<PAGE>
[NORDSTROM LOGO]
 
1501 Fifth Avenue, Seattle, WA 98101-1603
 
March 31, 1997
 
DEAR SHAREHOLDERS:
 
On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Shareholders on Tuesday, May 20, 1997, at 11:00
a.m., Pacific Daylight Time, in the Grand Ballroom, Sheraton Seattle Hotel &
Towers, 1400 Sixth Avenue, Seattle, Washington.
 
In addition to the matters described in the Notice of Annual Meeting and Proxy
Statement, there will be a report on the progress of the Company and an
opportunity to ask questions of general interest to you as a Shareholder.
 
YOUR VOTE IS VERY IMPORTANT. Therefore, whether or not you plan to attend the
meeting in person, please sign and return the enclosed Proxy in the envelope
provided. If you attend the meeting and desire to vote in person, you may do so
even though you have previously sent your Proxy.
 
I hope you will be able to join us and we look forward to seeing you in Seattle.
 
Sincerely yours,
 
[JOHN WHITACRE SIGNATURE]
John J. Whitacre
Chairman of the Board of Directors

<PAGE>
NORDSTROM, INC.
1501 FIFTH AVENUE
SEATTLE, WA
98101-1603
 

NOTICE OF ANNUAL
MEETING OF
SHAREHOLDERS
                      To the Shareholders of
                      Nordstrom, Inc.:
 
                      The Annual Meeting of Shareholders of Nordstrom, Inc. will
                      be held on Tuesday, May 20, 1997, at 11:00 a.m., Pacific
                      Daylight Time, in the Grand Ballroom, Sheraton Seattle
                      Hotel & Towers, 1400 Sixth Avenue, Seattle, Washington for
                      the following purposes:
 
                      1.  To elect 12 directors to hold office until the next
                      Annual Meeting of Shareholders and until their successors
                      are duly elected and qualified;
 
                      2.  To consider and vote upon a proposal to approve the
                      Nordstrom, Inc. 1997 Stock Option Plan;
 
                      3.  To ratify the appointment of auditors; and
 
                      4.  To transact such other business as may properly come
                      before the meeting and any adjournment thereof.
 
                      Holders of shares of Common Stock of record at the close
                      of business on March 20, 1997 are entitled to notice of,
                      and to vote at, the meeting.
 
                      Shareholders are cordially invited to attend the meeting
                      in person.
 
                      By order of the Board of Directors,
 
                      [KAREN E. PURPUR SIGNATURE]
                      Karen E. Purpur
                      Secretary
 
                      Seattle, Washington
 
                     March 31, 1997
 
                        WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING,
                        YOU ARE URGED TO SIGN AND DATE THE ENCLOSED PROXY AND
                        RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
 
                                                                               1

<PAGE>
PROXY STATEMENT
 
APPROXIMATE
MAILING DATE:
MARCH 31, 1997
                      This Proxy Statement is furnished to the Shareholders of
                      Nordstrom, Inc. (the "Company") in connection with the
                      solicitation of proxies by the Board of Directors for use
                      at the Annual Meeting of Shareholders to be held on May
                      20, 1997 and any adjournment thereof. If the enclosed
                      Proxy is executed and returned, it will be voted in
                      accordance with the instructions given, but may be revoked
                      at any time insofar as it has not been exercised by
                      notifying the Secretary of the Company in writing (such
                      notification to be directed to the Company's offices at
                      1501 Fifth Ave., Seattle, WA 98101-1603). Each Proxy will
                      be voted for Proposals 1, 2 and 3 and may be voted on such
                      other matters as may properly come before the meeting if
                      no contrary instruction is indicated in the Proxy.
 
                      There were 78,557,335 shares of Common Stock, the only
                      security of the Company entitled to vote at the meeting,
                      outstanding at March 20, 1997, the record date for the
                      Annual Meeting of Shareholders. Shareholders are entitled
                      to one vote for each share of Common Stock held of record
                      at the close of business on March 20, 1997. Under
                      Washington law and the Company's Articles of
                      Incorporation, a quorum consisting of a majority of the
                      shares eligible to vote must be represented in person or
                      by proxy to elect directors and to transact any other
                      business that may properly come before the meeting. For
                      election of directors, the nominees elected will be those
                      receiving the greatest number of votes cast by the shares
                      entitled to vote, up to the number of directors to be
                      elected. Any action other than a vote for a nominee will
                      have the effect of voting against the nominee. The
                      Nordstrom, Inc. 1997 Stock Option Plan will be approved
                      and the appointment of auditors will be ratified if the
                      votes cast in favor of the respective action exceed the
                      votes cast against it. Abstentions and nonvotes by brokers
                      will have no effect since such actions do not represent
                      votes cast by Shareholders.
 
2

<PAGE>

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
                      The following table sets forth as of March 20, 1997 the
                      number of shares of Common Stock held by each person known
                      to the Company to own beneficially more than five percent
                      of the outstanding shares of Common Stock, the directors
                      and nominees, the executive officers named in the Summary
 
                     Compensation Table on page 8, and all directors and
                      executive officers of the Company as a group:
 

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                                                 Amount and
                                                  Nature of
                                                 Beneficial           Percent of
Name of Beneficial Owner                          Ownership             Class
- --------------------------------------------------------------------------------
<S>                                            <C>                    <C>
PHILIP M. CONDIT                                     680                 *
D. WAYNE GITTINGER                             5,254,583(a)(b)          6.59%
  1420 Fifth Avenue, Suite 4100
  Seattle, Washington 98101
ENRIQUE HERNANDEZ, JR.                                 0                 *
RAYMOND A. JOHNSON                                62,214                 *
CHARLES A. LYNCH                                   4,039(c)              *
ANN D. MCLAUGHLIN                                  2,039                 *
JOHN A. MCMILLAN                               1,212,046(a)(d)          1.52%
BRUCE A. NORDSTROM                             5,480,449(a)(e)          6.88%
  1501 Fifth Avenue
  Seattle, Washington 98101
ELMER AND KATHARINE NORDSTROM FAMILY
INTERESTS, L.P.                                6,238,276(f)             7.83%
  c/o 1501 Fifth Avenue
  Seattle, Washington 98101
JOHN N. NORDSTROM                              2,037,972(a)(g)          2.56%
ALFRED E. OSBORNE, JR.                             2,889(h)              *
WILLIAM D. RUCKELSHAUS                             7,039                 *
ELIZABETH CROWNHART VAUGHAN                        2,492                 *
JOHN J. WHITACRE                                  33,462(i)              *
JAMMIE BAUGH                                      21,384(j)              *
GAIL A. COTTLE                                    19,396(k)              *
JOHN A. GOESLING                                  79,317(l)              *
JACK F. IRVING                                    52,543(m)              *
Directors and executive officers as a
group
(23 persons)                                   17,941,911(n)           22.52%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>

 
* Does not exceed 1% of the Company's outstanding Common Stock.
(a) Does not include 80,000 shares held by a corporation in which the director
or his spouse owns a one-eighth beneficial interest.
 
                                                                               3

<PAGE>
(b) Includes 3,477,404 shares held by his wife individually, 268 shares held by
her as a participant in the Company's 401(k) Plan, 388,800 shares held by a
trust of which she is a trustee and beneficiary, and 1,375,380 shares held by a
trust of which she is the beneficiary. Does not include 103,448 shares held by
trusts of which he is a trustee.
(c) Includes 3,000 shares held by a family trust of which he is a trustee and
beneficiary.
(d) Includes 1,025,097 shares held by his wife individually and 54,000 shares
held by a trust of which his wife is the beneficiary.
(e) Includes 29,194 shares held by his wife individually and 2,117,640 shares
held by trusts of which he is a trustee and beneficiary. Does not include
1,759,482 shares held by trusts of which he is co-trustee.
(f)  The general partners of this partnership are Katharine J. Nordstrom, the
Elmer Nordstrom Trust (John N. Nordstrom, trustee), the James F. Nordstrom
Interests, L.P., and the John N. Nordstrom Interests, L.P. The general partners
of the James F. Nordstrom Interests, L.P. are Sally A. Nordstrom, the Estate of
James F. Nordstrom (Sally A. Nordstrom, personal representative), J. Daniel
Nordstrom and William E. Nordstrom, and the general partners of the John N.
Nordstrom Interests, L.P. are John N. Nordstrom, Sally B. Nordstrom and James A.
Nordstrom. Each of these entities and individuals are deemed to beneficially own
the shares held by the Elmer and Katharine Nordstrom Family Interests, L.P. Each
of the general partners disclaims beneficial ownership of the shares held by the
Elmer and Katharine Nordstrom Family Interests, L.P. that exceed the greater of
their proportionate interest in their respective partnership's profits or
capital account.
(g) Includes 80,805 shares held by his wife, 1,003 shares held by a trust of
which he is the trustee and 1,390,000 shares held by the John N. Nordstrom
Interests, L.P. of which he is a general partner. Mr. Nordstrom disclaims
beneficial ownership of the shares held by the John N. Nordstrom Interests, L.P.
that exceed the greater of his proportionate interest in the partnership's
profits or capital account. Does not include any of the shares held by the Elmer
and Katharine Nordstrom Family Interests, L.P.
(h) Includes 300 shares held by his wife and 200 shares held by a corporation of
which he is the sole shareholder.
(i)  Includes 28,814 shares which may be acquired under the 1987 Stock Option
Plan and 2,648 shares held by him as a participant in the Company's 401(k) Plan.
(j)  Includes 18,443 shares which may be acquired under the 1987 Stock Option
Plan and 1,889 shares held by her as a participant in the Company's 401(k) Plan.
(k) Represents shares which may be acquired under the 1987 Stock Option Plan.
(l)  Includes 39,123 shares which may be acquired under the 1987 Stock Option
Plan.
(m) Includes 35,921 shares which may be acquired under the 1987 Stock Option
Plan.
(n) Includes the 6,238,276 shares held by the Elmer and Katharine Nordstrom
Family Interests, L.P.
 
