailers. If they think they can get a better deal elsewhere... they're going to do that," said Mathews.
VIDEO: San Francisco stores that are now gone
He also points out unique challenges to doing business in large cities where the cost of operation is higher and where organized retail theft is more of an issue compared to more suburban areas.
"It becomes a question whether you want to lose money in these areas by keeping your stores open or if you want to close things up and look for other opportunities," said Mathews.
Meantime the Market Street closures are making things worse for small businesses.
RELATED: What's in store for San Francisco Bay Area's economy post-pandemic?
Family-run Cole Hardware has a location blocks from the soon-to-be-closed Nordstrom on Market.
"The downtown store on 4th Street lost about 60% of business but as I say it's coming back and I'm optimistic we'll inch forward. Hopefully, we'll be back to 2019 numbers by 2029," says Rick Karp, owner of Cole Hardware.
But it's not all bad news on Market Street though. Swedish home goods brand IKEA is preparing to open a 70,000-square-foot location right down the street from Nordstrom in the near future.
The Union Square Alliance declined to comment for this story.
Jamie Nordstrom, Chief Stores Officer, sent the following message to employees:
"Today we announced that we've made the difficult decision not to renew our leases at the San Francisco Centre Nordstrom store and our Market Street Rack store across the street. Market Street Rack's last day of business will be July 1 and we intend to close San Francisco Centre at the end of August.
Decisions like this are never easy, and this one has been especially difficult. We've spent more than 35 years serving customers in downtown San Francisco, building relationships with them and investing in the local community. But as many of you know, the dynamics of the downtown San Francisco market have changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully. With both leases set to expire, and after looking closely at our opportunities in the region, we believe we can better serve our customers there by focusing on our 16 nearby Nordstrom and Nordstrom Rack locations, as well as online.
I want to be really clear that this decision had nothing to do with our team's hard work. They should be proud of everything they've achieved together and the way they've shown up and served the community. We're working with each impacted employee to support them through this transition and find new roles within the company wherever possible.
Stores continue to play a critical part in delivering our Closer to You strategy, and we continue to be opportunistic about new store locations, relocations and concepts. In fact, we have 20 new Rack store openings planned this year, with more to come in 2024. We also remain committed to the Bay Area market and have made significant investments in our stores there over the past several years. We recently announced a new Nordstrom Rack store will open in Pinole, CA, and completed a remodel at our Valley Fair Nordstrom store."
Read the full statement from Westfield Mall below:
"The planned closure of Nordstrom underscores the deteriorating situation in downtown San Francisco. A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area.
URW has actively engaged with City leaders for many years to express our serious concerns, which are shared by our customers and retailers. We have urged the City to find solutions to the key issues and lack of enforcement against rampant criminal activity.
The current environment is not sustainable for the community, or businesses, and we are hopeful the City will implement the changes that are so urgently needed."
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