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Saks Off 5th coming to midtown Manhattan

By Kristopher Fraser

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Retail

New York City has been home to Saks Fifth Avenue for decades and decades, but, now, New York City will be home to the department store's off-price chain, Saks Off 5th. As Bloomingdale's announced earlier this year that they will be opening an outlet chain on the Upper West Side, and Nordstrom has long had their popular Nordstrom Rack location in Union Square, the off-price discount designer competition is getting very tough in Manhattan. The location of the Saks Off 5th location will be at Tower 57, located at 125 East 57th Street near Lexington Avenue, and Saks' competitor Bloomingdale's.

An Off 5th location is also set to open in lower Manhattan not too far away from where Saks will be opening their new location at Brookfield place.

“Off-price is a major growth strategy for Saks Fifth Avenue,” Gerald L. Storch, ceo of Saks' parent company Hudson's Bay Co. said to WWD. “It’s growing faster than the retail industry. With Saks Off 5th, we have a concept positioned as the best of the off-price business. It’s white space above the other retailers.

Within the next year, Saks is hoping to open 15 to 20 new stores in the U.S. Currently, there are around 90 Off 5th stores in the United States. Saks's new strategy toward expansion is focusing on more urban and suburban areas.

Off 5th coming to Tower 57 in Midtown

While it might seem strange that Off 5th is opening in such close proximity to a mainline Saks Fifth Avenue, the two stores cater to a very different customer. Off 5th is more targeted toward the millennial customer, while Saks has an older more financially established clientele.

The idea behind Off 5th is that those customers will eventually turn into regular Saks Fifth Avenue customers once they are older and have reached a higher income bracket. According to Storch, there is little crossover between the Off 5th shopper and the Saks shopper.

One new approach Off 5th is taking to their business as they expand is their pricing model. Before, the store would have items with a tag that had the market price, then a markdown indicating the lower price, and a sign indicating a 40 percent or more markdown reduction. Final prices were calculated at the cash wrap.

All the math and discounting are now done before checking out, with final prices listed and total savings calculated from the market price. Savings can total up to 70 percent.

Off price luxury goods seems to be a major money maker for retail companies right now. Nordstrom Rack has actually surpassed Nordstrom in terms of total number of stores, and Macy's has also announced efforts to aggressively expand their outlet business Macy's Backstage.

With over 20 years operating Off 5th, Saks has an advantage over their competitors who are just really amping up their off-price business, and their biggest competition would arguably be Nordstrom Rack. How these two titans will face off against each other in the off-price market will be exciting to see.

photo:bestofthebetter.com
Off 5th
Saks Fifth Avenue