Dive Brief:
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Saks Fifth Avenue is making a play for high-end shoppers with its three-year $250 million restoration of its Fifth Avenue flagship store in New York.
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Saks Fifth Avenue president Marc Metrick gave the New York Times a tour of the renovation in progress, calling it a “passion project.”
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The renovation is an attempt to rekindle the upscale department store’s once premium place as the go-to retailer for movie stars and other elite clientele.
Dive Insight:
The renovation of Saks under new owner, Canadian department store retail company Hudson’s Bay, is going on as department stores are struggling mightily as a concept.
“The department store emporiums, filled with endless wonderment and tremendous assortments, were supplanted by the growth of the retail shopping mall, which put these stores as anchors but surrounded them with specialty stores,” retail studies professor Mark Cohen of Columbia University’s business school told Retail Dive earlier this year.
“The department stores got tremendous value from being in the malls, but lost their franchise. Then the downtowns got decimated, so they lost their shoppers. Then — the big box players could move an enormous amount of volume," he said. "It’s not that the department stores had no chance. But they didn’t attempt to reengineer themselves. By the time the Internet came on, all but Nordstrom were late to the party and are still catching up. Meanwhile, there’s Amazon, a virtual marketplace that’s kind of like an infinite shopping mall, where you can get with one click anything you want to buy.”
Department store stocks took a beating last week as Macy’s and Nordstrom reported disappointing results. Many are questioning the raison d’être of the whole concept. Or at least department stores’ commitment to do what they must to recapture shoppers’ imagination and wallets.
L Brands CEO Leslie H. Wexner said earlier this month that, in fact, “department stores are dead.”
“They just haven’t been buried yet,” he said. “Is that format obsolete? No, I don’t think so. But it will require tremendous imagination and creativity for them to completely reinvent themselves.”
The massive work at the Saks flagship store in New York, though, looks to be an attempt to do just that. The question is whether a return to its old glamour days is enough of a reinvention in an era when movie stars are as likely to shop at Target as anywhere, when even upscale customers are moving online, and when American consumers have become more discriminating in what they spend their money on.
Even those who see the Saks renovation as a good move question how much difference it will really make in today’s retail environment. Federica Levato, a principal at Bain & Company for example, told the New York Times that the move is “prudent” but that in the end shoppers will continue to buy online and at off-price stores.
Saks Off Fifth, the retailer’s off-price venture, has done better in same-store sales in recent quarters, but there are no plans to renovate those stores.