The directors and executive officers shown in the table disclaim beneficial
interest in any shares held solely as custodian or trustee, and all shares held
by their spouses and immediate family members.
 

PROPOSAL 1:
ELECTION OF DIRECTORS
                      Twelve directors will be elected at the meeting, each to
                      hold office until the next Annual Meeting of Shareholders
                      and until a successor has been duly elected and qualified.
                      Unless otherwise instructed by the Shareholder, the
                      persons named in the enclosed Proxy intend to vote for the
                      election of the persons listed in this Proxy Statement.
                      Except for Mr. Hernandez, all of the nominees are
                      currently directors of the Company. If any nominee becomes
 
4

<PAGE>
                      unavailable for any reason or should a vacancy occur
                      before the election (which events are not anticipated),
                      the Proxy may be voted for a person to be selected by the
                      Board of Directors of the Company.
 
                                                                               5

<PAGE>
                      NOMINEES
 
                      Information related to the director nominees is set forth
                      below:
 

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
                          Principal Occupation and Business            Director
Name and Age              Experience for Past Five Years                Since
- -------------------------------------------------------------------------------
<S>                       <C>                                          <C>
PHILIP M. CONDIT          Chairman and CEO of The Boeing Company, a       1994
  Age 55(a)                 Washington based aerospace product
                            manufacturer (formerly President of the
                            Boeing Company; Executive Vice President
                            of Boeing Commercial Airplane Group)
D. WAYNE GITTINGER        Partner in the law firm of Lane Powell          1971
  Age 64(b)(c)              Spears Lubersky LLP
ENRIQUE HERNANDEZ, JR.    President and CEO of Inter-Con Security          N/A
  Age 41(d)                 Systems, Inc., a California based
                            worldwide security and facility support
                            services provider; co-founder and
                            principal partner, Interspan
                            Communications, a television
                            broadcasting company serving Spanish
                            speaking audiences
CHARLES A. LYNCH          Chairman of Fresh Choice, Inc., a               1985
  Age 69(e)                 California based restaurant chain
                            (formerly Chairman of Market Value
                            Partners Company)
ANN D. MCLAUGHLIN         Chairman of the Aspen Institute, a              1992
  Age 55(f)                 Colorado based non- profit, non-partisan
                            organization whose goal is to enhance,
                            through debate, the effectiveness of the
                            leaders of the country's democratic
                            institutions (formerly Vice Chairman of
                            the Aspen Institute; President of the
                            Federal City Council; President and CEO
                            of New American Schools Development
                            Corporation; Visiting Fellow of the
                            Urban Institute)
JOHN A. MCMILLAN          Retired (formerly Co-Chairman of the Board      1966
  Age 65(c)(g)              of Directors of the Company)
BRUCE A. NORDSTROM        Retired (formerly Co-Chairman of the Board      1966
  Age 63(c)                 of Directors of the Company)
JOHN N. NORDSTROM         Retired (formerly Co-Chairman of the Board      1966
  Age 59(c)                 of Directors of the Company)
ALFRED E. OSBORNE, JR.    Director of the Harold Price Center for         1987
  Age 52(h)                 Entrepreneurial Studies and Associate
                            Professor of Business Economics, The
                            Anderson School at UCLA
WILLIAM D. RUCKELSHAUS    A Principal in Madrona Investment Group,        1985
  Age 64(i)                 L.L.C., a Washington based private
                            investment firm (formerly Chairman and
                            CEO of Browning-Ferris Industries, Inc.)
ELIZABETH CROWNHART       President of Salar Enterprises, Ltd., an        1977
  VAUGHAN                   Oregon based Company engaged in the
  Age 68                    production of historical materials
JOHN J. WHITACRE          Chairman of the Board of Directors of the       1995
  Age 44(j)                 Company (formerly Co-Chairman of the
                            Board of Directors of the Company;
                            Co-President of the Company)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>

 
6

<PAGE>
(a) Mr. Condit is also a director of The Boeing Company and Fluke Corporation.
(b) Mr. Gittinger is a partner in the law firm of Lane Powell Spears Lubersky
LLP, which rendered legal services to the Company during the past fiscal year.
(c) Bruce A. Nordstrom is a brother-in-law of D. Wayne Gittinger and a cousin of
John N. Nordstrom. John A. McMillan is a cousin of all three by marriage.
(d) Mr. Hernandez is also a director of California Healthcare Foundation, Great
Western Financial Corporation, ICSS Holding Corp. and McDonald's Corporation.
(e) Mr. Lynch is also a director of Fresh Choice, Inc., Pacific Mutual Life
Insurance Company, PST Vans, Inc. and SRI International.
(f)  Mrs. McLaughlin, a former U.S. Secretary of Labor, is also a director of
AMR Corporation, Donna Karan International, Fannie Mae, General Motors
Corporation, Harman International Industries, Inc., Host Marriott Corporation,
Kellogg Company, Potomac Electric Power Company, Sedgwick Group plc, Union Camp
Corporation and Vulcan Materials Company.
(g) Mr. McMillan is also a director of Fleming Companies, Inc. and the Follett
Company.
(h) Dr. Osborne is also a director of Greyhound Lines, Inc., SEDA Specialty
Packaging Corporation, The Times Mirror Company and United States Filter
Corporation, and is also a trustee of the Sierra Trust Funds and an independent
general partner of Technology Funding Venture Partners V.
(i)  Mr. Ruckelshaus is also a director of Browning-Ferris Industries, Inc.
(chairman of the board), Cummins Engine Company, Gargoyles, Inc., Monsanto
Company and Weyerhaeuser Company. The was also a director of the Company from
1978 to 1983.
(j)  Mr. Whitacre is also a director of Nordstrom Credit, Inc., the Company's
wholly-owned finance subsidiary.
 
T
he Board of Directors recommends a vote for each of the nominees listed in the
table.
 
                                                                               7

<PAGE>
BOARD OF DIRECTORS
AND COMMITTEES
                      The Board of Directors maintains an Audit Committee, a
                      Compensation and Stock Option Committee and a Committee on
                      Organization and Director Affairs. These committees do not
                      have formal meeting schedules, but are required to meet at
                      least once each year. During the past year, there were
                      four meetings of the Board of Directors, four meetings of
                      the Audit Committee, five meetings of the Compensation and
                      Stock Option Committee and four meetings of the Committee
                      on Organization and Director Affairs.
 
                      Current members of the Audit Committee are William D.
                      Ruckelshaus, Chair, Philip M. Condit, Charles A. Lynch,
                      Ann D. McLaughlin, Alfred E. Osborne, Jr. and Elizabeth
                      Crownhart Vaughan. The Audit Committee is responsible for
                      recommending the Company's independent auditors, and
                      reviewing the scope, costs and results of the audit
                      engagement.
 
                      Current members of the Compensation and Stock Option
                      Committee are Elizabeth Crownhart Vaughan, Chair, D. Wayne
                      Gittinger, Ann D. McLaughlin, Alfred E. Osborne, Jr. and
                      William D. Ruckelshaus. The Compensation and Stock Option
                      Committee is responsible for determining the overall
                      compensation levels of certain of the Company's executive
                      officers and administering the Company's stock option
                      plans.
 
