Retail Rules

Proceed To Checkout: Why You’re Shopping In Seattle (Even If You’ve Never Been There)

Among the first products ever sold in Seattle was lumber, boards of pine and fir churned out by a saw mill at the foot of what is now Yesler Street. You can still buy boards in Seattle – but now you can do it through Amazon. Search “lumber” on the hometown retail giant and you get back nearly 50,000 results.

Seattle has always known how to sell. It is, arguably, the retail capital of the United States. No other city is corporate home to as rich a mix of brick-and-mortar, big box and online retailers. Consider a partial list of retailers headquartered here: Amazon, Costco, Nordstrom, Starbucks, Zulily, Eddie Bauer, Tommy Bahama, drugstore.com and REI. Expand the definition of retail to include travel and real estate and Seattle claims Expedia, Zillow and Redfin.

But why? What makes the country’s 22nd largest city such a hotbed for starting retail businesses?

“That’s a question we’re always asking,” said Mary Ann Odegaard, who runs the University of Washington’s retail management program. “There is no agreed-upon answer.”

But that doesn’t mean there is a shortage of theories. Here are five likely explanations for Seattle’s retail dominance and, because this is a story about shopping, we’ve thrown in a sixth for free.

Theory No. 1: Geography is destiny

Seattle struck it rich during a gold rush that took place nearly 2,000 miles away. The boom the city experienced during the Klondike Gold Rush of 1897-1900 positioned it as the premier city in the Northwest and established a retail and customer service tradition that continues to this day.

In 1897, a steamship docked in Seattle carrying what newspapers said was “a ton of gold” discovered in the Yukon Territory, a rugged region near the border of Alaska. The country contracted gold fever. Tens of thousands of people rushed to Seattle, the American city closest to the gold fields and the departure point for the steamships to Alaska.

Faced with flood of ill-equipped, gold-crazed prospectors, Canada’s North-West Mounted Police ruled that any prospector without at least a ton of provisions would be turned back. Seattle took out ads nationwide touting itself as the “Gateway to the Gold Fields” and merchants piled the sidewalks with the woolen blankets, boots, shovels and dried food prospectors needed.

The gold hunters eventually returned to Seattle (most of them poorer than when they departed). Some stayed. In 1890, the city’s population was 43,000. By 1900, it was nearly twice that and it reached 237,000 by 1910.

One of those returned prospectors was Swedish immigrant John W. Nordstrom who, in 1901, used $13,000 in gold earnings to open a shoe store. That shop, of course, grew into one of the largest and most-respected department store chains in the country. Another Seattle store that opened in 1890, Bon Marche, became a regional chain before being absorbed by Federated Stores.

Seattle’s geography helped in other ways as well. With no other large cities nearby, retailers such as Nordstrom, Bon Marche and Costco were able to grow with relatively little competition in the regional market.

Also, Seattle’s location between the Pacific Ocean and the Cascade Range created a demand for rugged outside clothing and gear, equipment that wasn’t being made elsewhere in the country. For example, REI was founded in the 1930s when local mountaineers couldn’t find an ice axe they liked. This local demand helps explain the presence of brands such as Eddie Bauer, Filson, Cascade Designs, Outdoor Research, ExOfficio, K2 Sports and Eddyline Kayaks. 

Theory No. 2: Success begets success

Seattle does retail well because Seattle does retail well.

The city is a hub for retail the way New York City is for finance or Los Angeles is for entertainment, said Jason Stoffer, a partner at Maveron, a VC firm founded by Starbucks CEO Howard Schultz that invests exclusively in consumer businesses, including such Seattle firms as Livemocha and Julep.

Successful retailers spawn others, he said, noting that daily deal site Zulily was started by veterans of Blue Nile, an online jewelry retailer; beauty brand Julep by a Starbucks alum; and hot newcomer Hointer by an Amazon grad. Employees of successful retailers are well positioned to start their own firms, he said.

“Seattle has a specific talent pool for retail,” he said.

Seattle entrepreneurs also seem to have the right mindset for retail, he said, one that is patient and willing to skip a quick flip in favor of long-term growth.

The fact that Washington state does not have an income tax also helps. It’s one of the reasons Jeff Bezos launched Amazon in Seattle.

Theory No. 3: Customer service rules

Nordstrom set the standard for customer care; Starbucks drills its ethos of service into each and every barista; Costco tantalizes shoppers with a vast and occasionally unexpected array of offerings.

That tradition of service has been handed down to online retailers in Seattle, said Jessica Shapiro, director of brand and communications for Zulily.

“I think Nordstrom, Costco and REI have set the bar for customer service,” she said. “Being influenced by such great companies does have an influence on smaller companies.”

With its move into same-day delivery, Amazon continues to push the boundaries of online retail service, forcing others to follow in order to compete.

While it can seem impersonal, online shopping can lead to closer relationships than traditional retail, said Shapiro. For example, Zulily emails daily alerts to members, many of whom browse the deals whether or not they buy, which means more frequent contact with the retailer than with a store shoppers might visit once a week or less.

For online retailers, social media interaction substitutes for a clerk’s friendly smile and greeting, she said, adding that customers’ increased ability to broadcast their gripes with retailers also is motivation for better service.

Theory No. 4: Tech rules

As shopping increasingly moves online, the retailers with the best online presence and smoothest interfaces will win.

Thanks to Microsoft, Amazon, the University of Washington’s computer school and others, Seattle has one of the largest concentrations of tech talent in the country – talent that is as likely to be found working for shopping site Decide.com as at a software firm.

“There is a huge awareness of technology and the importance of establishing the best (online) shopping experience,” said Robert Spector, a Seattle-based retail consultant and author of books on Nordstrom and Amazon.

“We all compete for the same top talent,” said Zulily’s Shapiro, herself a former employee of Microsoft and Starbucks.

Theory No. 5: Seattle hustles

Seattle was not settled until 1851 and not incorporated until 1865, the same year the Civil War ended. That makes it one of the youngest metropolises in the country. That frontier spirit, lack of a power Establishment and a willingness to try new things means it’s a city that sells, said Spector.

“Seattle has always been an entrepreneurial city on the make,” he said. “Seattle has aspirations to be, if not New York, at least San Francisco.”

That hustle also creates a service mentality, he said, one willing to go the extra mile to keep a customer happy and make a buck.  

Theory No. 6: CEOs with vision

Successful retailers often are the result of charismatic company leaders who build companies around their vision and make sure their businesses fully embrace their philosophies, said Spector. Jeff Bezos, Howard Schultz, Eddie Bauer, John Nordstrom and James Sinegal and Jeffrey Brotman of Costco all fit that description.

Conclusion

In truth, not one single theory can explain Seattle’s retail success. They’ve all contributed.

The ultimate test of Seattle’s retail prowess is the legalization of marijuana for recreational purposes in Washington state. Though the first legal sale is not expected until next year, a former Microsoft manager already has declared his intention to start a chain of pot stores and become “the Starbucks of marijuana.”

Given Seattle’s history, it wouldn’t be wise to bet against it.

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