(Bloomberg)—For department stores, the fight for New York is fiercer than ever.
In a sign of retrenchment ahead of rivals’ expansion, luxury retailer Saks Fifth Avenue is shutting the doors of its women’s store at Manhattan’s Brookfield Place this week -- a location it opened just two years ago. While Saks’s smaller men’s store will stay open, the failure of the women’s shop shows that New York remains a department-store battlefield -- and highlights how the competition is intensifying.
Both Nordstrom and Neiman Marcus will be opening Manhattan locations this year, infringing on the turf that’s long been associated with Bloomingdale’s, Macy’s and Bergdorf Goodman.
“For New York specifically, there is a real battle for consumer spending as more large stores open in the city,” said Neil Saunders, managing director at GlobalData Retail. The Saks Brookfield Place store, he said, may not have even been needed given the company’s flagship location about 5 miles north on Fifth Avenue. “The whole purpose of a flagship is that it draws in people from a very large radius without the need for smaller locations,” Saunders said.
‘Preferred Format’
Saks, which is owned by Toronto-based Hudson’s Bay Co., said in an email that the women’s store was a test concept and allowed the company to learn that women’s “preferred format is a combination of our digital channels and our iconic Fifth Avenue flagship.” Brookfield, meanwhile, will soon announce a new “amenity-focused tenant to take the majority of space Saks will vacate,” according to a spokesman for the mall.
Saks’s flagship location on Fifth Avenue, one of the world’s largest and most prominent department stores, is undergoing what the company calls a “grand renovation.” Last year, the retailer opened a new beauty-focused floor with 58 new cosmetics brands and more than a dozen spa rooms.
Saks is slimming down as competitors beef up their presence in Manhattan. Much-anticipated retail space at Hudson Yards, in the Chelsea neighborhood, will open in March. The shopping area will include the first-ever Manhattan location for Neiman Marcus -- a giant store with three levels and about 250,000 square feet. The new development has also lured Stuart Weitzman and Tory Burch, among others.
Elsewhere in Manhattan, Nordstrom plans to open a 320,000-square-foot women’s store alongside its existing 47,000-square-foot space for menswear on West 57th Street near Central Park.
The growing competition puts even more pressure on department-store chains to make sure their physical locations are attracting foot traffic, since shoppers are increasingly gravitating to online shopping. Department stores saw U.S. sales decline 1.3 percent during the crucial holiday season, compared to the year prior, even though overall retail sales rose 5.1 percent to more than $850 billion, according to data from Mastercard SpendingPulse.
To contact the reporters on this story: Hema Parmar in New York at [email protected]; Kim Bhasin in New York at [email protected] To contact the editors responsible for this story: Anne Riley Moffat at [email protected] Jonathan Roeder, Cecile Daurat
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