                      Current members of the Committee on Organization and
                      Director Affairs are D. Wayne Gittinger, Chair, Charles A.
                      Lynch, Ann D. McLaughlin and Elizabeth Crownhart Vaughan.
                      The Committee is primarily responsible for recommending
                      director nominees to the Company's Board of Directors. The
                      Committee will consider recommendations by Shareholders
                      for vacancies on the Board. Suggestions may be submitted
                      to the Secretary of the Company.
 
                                                                               7

<PAGE>
COMPENSATION OF
EXECUTIVE OFFICERS IN
THE YEAR ENDED
JANUARY 31, 1997

                      SUMMARY COMPENSATION TABLE
 
                      The following table summarizes compensation paid or
                      accrued by the Company for services rendered by the
                      Chairman, the former Co-Chairman and four Executive Vice
                      Presidents for the periods indicated:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S>                       <C>        <C>        <C>        <C>            <C>        <C>
- --------------------------------------------------------------------------------------------------
 
<CAPTION>
                                       Annual Compensation                 Long-Term Compensation
- --------------------------------------------------------------------------------------------------
                                                                             Number
Name and Principal        Fiscal                            Other Annual   of Stock      All Other
Position                  Year(a)       Salary      Bonus  Compensation(b)   Options Compensation(c)
- --------------------------------------------------------------------------------------------------
<S>                       <C>        <C>        <C>        <C>            <C>        <C>
RAYMOND A. JOHNSON             1996   $350,000         $0        $49,503      2,233        $41,110
FORMER CO-CHAIRMAN             1995   $344,167         $0           $620      5,651        $11,397
                               1994   $315,000   $315,000           $658      4,495        $11,432
- --------------------------------------------------------------------------------------------------
JOHN J. WHITACRE               1996   $350,000         $0        $20,769      5,024        $48,093
CHAIRMAN OF THE BOARD OF       1995   $344,167         $0         $1,648      5,651        $10,998
DIRECTORS                      1994   $315,000   $315,000           $759      4,495        $12,830
- --------------------------------------------------------------------------------------------------
JAMMIE BAUGH                   1996   $242,000         $0           $823      3,473         $9,947
                               1995   $239,667         $0           $207      3,907        $10,540
EXECUTIVE VICE PRESIDENT       1994   $225,883   $208,222           $341      3,253        $12,435
- --------------------------------------------------------------------------------------------------
GAIL A. COTTLE                 1996   $216,667    $20,000            $59      3,221         $9,344
                               1995   $203,500    $20,000        $20,413      3,309        $46,407
EXECUTIVE VICE PRESIDENT       1994   $194,167   $221,000           $312      2,796        $12,463
- --------------------------------------------------------------------------------------------------
JOHN A. GOESLING               1996   $325,000         $0           $127      4,665        $11,055
EXECUTIVE VICE PRESIDENT       1995   $322,083         $0        $20,354      5,264        $50,715
AND TREASURER                  1994   $307,500   $307,500           $754      4,388        $13,109
- --------------------------------------------------------------------------------------------------
JACK F. IRVING                 1996   $297,000   $106,122           $600      4,263         $6,837
                               1995   $290,000    $44,793        $20,634      4,795        $45,406
EXECUTIVE VICE PRESIDENT       1994   $255,000   $136,394           $308      3,638        $11,237
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>

 
(a) The fiscal year of the Company ends January 31. Fiscal years indicated end
January 31 of the following year.
(b) Other Annual Compensation for fiscal year 1996 includes tax reimbursements.
(c) All Other Compensation for fiscal year 1996 includes the following:
 
     Profit Sharing Plan benefit: Mr. Whitacre: $4,949; Ms. Baugh: $4,956; Ms.
     Cottle: $4,972; Mr. Goesling: $4,946; Mr. Irving: $4,982.
 
     401(k) Plan benefit: Mr. Whitacre: $3,895; Ms. Baugh: $4,500; Ms. Cottle:
     $3,602; Mr. Goesling: $4,053.
 
     Premiums on excess life insurance: Mr. Johnson: $2,910; Mr. Whitacre: $885;
     Ms. Baugh: $491; Ms. Cottle: $770; Mr. Goesling: $2,056; Mr. Irving:
     $1,855.
 
     Automobile Allowance: Mr. Johnson: $38,200; Mr. Whitacre: $38,364.
 
8

<PAGE>
                      OPTION GRANTS IN LAST FISCAL YEAR
 
                      The following table sets forth information concerning
                      option grants during fiscal year 1996 to the named
                      executive officers:
 

<TABLE>
<CAPTION>
 
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
                                                                                                       Potential Realizable
                                                            Percent                                      Value at Assumed
                                                           of Total                                   Annual Rates of Stock
                                                            Options                                   Price Appreciation for
                                              Number     Granted to  Exercise or                           Option Terms
                                          of Options   Employees in   Base Price                      ----------------------
Name                                      Granted(a)    Fiscal Year    Per Share   Expiration Date           5%          10%
- ----------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>            <C>          <C>                 <C>        <C>
RAYMOND A. JOHNSON                             2,233          0.60%      $51.375  May 21, 2006          $72,147     $182,835
- ----------------------------------------------------------------------------------------------------------------------------
JOHN J. WHITACRE                               2,233          0.60%      $51.375  May 21, 2006          $72,147     $182,835
                                               2,791          0.75%      $41.125  Nov 19, 2006          $72,184     $182,930
- ----------------------------------------------------------------------------------------------------------------------------
JAMMIE BAUGH                                   1,544          0.41%      $51.375  May 21, 2006          $49,886     $126,420
                                               1,929          0.52%      $41.125  Nov. 19, 2006         $49,890     $126,432
- ----------------------------------------------------------------------------------------------------------------------------
GAIL A. COTTLE                                 1,308          0.35%      $51.375  May 21, 2006          $42,261     $107,097
                                               1,913          0.51%      $41.125  Nov. 19, 2006         $49,476     $125,383
- ----------------------------------------------------------------------------------------------------------------------------
JOHN A. GOESLING                               2,074          0.56%      $51.375  May 21, 2006          $67,010     $169,816
                                               2,591          0.70%      $41.125  Nov. 19, 2006         $67,012     $169,821
- ----------------------------------------------------------------------------------------------------------------------------
JACK F. IRVING                                 1,895          0.51%      $51.375  May 21, 2006          $61,226     $155,160
                                               2,368          0.64%      $41.125  Nov. 19, 2006         $61,244     $155,205
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

 
(a) Options are granted at the fair market value of the Company's Common Stock
on the date of grant. Absent contrary action by the Compensation and Stock
Option Committee at the time of grant, options vest and become exercisable
during employment with the Company ratably each year over a four-year period
from the date of grant. To the extent not already exercisable, options generally
become exercisable upon a sale of the Company or substantially all of its
assets. During the last fiscal year, the Company granted options to officers and
other key employees on May 21, 1996 and on November 19, 1996.
 
                                                                               9

<PAGE>
                      OPTION EXERCISES AND YEAR END VALUE TABLE
 
                      The following table sets forth information concerning
                      option exercises and the value of options held during
                      fiscal year 1996 by the named executive officers:
 

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
                                                                                          Dollar Value of
                                                           Number of Unexercised     Unexercised, in-the-Money
                                 Number of                    Options Held at             Options held at
                                    Shares       Dollar       January 31, 1997          January 31, 1997(a)
                               Acquired on        Value  --------------------------  --------------------------
Name                              Exercise  Realized(a)  Exercisable  Unexercisable  Exercisable  Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>          <C>          <C>            <C>          <C>
RAYMOND A. JOHNSON                   8,996     $210,148       25,890              0      $75,865             $0
- ---------------------------------------------------------------------------------------------------------------
JOHN J. WHITACRE                         0           $0       26,044         13,083     $107,184         $9,085
- ---------------------------------------------------------------------------------------------------------------
JAMMIE BAUGH                         5,009      $86,424       16,487          9,157      $81,324         $6,514
- ---------------------------------------------------------------------------------------------------------------
GAIL A. COTTLE                       7,744     $206,972       17,725          8,071      $69,488         $5,603
- ---------------------------------------------------------------------------------------------------------------
JOHN A. GOESLING                     3,302      $65,002       36,528         12,354     $228,156         $8,931
- ---------------------------------------------------------------------------------------------------------------
JACK F. IRVING                       4,250      $80,750       37,135         10,911     $264,266         $7,119
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

 
(a) Dollar value is based on the market value of the Company's Common Stock on
the date of exercise or at January 31, 1997, as the case may be, minus the
exercise price.
 
