Nordstrom Rack is becoming a massive threat to Macy's, Kohl's, and JCPenney

Nordstrom Rack/Facebook

Nordstrom is expanding its off-price chain, Nordstrom Rack, like crazy.

The brand plans to bump its current 180 stores up to 300 by 2020, Women's Wear Daily reports.

While the outlet model may devalue other retailers, Nordstrom has seen a huge cash influx with its Rack expansion by catering to a different demographic.

"The outlets have given them exposure to a completely different customer who is all about value," Edward Hertzman, founder and Publisher of retail publication Sourcing Journal, told Business Insider last year.

Nordstrom Rack, like TJ Maxx, is defying the odds. Many Americans are spending less and less on clothing, but these two discount retailers are getting it right.

It helps that Nordstrom Rack's higher-priced parent is incredibly successful.

Associated Press

A shopper checks a shoe as she walks down an aisle in a Nordstrom rack in Chicago

Unlike many other retailers, Nordstrom has figured out the elusive millennial generation - and the outlet concept appeals to cash-strapped young adults.

"The outlet business gives Nordstrom exposure to young customers who are seeking a deal and otherwise wouldn't be shopping there," Robin Lewis of The Robin Report has explained. "The company believes that the younger customer will migrate into the full-line stores as they grow older."

While Lewis believes there is a risk of the outlet business diluting the brand's image, he says that brands like Nordstrom that offer a variety of brands are less at-risk than name brands like Michael Kors.

"They have a breadth of brands, so having outlets might not tarnish the nameplate," he explained.

Ashley Lutz contributed to this report.