When the Wrong Saks Comes to Town

Discussion
May 03, 2010
Tom Ryan

By Tom Ryan

Some retailers at the Bridgeport Village fashion lifestyle center in Portland, Oregon, were happy to hear about a Saks coming to their complex but were caught off guard when they realized it was actually the luxury retailer’s Off 5th discount concept.

The 28,000-square foot location, opening in September, will be the chain’s 12th “in a new ‘luxury in a loft’ design that aims for a modern and — without aisles — open feel,” according to an article in The Oregonian.

Fred Bruning, chief executive of CenterCal Properties, which owns Bridgeport, told the paper that the concept looks like a mini department store. Jewelry departments are similar to Saks’ full-price locations; with one Off 5th store he toured selling a $20,000 piece.

“We feel this will really fill a retail gap that exists here in Oregon,” said Mr. Bruning.

About 20 percent of the Off 5th merchandise is from full-price stores, another 20 percent is private label, and the remainder is especially made for the store.

“We work with brands that you would find in other luxury retailers, whether Saks or Nordstrom or Neiman Marcus. We just work with them to create a value product,” Robert Wallstrom, president of Off 5th, told the Oregonian.

The 500,000 square foot open-air center is located in one of the Portland metropolitan area’s most affluent areas. Tenants include the Apple Store, Container Store, Crate & Barrel, Tommy Bahama, BCBGMAXAZRIA, J. Crew, Banana Republic, MAC Cosmetics and Ann Taylor Loft. It also includes restaurants such as California Pizza Kitchen and P.F. Chang’s as well as the largest Regal Cinema in the state. The move comes as Saks just announced plans to close its full-price store in downtown Portland.

Mario Bisio, who operates upscale apparel stores at Bridgeport and in downtown Portland, said he was less worried about competition from Off 5th than the off-price connotation.

“We have to be careful. There’s an outlet mall in Woodburn, but this is not an outlet mall. It’s a mixed message,” he said. “Still, I have mixed emotions. There’s a little cachet to having a Saks at Bridgeport and that may be the greater good.”

The move comes as Nordstrom is opening its Rack concept in atypical locations, including in Union Square in New York City. Neiman Marcus is also testing a lower-priced concept.

Discussion Questions: Is the arrival of off-price luxury concepts such as Off 5th and Rack healthy or unhealthy for other tenants at upscale lifestyle centers? Do you expect to see more off-price concepts owned by luxury stores moving into non-outlet locations?

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10 Comments on "When the Wrong Saks Comes to Town"


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Bob Phibbs
Guest
11 years 8 days ago

Five years ago this might have been cutting edge to clone yourself as the cheaper alternative. When customers come back- which they already are- does this make the old Saks irrelevant? I would suggest yes. The stewards of the brand are sacrificing the years of equity to try “something.” you can private label yourself out of the marketplace.

Dick Seesel
Guest
11 years 8 days ago

I think the addition of stores like Nordstrom Rack and Off 5th is healthy, not only for the chains but also for lifestyle centers looking for a more diverse and upscale tenant mix. It’s not a practical expectation for most lifestyle centers to support a full-size, two-level anchor department store — with rare exceptions such as Easton in Columbus. And these types of stores still fit the aspirational profile of most “town centers”…after all, we’re not talking about adding a dollar store.

Bill Emerson
Guest
Bill Emerson
11 years 7 days ago

This seems like a win for everybody at Bridgeport. There is a new draw with a respected upscale name (albeit in off-price format) which will attract more traffic for everyone. The landlord fills 28,000 SF, which is not so easy these days. And Saks keeps its brand in Portland after closing its full-line store, which apparently was not viable.

The retail world is evolving after the challenges of the last two years. It seems likely that the old notions of who fits together in a mall and who doesn’t will continue to change.

Jonathan Marek
Guest
11 years 7 days ago

Have they been paying attention to which concepts are growing store count? Of course it was Off 5th! Frankly, Off 5th isn’t a bad concept for this type of center. And with the amount of vacant retail space and the risk of entire centers drying up, these co-tenants should take what they can get to keep the center vibrant.

Chuck Palmer
Guest
11 years 7 days ago
I think it is an exciting prospect for the luxury department stores to be developing brand extensions. If that is, in fact, what they are doing. It is not. Unfortunately what’s really happening here is forcing old formats into new places. This is considered strategic? Consumers today know and understand the game. They realize that a small percentage–in this case 20%–of product is actually “off price.” Will consumers accept and buy from these stores in lifestyle centers? Probably. They will be driven by price, not brand experience. Easton in Columbus, Ohio was mentioned above. My gut tells me that we won’t see an “off price” brand there. The managers of Easton are much better editors than that. (Puma, Lacoste, Burberry are the latest additions.) My advice is to look at proper brand extensions such as Barney’s Co-Op. While not an “off-pricer,” it gives Barney’s new and different relevancy in different centers, appealing to different customers. Consumers get the halo effect of the master brand, but it’s accessible in their neighborhoods, more on their terms. Saks… Read more »
Robert Straub
Guest
Robert Straub
11 years 7 days ago

It should also be pointed out that this comes at the same time as the closing of Saks’ only “normal” store in the metro Portland area in Pioneer Square.

Mark Johnson
Guest
Mark Johnson
11 years 7 days ago

Perception, attitudes, and preferences are all very important to consider. You need to have a more detailed and comprehensive understanding of your customers and what products they want and what stores they want to buy them from.

Craig Sundstrom
Guest
11 years 7 days ago

As was noted, both in the article and in the comments, Saks is closing their downtown (Portland) store, the reason of course being that it was losing money; but more to the point, one of the reasons it was losing money was said be the high cost of supporting what was their only store in the entire Northwest (in this case NW = the huge area North of San Francisco and West of Chicago) This singularity is perhaps a testament to Nordstrom’s strength in the market–though the Saks in Minneapolis, also the only one in the area, suffered a similar fate (being “Off 5th”ed rather than closed outright)–but it raises the obvious question of whether or not Saks will have to increase the number of stores in their “Off” division to the point that quality is degraded…5 figure jewelry pieces notwithstanding.

John Crossman
Guest
John Crossman
11 years 7 days ago

Is it healthy? Many of these centers are dealing with vacancy. It is much better than having a dark space (which could be vacant for awhile).

William Passodelis
Guest
11 years 4 days ago
There seem to be two issues here. One is the center itself. Any center should be proud to have Off 5th, Rack, or Last Call by Neiman Marcus. This is a great draw for them and we are STILL in the time when the off-price versions of these stores are still not very numerous. If I was a center manager, I would want the best components I could obtain. A very different point regards the store itself. Rack is very different from Nordstrom and does offer some real advantages, however, it is NOT Nordstrom–just as Off 5th is NOT Saks–and I agree that these retailers do risk injuring their core brands if these off stores are not well executed, and closely watched for assortment. I have found a LOT of great things at Nordstrom and Saks when they have their periodic sales. I have found little, from my personal experience, at the off stores. Of course male and female shopping experiences are likely very different. I would hate to see Saks morph into Off 5th… Read more »
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