                      PENSION PLAN TABLE
 
                      The following table sets forth information concerning
                      estimated annual benefits payable to each of the named
                      executive officers upon their retirement based upon
                      indicated years of service (without reduction for any
                      Profit Sharing Retirement Plan benefits):
 

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
                                    Years of Service(b)
   Average Annual  -----------------------------------------------------
  Compensation(a)     15         20         25         30         35
- ------------------------------------------------------------------------
 
<S>                <C>        <C>        <C>        <C>        <C>
     125,000       $  45,000  $  60,000  $  75,000  $  75,000  $  75,000
     150,000       $  54,000  $  72,000  $  90,000  $  90,000  $  90,000
     175,000       $  63,000  $  84,000  $ 105,000  $ 105,000  $ 105,000
     200,000       $  72,000  $  96,000  $ 120,000  $ 120,000  $ 120,000
     225,000       $  81,000  $ 108,000  $ 135,000  $ 135,000  $ 135,000
     250,000       $  90,000  $ 120,000  $ 150,000  $ 150,000  $ 150,000
     300,000       $ 108,000  $ 144,000  $ 180,000  $ 180,000  $ 180,000
     400,000       $ 144,000  $ 192,000  $ 240,000  $ 240,000  $ 240,000
     450,000       $ 162,000  $ 216,000  $ 270,000  $ 270,000  $ 270,000
     500,000       $ 180,000  $ 240,000  $ 300,000  $ 300,000  $ 300,000
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
</TABLE>

 
(a) The benefits are payable pursuant to the Nordstrom Supplemental Executive
Retirement Plan, which covers officers of the Company and its subsidiaries,
including the named executive officers. The benefits are unfunded and limited to
a maximum of 60% of the monthly average compensation (based solely on the yearly
amounts set forth in the salary and bonus columns of the Summary Compensation
 
10

<PAGE>
Table) less any monthly benefits payable under the Nordstrom Profit Sharing
Retirement Plan. The normal retirement benefit provided by the Nordstrom
Supplemental Executive Retirement Plan is 2.4% of the monthly average
compensation for the three highest paying years of the last five years,
multiplied by the number of years of service with the Company, up to a maximum
of twenty-five years.
(b) The credited years of service to the Company for Raymond A. Johnson, John J.
Whitacre, Jammie Baugh, Gail A. Cottle, John A. Goesling, and Jack F. Irving are
27, 20, 22, 27, 19 and 30, respectively.
 
COMPENSATION AND
STOCK OPTION
COMMITTEE
REPORT ON FISCAL YEAR
1996 EXECUTIVE
COMPENSATION
                      The Compensation and Stock Option Committee is comprised
                      of five directors, and is responsible for setting
                      compensation levels for the Chairman of the Board of
                      Directors, the Co-Presidents and the Executive Vice
                      Presidents of the Company. The Committee also consults
                      with the Chairman and the Co-Presidents with respect to
                      the compensation and benefits for other officers and with
                      respect to the benefits for certain other employees of the
                      Company.
 
                      COMPENSATION PHILOSOPHY
 
                      The Company bases different portions of its executive
                      compensation program on differing measures of Company
                      performance and Shareholder value. The Company believes
                      that focusing on performance measures based solely on
                      short-term changes in stock price or on performance
                      measures based solely on Company data, such as sales
                      increases or earnings per share, will not necessarily
                      increase the long-term return to Shareholders. As a
                      result, the Company's compensation program currently
                      reflects the following themes:
 
                          - Compensation should play a critical role in
                            attracting and retaining executives whom the Company
                            deems most able to further its goals.
 
                          - A material portion of compensation should be
                            meaningfully related to Company performance and
                            value created for Shareholders.
 
                          - Medium and long-term Company performance and value
                            created for Shareholders should be measured by a mix
                            of factors, including increases in Company stock
                            price, sales increases, earnings per share and other
                            performance related value drivers which will or
                            should increase shareholder return.
 
                          - Since the Company has chosen a team to oversee the
                            operations of the Company, compensation
                            opportunities for the Co-Presidents, who manage
                            specific areas of the Company's business, and the
                            Chairman, who oversees the overall operations of the
                            Company, should be based on the team's effort and
                            performance of the Company as a whole.
 
                      The Company also considers Section 162(m) of the Internal
                      Revenue Code, which limits to $1 million per year the
                      compensation expense deduction the Company may take with
                      respect to the executive officers named in the Summary
                      Compensation Table. The Company is submitting its 1997
                      Stock Option Plan for Shareholder approval in part to
                      comply with regulations
 
                                                                              11

<PAGE>
                      promulgated under Section 162(m) to qualify that plan
                      under the performance-based compensation exception to the
                      expense deduction limit. Based on current levels of other
                      compensation available to the executive officers named in
                      the Summary Compensation Table, the Company believes there
                      is no risk of exceeding the $1 million amount for any of
                      those officers.
 
                      The Committee periodically reviews its compensation
                      philosophy and overall compensation structure. In fiscal
                      1997, the Committee engaged two outside consultants to
                      counsel the Committee regarding the possibility of
                      aligning the Company's executive compensation structure
                      with additional or different financial measurement
                      criteria from those the Committee has traditionally used
                      to determine executive compensation. The Committee will
                      consider these recommendations during fiscal 1997 for
                      possible use in future compensation decisions. The
                      Committee is currently discussing with management how it
                      perceives other shareholder value driver criteria which
                      may be more closely tied to total shareholder return and
                      how those criteria might be utilized in the compensation
                      system.
 
                      PAY MIX AND MEASUREMENT
 
                      The Company's executive compensation program is based on
                      three components, each of which furthers a differing
                      objective, but all of which together are intended to serve
                      the Company's overall compensation philosophy.
 
                      BASE SALARY.  The Committee reviews the competitive median
                      base salaries for competitors in the specialty retailing
                      field, including companies listed in Standard & Poor's
                      Retail Store Composite referenced in the Performance Graph
                      on page 15. The executive structure of most of these
                      companies does not lend itself readily to direct
                      comparison with the Company and its practice of choosing a
                      team to manage the business of the Company. With attendant
                      shared responsibilities, the Company has chosen to set
                      base salary levels for individuals in this team at levels
                      which are generally not as high as that of its competitors
                      with a single chief executive officer. Although the
                      Company has informally labeled the Chairman as its chief
                      executive officer to provide disclosure requiring that
                      designation, the Co-Presidents share certain duties with
                      the Chairman that would otherwise be included in the
                      duties of a true chief executive officer.
 
                      Base salary increases or decreases are established on an
                      annual basis and are based on the Committee's view of how
                      the management team and the respective individuals
                      contribute to the overall performance of the Company.
                      Overall performance of the Company is measured by a number
                      of factors including the Company's earnings, its
                      performance in the real or perceived retail environment
                      and competitive conditions, performance versus budget,
                      growth in accounts receivable, improvement in gross
                      margins and the Committee's assessment of management
                      skills. None of these factors is
 
12

<PAGE>
                      given greater weight than any other factor. The
                      Committee's review of salary information for competitors
                      also enables it to observe what changes have occurred, if
                      any, in competitors' base salaries.
 
                      ANNUAL BONUS INCENTIVES.  This incentive is intended to
                      reflect the Company's belief that management's
                      contribution to medium and long-term Company performance
                      comes, in part, from maximizing Company earnings per
                      share, division sales, inventory turn and gross margins.
                      Annual bonus incentives for the Chairman, the
                      Co-Presidents and the Executive Vice President who acts as
                      the Chief Financial Officer are based solely on specified
                      earnings per share target amounts. Annual bonus incentives
                      for the other Executive Vice Presidents are based on
                      various combinations of earnings per share, division
                      sales, inventory turn, gross margin and expense control
                      targets. The amount of the respective bonuses is based on
                      these targets which, in turn, relate to pre-established
                      percentages of the respective base salaries. Under this
                      plan, executive officers do not receive any bonus
                      incentives until the applicable minimum specified
                      performance target is achieved. Bonuses for fiscal year
                      1996 were paid only to those executive officers who were
                      subject to division sales, inventory turn and gross margin
                      targets. The performance targets have not been waived for
                      purposes of these bonus incentives for any year covered by
                      the Summary Compensation Table.
 
                      LONG-TERM INCENTIVES.  STOCK OPTIONS. The Company has
                      options outstanding under the 1987 Stock Option Plan,
                      which expires in August 1997. The 1987 Stock Option Plan
                      is administered by the Committee. The Committee proposed
                      to the Board the 1997 Stock Option Plan and, if approved
                      by the Shareholders, that Plan will also be administered
                      by the Committee, four members of which are considered
                      "outside" directors within the meaning of Section 162(m)
                      of the Internal Revenue Code and "non-employee" directors
                      under Rule 16b-3 of the Securities Exchange Act of 1934.
                      The member of the Committee who is not considered an
                      "outside" or "non-employee" director abstains from any
                      action taken by the Committee with respect to options
                      granted to those executive officers who may be named in
                      the Summary Compensation Table.
 
