Saks Fifth Avenue‘s off-price division Saks OFF 5TH will open up to 8 Canadian locations in 2016, with plans to open up to 25 locations before the year 2021. Its first three locations were recently announced, and landlords continue to negotiate with Saks Canada-wide.
Saks OFF 5TH’s first Canadian locations will include a 28,000 square foot location at Tanger Outlets Ottawa, a 32,500 square foot store at Outlet Collection at Niagara in Niagara-on-the Lake, Ontario, as well as a 35,000 square foot location at Vaughan Mills, just north of Toronto. All locations will open in the spring of 2016, along with full-priced Saks Fifth Avenue stores at Toronto Eaton Centre and Sherway Gardens.
OFF 5TH’S largest location to date is in Stamford, Connecticut, spanning an impressive 56,000 square feet.
Jonathan Greller, President of Hudson’s Bay Company‘s (HBC) outlet division, told Women’s Wear Daily that Saks OFF 5TH will also open 20 U.S. locations next year, adding to the approximately 90 U.S. stores that it will operate by the end of this year. He also mentioned that the concept could go global, suggesting that Germany could be next following HBC’s recent purchase of the Kaufhof department store chain.
According to Mr. Greller, Saks OFF 5TH’s real estate strategy extends beyond traditional outlet centres and in some instances, OFF 5TH could locate close to full-priced Saks stores. “Outlet centers are a big part of our go-forward strategy, but we also believe we can be in malls, in downtowns, in lifestyle centers, strip centers — non-outlet centers,” he said. “We think there is a big opportunity to open downtown. We just opened in downtown San Francisco and we opened our first mall store in Stamford, Conn., at the end of June.”
Mr. Greller isn’t concerned about its off-price division taking sales away from Saks’ full-priced stores. “I get real data. I can look at the data every single day and there is almost no cannibalization. Cannibalization is defined as having a customer from Saks Fifth Avenue walking over to Off 5th and never coming back to Saks Fifth Avenue. Our best customers are those that shop all channels,” he told Women’s Wear Daily. He also noted that the OFF 5TH shopper tends to be about 10 years younger than the typical full-priced Saks shopper, and how the off-price division may introduce some Millennials to Saks’ full-priced division.
New OFF 5TH locations have a more open format and fewer walls, and also carry product not available in full-priced Saks stores. “It’s easier to shop, you go to your size, you can see up to potentially 200 pairs [of shoes] sitting on the racks, you will see good, better and best price points, all in that size. Customers are buying, three, four and five styles at a time. Our penetration of shoes has more than doubled,” said Mr. Greller. He also explained how about 10% of inventory is clearance from Saks Fifth Avenue stores, with about 70% obtained from vendors and about 20% under its house label. Home products, traditionally only sold online, are being added to Saks OFF 5TH as impulse items at checkouts. These include soaps, small foods and tech accessories.
HBC also operates two Hudson’s Bay Outlet locations. Its first location opened at Toronto Premium Outlets in August of 2013 and a second location opened at Premium Outlets Montreal in October of 2014. Mr. Greller said that it was ‘too soon’ to discuss what HBC has planned for the outlet concept, though he did indicate to Women’s Wear Daily that there is strategy in the works both for Hudson’s Bay Outlets as well as the four-store Lord & Taylor outlet division in the United States.