Off 5th seeing rapid expansion

Outlet retail chains seem to be all the rage nowadays. Nordstrom Rack has surpassed Nordstrom in terms of the number of stores they have in the United States, Bloomingdale’s has announced plans to open an outlet in Manhattan, and now it looks like Saks Fifth Avenue is the latest luxury department store to take notice of the power of the outlet retail chain.

It’s no secret people love designer goods, but they don’t always want to pay those designer price points. Saks Fifth Avenue’s outlet chain, Off 5th, is currently accelerating their rollout with changes to approach in pricing and buying and marketing shifts to present more approachable imagery. In short, they want more customers, and they want them now.

“We will open up 15 Saks Off 5th outlets in the U.S. in 2015 and will have 90 by the end of the year,” Jonathan Geller, president of Hudson Bay Co’s outlets, was quoted saying to WWD. “In 2016, our plan is to open 20 stores in the U.S. And we are opening up to eight stores in Canada in 2016, and up to 25 in Canada within the first five years.”

He also discussed plans to potentially go global with Off 5th. The first new store opening with be in Canda at Vaughan Mills in Toronto. Openings in Canada at Ottawa Tanger Outlets and Outlet Collections in Niagara are to follow. Off 5th’s stores usually average around 28,000 square feet, but their Stamford, Connecticut store is 56,000 square feet.

Hudson Bay Co. growing Off 5th outlet chain

Nordstrom Rack is also expected to enter the Canadian market, so Off 5th will be given a run for their money. Off 5th has been moving towards becoming more of an off-price business rather than an outlet business, because as an off-price business they will have an easier time expanding throughout the country and globally, rather than if they were just an outlet business. Think of the number of Off-price stores like Marshalls and TJ Maxx you see versus the number of outlet stores you see.

Off 5th is planned to open in lower Manhattan a few blocks away from the new Saks Fifth Avenue slated to open next year at Brookfield Place. While many might not see situating an Off 5th next to a Saks Fifth Avenue as a smart business move, given the age discrepancy between the two customers, both businesses stand the potential to flourish. The average Off 5th customer is in their 30s, ten years younger than the average Saks Fifth Avenue customer.

Off 5th’s new buying strategy will have every store looking completely different, with new product coming in everyday, and certain items being delivered on a monthly basis. In terms of merchandise, they will continue to carry luxury brands, but they will be adding more entry level price point products as well. Off 5th is also redesigning their stores to make the brand feel more approachable and not expensive.

There’s a lot more color and in the store décor and the traditional Saks black-and-white motif is gone. In terms of their sales strategy, brands will be 70 percent off their original retail value now, resulting in what will be huge savings for customers. While the regular Saks Fifth Avenue channel might be seeing sluggish sales due to currency exchange rates, Hudson Bay is still helping finding success with their outlet chain Off 5th.