NEW YORK — Expansion is back on at Off 5th.

The Off 5th outlet chain, a division of Saks Inc., has developed a prototype that will make its debut in the Prime Outlets International center in Orlando, Fla., in mid-April. The 26,400-square-foot outlet will replace the existing 21,800-square-foot unit in the same mall. Over the next 60 days, three or four new locations will be unveiled as leases get finalized, and sites for additional locations are being scouted around the country, Robert Wallstrom, president of Off 5th, told WWD.

“Over time, we believe there is meaningful new store growth opportunity for Off 5th, and we look forward to expanding this new format into other markets….,” said Wallstrom. “Productivity is absolutely part of the goal.”

Off 5th, currently operating 48 outlets in 23 states, last year generated volume of just under $400 million. Merchandise includes labels sold at Saks Fifth Avenue and other high-end stores, as well as Saks’ private label. Discounts start at 30 percent off, but go as high as 90 percent off on clearance goods.

Wallstrom described the prototype as a “very open, clean, modern loft environment.” It’s also brighter and uncluttered compared with the older generation of outlets, and has one consistent hard-surface floor throughout. Fixtures are on casters so there’s flexibility in the merchandising and easier movement through the store.

In comparison, the existing outlets have the feel of an old department store with a lot of small rooms and different floor surfaces, Wallstrom observed.

He said that when you visit other outlets, like those of Coach, Polo, J. Crew or Brooks Brothers, they reflect the regular-priced stores. “The customer is looking for an environment reflective of parent brands.” He wants Off 5th to better reflect the image of Saks Fifth Avenue. He also said the prototype will help with the expansion because it’s a selling point to developers.

Around the country, some Off 5ths will be totally renovated to the new look and others will incorporate various elements of the upgrade.

Off 5th was last in expansion mode in the mid-Nineties until around 2000. Despite the slowdown, Wallstrom said Off 5th has always been profitable. The majority of stores are in outlet centers, while some are in strip centers and mixed-use centers. The new prototype is also suitable for lifestyle centers.

This story first appeared in the January 18, 2008 issue of WWD.  Subscribe Today.

“We have really dug into customer demographics. We now have a better understanding of this business model than we did 10 years ago,” Wallstrom said. “We realize that customers shopping Off 5th are different customers than those who shop our full-line stores. Off 5th is an opportunity to pick up another customer.”

Between 80 and 90 percent of the labels found in Off 5th are the same as those found in the Saks Fifth Avenue regular-priced stores; 10 to 20 percent are brands not carried at Saks and could be from competitors. The outlets also sell some private label.

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