                      The option incentive component of the total compensation
                      package is intended to retain and motivate executives to
                      increase total return to the Shareholders. Stock options
                      have been granted at the fair market value of the
                      Company's Common Stock and will only have value if the
                      Company's stock price increases from the time of the
                      award. Vesting of options occurs only during employment
                      with the Company upon each anniversary of the award, with
                      full vesting generally after the fourth year following an
                      award. The number of stock options granted to the
                      executive officers named in the Summary Compensation Table
                      has been determined by the Committee pursuant to a formula
                      used for all plan participants, without reference to the
                      number of stock options granted previously. Pursuant to
                      the formula, the number of option shares granted
                      corresponds to the number of underlying
 
                                                                              13

<PAGE>
                      Company shares that would produce a value equal to 50% of
                      the participant's yearly salary, assuming an annual 12%
                      growth rate in the Company's Common Stock price over a
                      five-year period. Stock options have been granted
                      semiannually in May and November, with one half of the
                      formula value of the option award granted each time. Since
                      the formula is keyed to salary, the performance factors
                      discussed in the Base Salary paragraph also would apply to
                      this compensation component. The Committee reserves the
                      right to change or eliminate the formula at any time.
 
                      RETIREMENT.  The Nordstrom Profit Sharing Retirement Plan
                      covers all regular employees of the Company and its
                      subsidiaries, including the executive officers named in
                      the Summary Compensation Table. The Board of Directors
                      determines annually an amount to be contributed by the
                      Company to the Retirement Plan. Allocation of the
                      Company's contribution to each participant's account is
                      pro rata, based on one unit of credit for each year of
                      service and one unit of credit for each $100 of
                      compensation. For purposes of this latter calculation,
                      compensation is limited to $150,000 for calendar year
                      1996.
 
                      SAVINGS.  Pursuant to the Nordstrom Employee Deferral
                      Retirement Plan, employees may elect to have the Company
                      pay from 1% to 10% of the employee's compensation, up to a
                      maximum of $9,500 for calendar year 1996, to the
                      Retirement Plan instead of paying that amount to the
                      employee. The Company matches 50% of the employee's
                      contribution up to 6% of the employee's compensation.
                      Monies in the account are invested at the direction of the
                      employee among one or more of six funds, one of which
                      consists of Common Stock of the Company. Distributions are
                      made at normal retirement or earlier termination of
                      employment, and for terminal illness, disability or
                      hardship.
 
                      The Nordstrom Supplemental Executive Retirement Plan
                      provides retirement benefits to certain executives and key
                      employees of the Company. This Plan is described in the
                      note to the Pension Plan Table above.
 
COMPENSATION OF THE
CHIEF EXECUTIVE
OFFICER
                      The base salary for the chief executive officer is
                      determined by the Committee and is based on overall
                      Company performance. That performance is measured by a
                      number of factors including the Company's earnings, real
                      or perceived retail environment and competitive
                      conditions, performance versus budget, growth in sales,
                      improvement in gross margins and the Committee's
                      assessment of management skills. None of these factors is
                      given greater weight than any other factor. The base
                      salaries of the Chairman and the former Co-Chairman were
                      not changed in 1996, reflecting the absence of any
                      improvement in the Company's financial performance over
                      the previous year. The annual bonus incentives for the
                      Chairman and former Co-Chairman were based solely on
                      earnings per share targets as previously described. Those
                      earnings per share targets were not met and the Chairman
                      and the former Co-
 
14

<PAGE>
                      Chairman did not receive any bonus for fiscal year 1996.
                      The Chairman and the former Co-Chairman received stock
                      options during fiscal year 1996 pursuant to the formula
                      used for all Stock Option Plan participants as previously
                      described.
 
                                           COMPENSATION AND STOCK OPTION
                                           COMMITTEE
 
                                           Elizabeth Crownhart Vaughan, Chair
                                           D. Wayne Gittinger
                                           Ann D. McLaughlin
                                           Alfred E. Osborne, Jr.
                                           William D. Ruckelshaus
 
STOCK PRICE
P
ERFORMANCE
                      PERFORMANCE GRAPH
 
                      The following graph compares for each of the last five
                      fiscal years ending January 31 the cumulative total return
                      of Company Common Stock, Standard & Poor's 500 Index and
                      Standard & Poor's Retail Store Composite. The cumulative
                      total return of Company Common Stock assumes $100 invested
                      on January 31, 1992 in Nordstrom, Inc. Common Stock and
                      assumes reinvestment of dividends.
 
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
 

<TABLE>
<CAPTION>
            STANDARD & POOR'S       S&P RETAIL       NORDSTROM, INC.
<S>        <C>                  <C>                  <C>
                     500 Index     Stores Composite      Common Stock
1992                       100                  100               100
1993                       111                  118               107
1994                       125                  111                96
1995                       125                  105               112
1996                       174                  111               111
1997                       219                  133               108
</TABLE>

 
                                                                              15

<PAGE>

COMPENSATION OF
DIRECTORS
                      Employee directors of the Company are not paid any fees
                      for serving as members of the Board or any Board
                      committee. Non-employee directors are paid a yearly
                      retainer of $15,000 and a fee of $1,000 for each Board
                      meeting and $1,000 for each committee meeting attended,
                      together with reasonable traveling expenses. Pursuant to
                      the 1993 Non-Employee Director Stock Incentive Plan,
                      immediately following each Annual Meeting of Shareholders
                      non-employee directors also receive that number of shares
                      of Company Common Stock having a fair market value of
                      $10,000, plus a $4,000 cash award to offset tax
                      obligations attributable to the stock award.
 
COMPENSATION
COMMITTEE INTERLOCKS
AND INSIDER
PARTICIPATION
                      None of the members of the Compensation and Stock Option
                      Committee is or has been an officer or employee of the
                      Company or any of its subsidiaries. D. Wayne Gittinger, a
                      director of the Company and a member of the Compensation
                      and Stock Option Committee, is a partner in the law firm
                      of Lane Powell Spears Lubersky LLP, which rendered legal
                      services to the Company during the past fiscal year.
 
P
ROPOSAL 2:
APPROVAL OF THE 1997
STOCK OPTION PLAN
                      The Company has granted stock options to its employees
                      since 1977 under the 1977 and 1987 Stock Option Plans. The
                      1977 Stock Option Plan expired in August 1987 and the
                      current plan expires in August 1997. If approved by
                      Shareholders, the Nordstrom, Inc. 1997 Stock Option Plan
                      (the "Plan") would enable the Company to continue its
                      practice of granting stock options as one element of its
                      compensation program. The following is a summary of the
                      Plan, a complete copy of which has been filed with the
                      Commission as an appendix to this proxy statement.
 
                      PURPOSE
 
                      The purposes of the Plan are to attract and retain the
                      best available personnel for positions of substantial
                      responsibility, to provide additional incentive to
                      employees of the Company or any of its subsidiaries, and
                      to promote the success of the Company's business.
 
                      SHARES SUBJECT TO PLAN
 
                      There are 5,000,000 shares of Common Stock authorized for
                      nonqualified and incentive stock option grants and for
                      grants of restricted shares of Common Stock under the
                      Plan, which are subject to adjustment in the event of
                      stock splits, stock dividends and other situations.
 
                      EMPLOYEE PARTICIPANTS
 
                      Participants in the Plan include any employee of the
                      Company or any parent or subsidiary of the Company and are
                      selected by the Compensation and Stock Option Committee,
                      or a subcommittee thereof (the "Committee"). The Company
                      estimates there are approximately 265 persons who would
                      currently be eligible to participate in the Plan. The Plan
                      provides that no
 
16

<PAGE>
                      participant may be granted in any year more than 50,000
                      shares of restricted stock, or options to purchase more
                      than 50,000 shares of Common Stock, as adjusted as
                      provided in the Plan.
 
                      ADMINISTRATION
 
                      The Committee shall either (i) consist solely of two or
                      more non-employee directors of the Company as defined in
                      Rule 16b-3 under the Securities Exchange Act of 1934, as
                      amended, or (ii) cause any director who is not a
                      non-employee director to abstain from any action by the
                      Committee related to granting options to executive
                      officers of the Company. The Board of Directors may also
                      appoint one or more separate committees of the Board of
                      Directors which may administer the Plan with respect to
                      employees who are not executive officers of the Company.
 
                      The Board of Directors may amend or terminate the Plan as
                      desired, without further action by the Company's
                      shareholders, except to the extent required by applicable
                      law.
 
                      TERMINATION
 
                      The Plan will continue in effect until all shares of stock
                      available for grant have been acquired through exercise of
                      options or otherwise, or for a term of ten (10) years from
                      its effective date, whichever is earlier. The Plan may be
                      terminated at such earlier time as the Board of Directors
                      may determine. Termination of the Plan will not affect the
                      rights and obligations arising under restricted stock or
                      options granted under the Plan and then in effect.
 
