Neiman Marcus, Nordstrom, Bloomingdales and Saks increase outlets

By Kyle Stock - July 16, 2013 Bloomberg Business Week

High-end department stores are slumming … sort of.

At pricey apparel retailers such as Neiman Marcus and Bloomingdales (M), outlet stores may soon outnumber traditional locations, according to a new report by Bloomberg Industries. In fact, they already do at Saks (SKS) and Nordstrom (JWN). Some 60 percent of Saks locations are now outlets, and all but two of the 15 stores it plans to open in the next two years will be discount centers. Nordstrom meanwhile, has 127 “Rack” outlets and plans to open another 17 by the end of the year..

The strategy is a simple play for the bargain-hunters who have driven handsome returns for Ross Stores and TJ Maxx of TJX Companies (TJX). “It’s predominantly an entirely different customer for these companies,” says Bloomberg Analyst Poonam Goyal. “They know they can’t afford the full-line stuff, but they still desire the brand.”

A steady stream of thrifty customers pays off in tight times. As the economy buckled in 2009, combined revenue at Ross and TJX swelled by 5 percent, while sales at Neiman Marcus, Nordstrom, and Saks slid by 10 percent.

“It really took the recession for them to see the opportunity there,” Goyal says.

Separating shoppers by willingness to pay—better known as price differentiation—has long been a proven business strategy. It’s tough for a mid-market player such as Macy’s, but it’s perfect for a company that focuses on pricier products.

The trick, however, is to make sure that people who are willing to pay the higher price can’t easily switch to the cheaper option. That’s the beauty of outlets; they physically separate buyers. They also let high-end brands offload stale inventory without slashing prices in flagship stores, conditioning affluent customers to wait for discounts.

The discount stores are often more profitable than the glitzier retail hubs. In terms of revenue per square foot, Nordstrom Rack locations sell 40 percent more than the company’s traditional locations, according to the Bloomberg analysis. And expenses are lower at outlets, whose shoppers generally don’t need to be enticed by a swarm of sales staff, or by expensive displays and fixtures.

“The only real danger for outlets,” Goyal says, “is if everyone suddenly wants to pay full price.”

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Neiman Marcus, Saks among retailers at Fashion Outlets of Chicago

Neiman Marcus, Saks among retailers at Fashion Outlets of Chicago

 By Brigid Sweeney - Crains - Chicagobusiness.com

Fashion Outlets of Chicago, the major new mall set to open in August near O'Hare International Airport, announced its full tenant list today.

As reported last week, the two-level, 530,000-square-foot center will be anchored by a Bloomingdale's outlet, Last Call by Neiman Marcus, Saks Fifth Avenue Off 5th and Forever21.

More than 100 other retailers will join them, including Banana Republic, Barneys New York, Giorgio Armani, Gucci, J.Crew, Michael Kors, Nike, Prada and Tory Burch.


The mall also will be home to two restaurants: Prasino, an upscale, health-conscious eatery that's already earned a following with locations in Wicker Park and west suburban La Grange, and Villagio, an Italian spot by Florida-based restaurant group Carpaccio LLC, which operates several Miami-area restaurants, including one at the upscale Bar Harbour Shops. The mall will also have 16 or 17 other more casual dining options.

“The era of the shopper and the community being estranged from one another and the mall as a remote appendage doesn't work any longer,” said Arthur Weiner, chairman of AWE Talisman, Fashion Outlets' Coral Gables, Fla.-based co-developer. “We're integrating fashion, food, art and shopping.”

Mr. Weiner said he hopes to draw a heavy crowd of international tourists from nearby O'Hare, especially Chinese, Brazilian and Russian luxury shoppers.

“The outlet industry is tremendously tourist-driven,” he said. “We market our centers globally to (international) tour operators.”

Fashion Outlets will try to capitalize on its location near O'Hare by offering regular shuttles to and from the airport's terminals, Mr. Weiner said, and shuttles to and from the CTA's Blue Line. It will also operate a concierge service that allows travelers to print their boarding passes and check shopping bags and luggage from the mall.

Though some suburban malls have struggled to regain their footing after the recession, Mr. Weiner said consumers will flock to a high-end mall with a vibrant mix of tenants and dining options.
“Outlets have been a model that people frequent three times a year on their way to somewhere else,” Mr. Weiner said. “They were in the cornfields, removed from the population and had no sizzle. It's time to change that.”

Retail experts agree that Fashion Outlets is positioned to do well.

“They've put together a really impressive roster of tenants, which is far and away the most important factor in a mall's success,” said Neil Stern, a retail analyst at Chicago-based McMillan Doolittle & Co.

Last Call by Neiman Marcus to close at Las Americas Premium Outlets

Written by Tanya Mannes - UT San Diego - March 23, 2012

Bad news for luxury-lovers who like to browse discount racks.