                      TERMS OF STOCK OPTIONS
 
                      The Committee may grant incentive stock options as defined
                      in Section 422 of the Internal Revenue Code of 1986, as
                      amended, and non-qualified stock options. Options granted
                      pursuant to the Plan need not be identical but each option
                      is subject to certain terms and conditions of the Plan.
                      The exercise price under each option is established by the
                      Committee. The exercise price may be paid as determined by
                      the Committee. Options granted expire within a period of
                      not more than ten (10) years from the grant date. Options
                      shall be exercisable in such manner and at such times as
                      the Committee may determine. The Committee, may, at any
                      time prior to exercise and subject to consent of the
                      participant, amend, modify or cancel any option previously
                      granted and may or may not substitute in their place
                      options at a different price and of a different type under
                      different terms or in different amounts.
 
                      TERMS OF RESTRICTED STOCK
 
                      The Committee may grant shares of restricted Common Stock
                      of the Company with such terms and conditions as may be
                      determined by the Committee. Grants of shares of
                      restricted stock shall be made at such cost as the
                      Committee shall determine and may be issued for no
                      monetary
 
                                                                              17

<PAGE>
                      consideration, subject to applicable state law. Shares of
                      restricted stock shall be issued and delivered at the time
                      of the grant or as otherwise determined by the Committee,
                      but shall be subject to forfeiture until provided
                      otherwise in the applicable restricted stock agreement.
                      Each certificate representing shares of restricted stock
                      shall bear a legend referring to the risk of forfeiture of
                      the shares and stating that such shares are
                      nontransferable until all restrictions have been satisfied
                      and the legend has been removed. At the discretion of the
                      Committee, the grantee may or may not be entitled to full
                      voting and dividend rights with respect to all shares of
                      restricted stock from the date of grant.
 
                      FEDERAL INCOME TAX CONSEQUENCES
 
                      The following discussion of the federal income tax
                      consequences of the Plan is intended to be a summary of
                      applicable federal law. State and local tax consequences
                      may differ. Because the federal income tax rules governing
                      options and related payments are complex and subject to
                      frequent change, optionees are advised to consult their
                      tax advisors prior to exercise of options or dispositions
                      of stock.
 
                      Incentive stock options and non-qualified stock options
                      are treated differently for federal income tax purposes.
                      Incentive stock options are intended to comply with the
                      requirements of Section 422 of the Code. Non-qualified
                      stock options need not comply with such requirements.
 
                      An optionee is not taxed on the grant or exercise of an
                      incentive stock option. The difference between the
                      exercise price and the fair market value of the shares on
                      the exercise date will, however, be a preference item for
                      purposes of the alternative minimum tax. If an optionee
                      holds the shares acquired upon exercise of an incentive
                      stock option for at least two years following grant and at
                      least one year following exercise, the optionee's gain, if
                      any, upon a subsequent disposition of such shares is long
                      term capital gain. The measure of the gain is the
                      difference between the proceeds received on disposition
                      and the optionee's basis in the shares (which generally
                      equals the exercise price). If an optionee disposes of
                      stock acquired pursuant to exercise of an incentive stock
                      option before satisfying the one and two-year holding
                      periods described above, the optionee will recognize both
                      ordinary income and capital gain in the year of
                      disposition. The amount of the ordinary income will be the
                      lesser of (i) the amount realized on disposition less the
                      optionee's adjusted basis in the stock (usually the option
                      price) or (ii) the difference between the fair market
                      value of the stock on the exercise date and the option
                      price. The balance of the consideration received on such a
                      disposition will be long term capital gain if the stock
                      had been held for at least one year following exercise of
                      the incentive stock option. The Company is not entitled to
                      an income tax deduction on the grant or exercise of an
                      incentive stock option or on the optionee's disposition of
                      the shares after satisfying the holding period requirement
                      described above. If the holding periods are not satisfied,
                      the
 
18

<PAGE>
                      Company will be entitled to a deduction in the year the
                      optionee disposes of the shares, in an amount equal to the
                      ordinary income recognized by the optionee.
 
                      An optionee is not taxed on the grant of an non-qualified
                      stock option. On exercise, however, the optionee
                      recognizes ordinary income equal to the difference between
                      the option price and the fair market value of the shares
                      on the date of exercise. The Company is entitled to an
                      income tax deduction in the year of exercise in the amount
                      recognized by the optionee as ordinary income. Any gain on
                      subsequent disposition of the shares is long term capital
                      gain if the shares are held for at least one year
                      following exercise. The Company does not receive a
                      deduction for this gain.
 
                      A grantee of shares of restricted stock recognizes
                      ordinary income on the date of receipt equal to the value
                      of such shares (less any consideration paid by the
                      grantee) unless the shares of stock are subject to a
                      substantial risk of forfeiture. If the shares of stock are
                      subject to a substantial risk of forfeiture, absent an
                      election by the grantee to be taxed on the date of grant,
                      then the grantee will recognize ordinary income when the
                      risk of forfeiture lapses. The Company is entitled to an
                      income tax deduction in the year the grantee recognizes
                      income equal to the amount of income recognized by
                      grantee.
 
                      PLAN BENEFITS
 
                      The Committee has full discretion to determine the number
                      and amount of options to be granted to employees under the
                      Plan, subject to an annual limitation on the total number
                      of options that may be granted to any employee. Therefore,
                      the benefits and amounts that will be received by each of
                      the named executive officers, the executive officers as a
                      group and all other employees under the Plan are not
                      presently determinable. Details on stock options granted
                      during the last three years to certain executive officers
                      are presented in the Summary Compensation Table.
 
                      REQUIRED APPROVAL
 
                      The Plan will be approved if the votes cast in favor of
                      the Plan exceed the votes cast against it. Abstention from
                      voting or nonvoting by brokers will have no effect since
                      such actions do not represent votes cast by shareholders.
                      Unless marked to the contrary, proxies received will be
                      voted for approval of the Plan.
 
 
                     The Board of Directors recommends a vote for the approval
                      of the Plan.
 
                                                                              19

<PAGE>

PROPOSAL 3:
RATIFICATION OF
APPOINTMENT OF
AUDITORS
                      The Board of Directors, acting upon the recommendation of
                      the Audit Committee, has appointed the independent public
                      accounting firm of Deloitte & Touche LLP to be the
                      Company's auditors for fiscal year 1997. As in the past,
                      the Board has determined that it would be desirable to
                      request ratification of its appointment by the
                      Shareholders of the Company. If the Shareholders do not
                      ratify the appointment of Deloitte & Touche LLP, the
                      appointment of independent public accountants will be
                      reconsidered by the Board. A representative of Deloitte &
                      Touche LLP will be present at the Annual Meeting, will
                      have the opportunity to make a statement if he or she so
                      desires and will be available to respond to appropriate
                      questions.
 
                      The Board of Directors recommends ratification of Deloitte
                      & Touche LLP as auditors for the Company.
 
SOLICITATION OF
PROXIES
                      All expenses of proxy solicitation will be paid by the
                      Company. Solicitation of proxies will be made primarily by
                      mail, but proxies may also be solicited personally, by
                      telephone and by telegraph and by regular officers and
                      employees of the Company who will receive no additional
                      compensation for their services. Brokers or other persons
                      holding shares in their names or in the names of nominees
                      will be reimbursed their reasonable expenses for sending
                      proxy material to principals and obtaining their proxies.
                      In addition, the Company has retained Corporate Investor
                      Communications, Inc. to aid in the Company's solicitation
                      for an estimated fee of $6,000 plus out-of-pocket
                      expenses.
 

COMPLIANCE WITH
SECTION 16(A) OF
THE EXCHANGE ACT
O
F 1934
                      Based solely on its review of copies of reports made
                      pursuant to Section 16(a) of the Securities Exchange Act
                      of 1934 and the related regulations, the Company believes
                      that during fiscal year 1996 all filing requirements
                      applicable to its directors, executive officers and 10
                      percent shareholders were satisfied.
 
O
THER MATTERS
                      The Board of Directors of the Company knows of no other
                      matters that may come before the meeting. However, if any
                      other matters should properly come before the meeting or
                      any adjournment thereof, it is the intention of the
                      persons named in the Proxy to vote the Proxy in accordance
                      with their best judgment.
 
SHAREHOLDER
PROPOSALS FOR 1998
ANNUAL MEETING
                      Proposals for Shareholder action which eligible
                      Shareholders wish to have included in the Company's Proxy
                      Statement mailed to Shareholders in connection with the
                      Company's 1998 Annual Meeting must be received by the
                      Company at its principal executive offices on or before
                      December 1, 1997.
 
                      By Order of the Board of Directors,
 
                      [KAREN E. PURPUR SIGNATURE]
                      Karen E. Purpur
                      Secretary
 
20

<PAGE>
                      Seattle, Washington
                      March 31, 1997
 
                                                                              21

<PAGE>
                                     [LOGO]
 
                                [RECYCLED LOGO]
                           Printed on Recycled Paper

<PAGE>
                                                                  Appendix

                                   NORDSTROM, INC.
                                1997 STOCK OPTION PLAN


    1.   Purposes of the Plan.  The purposes of this 1997 Nordstrom Stock
Option Plan (the "Plan") are to attract and retain the best available personnel
for positions of substantial responsibility with Nordstrom, Inc. (the
"Company"), to provide additional incentive in the form of stock options or
shares of restricted Common Stock of the Company (the "Benefits") to employees
of the Company or any parent or subsidiary of the Company which now exists or
hereafter is organized or acquired by or acquires the Company, and to promote
the success of the business.

    2.   Eligibility.  Any employee of the Company or any parent or subsidiary
of the Company may receive Benefits under the Plan.

    3.   Administration.  The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company, or a subcommittee thereof
(the "Committee").  The Committee shall either (i) consist solely of two or more
non-employee directors of the Company as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, or (ii) cause any director who is
not a non-employee director to abstain from any action by the Committee related
to granting Benefits to executive officers of the Company.  The Board of
Directors may also appoint one or more separate committees of the Board of
Directors who may administer the Plan with respect to employees who are not
executive officers of the Company.

    4.   Effective Date and Termination of Plan.  Subject to shareholder
approval, the effective date of the Plan is May 20, 1997.  The Plan shall
terminate when all shares of stock subject to Benefits granted under the Plan
shall have been acquired or on May 19, 2007, whichever is earlier, or at such
earlier time as the Board of Directors may determine.  Termination of the Plan
will not affect the rights and obligations arising under Benefits granted under
the Plan and then in effect.

    5.   Shares Subject to the Plan.  The stock subject to Benefits authorized
to be granted under the Plan shall consist of 5,000,000 shares of the Company's
common stock, no par value, or the number and kind of shares of stock or other
securities which shall be substituted or adjusted for such shares as provided in
Section 8.  All or any shares of stock subject to Benefits which for any reason
terminate may again be made subject to Benefits under the Plan.

    6.   Grant, Terms and Conditions of Options.  Incentive stock options as 
defined in Section 422 of the Internal Revenue Code of 1986, as amended and 
non-qualified stock options may be granted by the Committee at any time and 
from time to time prior to the termination of the Plan to those employees of 
the Company or any parent or subsidiary of the Company who, in the 
Committee's judgment, are largely responsible through their judgment, 
interest, ability and special efforts for the successful conduct of the 
Company's operations. However, no 



<PAGE>

participant shall be granted options in any year to purchase more than 50,000 
shares of the Company's common stock as adjusted as provided in Section 8.

         No participant shall have any rights as a shareholder of the Company
with respect to any shares of stock underlying any option granted hereunder
until those shares have been issued.  Each option shall be evidenced by a
written stock option agreement which will expressly identify the option as an
incentive stock option or as a non-qualified stock option.  Furthermore, the
grant of an incentive option pursuant to the Plan shall in no way be construed
as an alternative to the right of an optionee to purchase stock pursuant to any
present or future grant of a non-qualified option under any of the Company's
current or future stock option plans.  Options granted pursuant to the Plan need
not be identical but each option is subject to the terms of the Plan and is
subject to the following terms and conditions:

         6.1  Price.  The exercise price of each option granted under the Plan
    shall be established by the Committee.  The exercise price may be paid as
    determined by the Committee.

         6.2  Duration and Exercise or Termination of Option.  Each option
    granted under the Plan shall be exercisable in such manner and at such
    times as the Committee shall determine.  Each option granted must expire
    within a period of ten (10) years from the grant date.

         6.3  Transferability of Options.  Each option shall be transferable
    only by will or the laws of descent and distribution except and unless the
    option provides for additional rights to transfer.

         6.4  Other Terms and Conditions.  Options may also contain such other
    provisions, which shall not be inconsistent with any of the foregoing
    terms, as the Committee shall deem appropriate.  No option, however, nor
    anything contained in the Plan shall confer upon any participant any right
    to continue in the Company's employ or service nor limit in any way the
    Company's right to terminate his or her employment or service at any time.

    7.   Grant, Terms and Conditions of Restricted Stock.  The Committee may 
grant shares of restricted common stock of the Company with such terms and 
conditions as may be determined in the sole discretion of the Committee.  
Grants of shares of restricted stock shall be made at such cost as the 
Committee shall determine and may be issued for no monetary consideration, 
subject to applicable state law.  Shares of restricted stock shall be issued 
and delivered at the time of the grant or as otherwise determined by the 
Committee, but may be subject to forfeiture until provided otherwise in the 
applicable restricted stock agreement.  Each certificate representing shares 
of restricted stock shall bear a legend referring to the risk of forfeiture 
of the shares and stating that such shares are nontransferable until all 
restrictions have been satisfied and the legend has been removed.  At the 
discretion of the Committee, the grantee may or may not be entitled to full 
voting and dividend rights with respect to all shares of 

                                  2


<PAGE>

restricted stock from the date of grant.  No participant shall be granted 
more than 50,000 shares of restricted stock of the Company in any year, as 
adjusted as provided in Section 8.

    8.   Adjustment Upon Changes in Capitalization/Change in Control.  The
number and kind of shares of Company stock subject to Benefits under the Plan
shall be appropriately adjusted along with a corresponding adjustment in the
option exercise price, if applicable, to reflect any stock dividend, stock
split, split-up or any combination or exchange of shares, however accomplished.
An appropriate adjustment shall also be made with respect to the aggregate
number and kind of shares available for grant under the Plan.  If the Company or
the shareholders of the Company enter into an agreement to dispose of all or
substantially all of the assets or shares by means of a sale, a reorganization,
a liquidation, or otherwise, all options shall become immediately exercisable
with respect to the full number of shares subject to those options and all
restrictions on any shares of restricted stock granted under the Plan shall be
immediately removed.

    9.   Withholding.  To the extent required by applicable federal, state,
local or foreign law, a participant shall make arrangements satisfactory to the
Company for the satisfaction of any withholding tax obligations that arise
pursuant to Benefits granted under the Plan.  The Company shall not be required
to issue shares until such obligations are satisfied.  The Committee may (but
shall not be required to) permit these obligations to be satisfied by having the
Company withhold a portion of the shares of stock that otherwise would be issued
to the participant or by delivering shares previously owned by the participant.

    10.  Amendment and Termination.  The Board of Directors may amend or
terminate the Plan as desired, without further action by the Company's
shareholders, except to the extent required by applicable law.


                                     3


<PAGE>
- --------------------------------------------------------------------------------

PROXY

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

                                NORDSTROM, INC.
                   1501 FIFTH AVENUE, SEATTLE, WA 98101-1603

   By signing this Proxy, the Shareholder appoints D. Wayne Gittinger and 
Karen E. Purpur, or either of them, with full power of substitution, proxies to 
vote all shares of stock of the undersigned entitled to vote at the Annual 
Meeting of Shareholders of Nordstrom, Inc. to be held May 20, 1997 in Seattle, 
Washington, at 11:00 a.m., Pacific Daylight Time, and any adjournment thereof, 
with all power the Shareholder would possess if personally present.

   This Proxy will be voted in accordance with the instructions given. Unless
revoked or otherwise instructed, the shares represented by this Proxy will be
voted for proposals 1, 2 and 3 and will be voted in accordance with the
discretion of the proxies upon all other matters which may come before the
meeting or any adjournment thereof.



- --------------------------------------------------------------------------------
              Please Mark, Date, Sign and Return this proxy card
              promptly using the enclosed postage-paid envelope.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                          FOLD AND DETACH HERE 

- --------------------------------------------------------------------------------



DIRECT DEPOSIT OF DIVIDEND



Nordstrom is pleased to offer its shareholders of record the ability to have
quarterly dividends electronically deposited. This service is provided at no
cost to you and enables you to have your dividends deposited on the date payable
in an account at the financial institution of your choice. 


The advantages of having your dividend payment electronically deposited include:
the availability of funds on the date payable, the elimination of a trip to the
bank and no possibility of a stolen or lost check. 


Should you wish to take advantage of this service, please contact ChaseMellon
Shareholder Services at 1-800-522-6645 or Nordstrom Investor Relations at 
1-206-233-6301.