The only Last Call by Neiman Marcus store in San Diego County, at Las Americas Premium Outlets in San Ysidro, will close in mid-April. The high-end department store company's off-price division opened the store in 2005, when the center expanded.

"The decision (to close) was based on a thorough evaluation of the future business potential in this location," said Neiman Marcus spokeswoman Ginger Reeder. "We hope our loyal customers will shop with us at lastcall.com or check the website for another store nearby."

That area, which is near the U.S.-Mexico border, is a hot spot for retail, U-T San Diego reported this week. Construction is underway on a shopping-center site just west of the Last Call store that will include a T.J.Maxx and a Ross Dress for Less, opening later this year.

The company's four other outlet stores in California include locations in Cabazon and Orange.

The outlet center's owner, Simon Property Group, plans to divide the space into two new stores. Tenants will be announced soon, the company said.

The store had a loyal following. "Love the Last Call store," said San Diego resident Joanna Jones on Facebook early this week. "Great deals...super kind staff...love the mall."

According to Bloomberg, the Neiman Marcus chain is growing and plans to expand in China, but still hasn't returned to its prerecession sales level. The retailer reported revenue of $4 billion in its most recent full fiscal year, which ended in July, down from its peak of $4.6 billion in the year ended in mid-2008.

Neiman Marcus operates 42 namesake stores, including one that opened on March 9 in Walnut Creek, California, as well as two Bergdorf Goodman locations.

There is a full-line Neiman Marcus store in Fashion Valley Mall, also owned by Simon Property Group.

Last Call by Neiman Marcus opens in Desert Hills Premium Outlets

BY TIFFANY RAY -  The Press Enterprise

Last Call by Neiman Marcus will open its first Inland outlet Friday at Desert Hills Premium Outlets in Cabazon.

That will be followed in May by a second location in Ontario Mills that will be part of an ongoing expansion and renovation of the mall property.

The Ontario location will occupy 21,000 square feet of space on the north end of the mall, which will be retrofitted to accommodate the new store. At the same time, Nordstrom Rack will be renovated to bring it up to the look of the company’s latest prototype.

New exterior entrances will create direct access from the parking lot to both stores, and the lot will get new landscaping.

It’s the second phase of a plan announced last year to upgrade the mall. Earlier upgrades, financed with help from the city’s redevelopment agencies, include a new guest services center, renovated restrooms and new entrances near Forever 21 and Sports Authority. Forever 21 recently expanded in the mall, and Sports Authority returned after departing the mall in 2005.

The Last Call chain, which offers markdowns from Neiman Marcus and Bergdorf Goodman, debuted in Texas in 1988; there are about 30 Last Call stores in the U.S. today.

Luxury Retailers continue expansion into Outlets

By Phil Wahba and Dhanya Skariachan -NEW YORK (Reuters) Thu May 26, 2011 4:20pm EDT

NEW YORK (Reuters) - U.S. luxury department stores plan to keep opening more lower-price outlets without fear of hurting their high-end prestige, retail executives said this week.

Saks Inc (SKS.N) is planning to open another three to five Off Fifth outlets annually in the coming years but will not open any new Saks Fifth Avenue department stores.

Neiman Marcus NMRCUS.UL and Nordstrom Inc (JWN.N) are also focusing on low-price outlets in their new store openings.

"I don't think we are close to the point where you have too many," Saks Chief Executive Steve Sadove said at the Reuters Global Luxury and Fashion Summit.

Saks operates 57 outlets, compared to 46 department stores. On Thursday, Nordstrom said it was closing a full service store in Indianapolis but will open a Rack outlet nearby.

Outlets, where luxury chains sell more affordable merchandise and items left over from earlier seasons, have lifted retailers' sales during and since the recession, reaching so-called "aspirational" shoppers with limited budgets who covet top name brands.

Neiman Marcus CEO Karen Katz said at the Summit that the retailer's Last Call chain of 28 outlets is a way "to reach that price-sensitive fashion customer that is out there and in most cases not ready yet to shop Neiman Marcus."

Neiman operates 41 department stores, and will open one next year, but otherwise, the number of stores has remained steady in recent years.

Neiman Marcus blurs the line between outlets and specialty stores.

Neiman Marcus may be known as a place for Texas-size yearnings and price tags, but in a sign of the economic times for luxury retailers, the company is being drawn to a less haughty shopper.

The retailer, based in Dallas, is preparing to open a new line of outlet stores this fall called Last Call Studio, which will sell clothes that have never passed through a Neiman Marcus or even the retailer’s existing chain of Last Call outlet stores.

The Studio stores, to be located in suburban areas or strip malls that are not outlet centers, will specialize in moderately priced goods — blousy tops, knee-length skirts — aimed at the value-minded shopper who “may not have the reach level to buy the fine apparel that Neiman Marcus offers,” said Wanda Gierhart, Neiman’s chief marketing officer.