NORDSTROM

- --------------------------------------------------------------------------------

<PAGE>

<TABLE>
<S>                                    <C>                       <C>                        <C>             <C>
                                                                                                            Please mark
                                                                                                            your votes as    /X/
                                                                                                            indicated in     
                                                                                                            this example


                                           FOR all nominees
PROPOSAL 1-ELECTION OF DIRECTORS       (except as indicated to      WITHHOLD AUTHORITY
                                          the contrary below)    to vote for all nominees                    FOR  AGAINST  ABSTAIN
P. M. Condit, D. W. Gittinger,                 /      /                  /      /           PROPOSAL 2-     
E. Hernandez, Jr., C. A. Lynch,                                                             APPROVAL OF     /   /  /   /    /   /  
A. D. McLaughlin, J. A. McMillan,                                                           THE 1997 NORDSTROM   
B. A. Nordstrom, J. N. Nordstrom,                                                           STOCK OPTION    
A. E. Osborne, Jr.,                                                                         PLAN                                   
W. D. Ruckelshaus, E. C. Vaughan,                                                                             FOR  AGAINST  ABSTAIN
J. J. Whitacre                                                                              PROPOSAL 3-                            
                                                                                            RATIFICATION    /   /  /   /    /   /  
To withhold authority to vote for                                                           OF APPOINTMENT  
any individual nominee, write that                                                          OF AUDITORS     
nominee's name on the space provided 
below.                                                                                        IN THEIR DISCRETION, THE PROXIES ARE
                                                                                              AUTHORIZED TO VOTE UPON SUCH OTHER 
- ------------------------------------                                                          MATTERS AS MAY PROPERLY COME BEFORE
                                                                                              THE MEETING.  The Board of Directors
                                                                                              at present knows of no other matters
                                                                                              to be brought before the meeting.
</TABLE>



     Signature(s)                                         Dated            1997
                 --------------------------------------        -----------
     PLEASE SIGN AS NAME APPEARS ON THIS PROXY. Joint signers should each sign.
     Trustees, Guardians, Personal and other Representatives, please indicate 
     full title.


- --------------------------------------------------------------------------------

                               FOLD AND DETACH HERE

- --------------------------------------------------------------------------------


BE ON THE LOOKOUT FOR A NEW NORDSTROM NEAR YOU


<TABLE>
<S>                               <C>                           <C>
OPENING SPRING OF 1997            OPENING SPRING OF 1998        OPENING FALL 1999*                 

Costa Mesa, California            Atlanta, Georgia              Providence, Rhode Island            
Metro Point (Rack)                Perimeter Mall                Providence Place                    
                                  
San Diego, California                                                                              
Mission Valley (Rack)             Overland Park, Kansas         Mission Viejo, California          
                                  Oak Park Mall                 Mission Viejo Shopping Center      
Bellevue, Washington                                                                               
Factoria Mall (Rack)              OPENING FALL OF 1998          Hurst, Texas                       
                                                                North East Mall                    
                                  Seattle, Washington                                              
OPENING FALL OF 1997              Downtown Seattle                                                 
Long Island, New York                                           OPENING FALL 2000*                 
Roosevelt Field                   San Diego, California                                            
                                  Fashion Valley (expansion)    Honolulu, Hawaii                   
West Hartford, Connecticut                                      Ala Moana Shopping Center          
Westfarms Mall                    Scottsdale, Arizona                                              
                                  Scottsdale Fashion Square     Columbia, Maryland                 
Beachwood, Ohio                                                 Columbia Mall                      
Beachwood Place                                                                                    
                                  OPENING SPRING OF 1999*       *tentative                         
Long Island, New York                                           
The Mall at The Source (Rack)     Norfolk, Virginia             
                                  MacArthur Center              
Beverly Hills, California                                       
Faconnable Boutique               Spokane, Washington           
                                  Downtown Spokane              
                                  
                                  
</TABLE>

NORDSTROM                         

- --------------------------------------------------------------------------------

<PAGE>

PROXY

          THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

                               NORDSTROM, INC.
                   1501 FIFTH AVENUE, SEATTLE, WA 98101-1603

    By signing this Proxy, the Shareholder appoints D. Wayne Gittinger and 
Karen E. Purpur, or either of them, with full power of substitution, proxies 
to vote all shares of stock of the undersigned entitled to vote at the Annual 
Meeting of Shareholders of Nordstrom, Inc. to be held May 20, 1997 in 
Seattle, Washington, at 11:00 a.m., Pacific Daylight Time, and any 
adjournment thereof, with all power the Shareholder would possess if 
personally present.

     This Proxy will be voted in accordance with the instructions given. 
Unless revoked or otherwise instructed, the shares represented by this Proxy 
will be voted for proposals 1, 2 and 3 and will be voted in accordance with 
the discretion of the proxies upon all other matters which may come before 
the meeting or any adjournment thereof.

Please Mark, Date, Sign and Return this proxy card promptly using the 
enclosed postage-paid envelope.

- --------------------------------------------------------------------------------
                          -  FOLD AND DETACH HERE  -


Dear Plan Participant:

Since you have a portion of your Nordstrom P.S. PLUS 401(k) account in the
Nordstrom Stock Fund, you have the right to vote the shares of Nordstrom 
stock held for your account. This same proxy and voting information is 
furnished to all Nordstrom shareholders.

The Trustee of the Nordstrom Stock Fund (Wells Fargo Bank) will receive your 
signed proxy and instructions, along with those made by other participants, 
and cast the resulting vote on behalf of the Fund as a whole to the Company. 
YOUR VOTE WILL BE KEPT IN STRICT CONFIDENCE BY THE TRUSTEE.

YOUR VOTE IS VERY IMPORTANT. Please return only this proxy card in the 
enclosed envelope. Do not combine it with any other proxy cards you may 
receive as they may be tabulated by a different system. You must execute and 
return this proxy card if you wish to vote these shares.

NORDSTROM


<PAGE>

                     PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE    /X/


PROPOSAL 1-ELECTION OF DIRECTORS    FOR ALL NOMINEES         
                                 (except as indicated to   WITHHOLD AUTHORITY to
                                   the contrary below)     vote for all nominees
P. M. Condit, D. W. Gittinger,            / /                       / /
E. Hernandez, Jr., C. A. Lynch,
A. D. McLaughlin, J. A. McMillan,
B. A. Nordstrom, J. N. Nordstrom,
A. E. Osborne, Jr., W. D.
Ruckelshaus, E. C. Vaughan, 
J. J. Whitacre

To withhold authority to vote for
any individual nominee, write that
nominee's name on the space
provided below.

- ---------------------------------

                                              FOR        AGAINST       ABSTAIN
P
ROPOSAL 2-APPROVAL OF THE 1997               / /          / /           / /
NORDSTROM STOCK OPTION PLAN

                                              FOR        AGAINST       ABSTAIN
P
ROPOSAL 3-RATIFICATION OF                    / /          / /           / /
APPOINTMENT OF AUDITORS

IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING. The Board of Directors at present knows
of no other matters to be brought before the meeting.



Signature(s)___________________________________________ Dated ____________, 1997

PLEASE SIGN AS NAME APPEARS ON THIS PROXY. JOINT SIGNERS SHOULD EACH SIGN.
TRUSTEES, GUARDIANS, PERSONAL AND OTHER REPRESENTATIVES, PLEASE INDICATE FULL
TITLE.
- --------------------------------------------------------------------------------
                          -  FOLD AND DETACH HERE  -

BE ON THE LOOKOUT FOR A NEW NORDSTROM NEAR YOU

OPENING SPRING OF 1997

Costa Mesa, California
Metro Point (Rack)

San Diego, California
Mission Valley (Rack)

Bellevue, Washington
Factoria Mall (Rack)

OPENING FALL OF 1997

Long Island, New York
Roosevelt Field

West Hartford, Connecticut
Westfarms Mall

Beachwood, Ohio
Beachwood Place

Long Island, New York
The Mall at The Source (Rack)

Beverly Hills, California
Faconnable Boutique

OPENING SPRING OF 1998

Atlanta, Georgia
Perimeter Mall

Overland Park, Kansas
Oak Park Mall

OPENING FALL OF 1998

Seattle, Washington
Downtown Seattle

San Diego, California
Fashion Valley (expansion)

Scottsdale, Arizona
Scottsdale Fashion Square

OPENING SPRING OF 1999*

Norfolk, Virginia
MacArthur Center

Spokane, Washington
Downtown Spokane 

OPENING FALL 1999*

Providence, Rhode Island
Providence Place

Mission Viejo, California
Mission Viejo Shopping Center

Hurst, Texas
North East Mall

OPENING FALL 2000*

Honolulu, Hawaii
Ala Moana Shopping Center

Columbia, Maryland
Columbia Mall

*tentative

NORDSTROM