Saks Off 5th opens its first unit in Germany on Thursday, setting the stage for expanding the off-price format throughout the country, as well as in the Netherlands and possibly elsewhere in Europe.
Hudson’s Bay Co., the parent of Saks Off 5th, sees the potential to open up to 40 Off 5th units in Germany over the next three years. Stores will open this summer in Frankfurt, Stuttgart, Wiesbaden, Heidelberg and Rotterdam, and a store in Amsterdam is also planned. Off 5th operates a national chain in the U.S. and last year began opening stores in Canada, where there are five operating.
Germany’s first Off 5th unit, which Hudson’s Bay termed a European flagship for the chain, will open in Carsch-Haus in Düsseldorf. It’s a larger-than-average Off 5th space, with 3,500 square meters, or 37,674 square feet, over five levels.
“The Saks Off 5th concept will resonate with the German consumer and deliver an exciting new experience to the retail landscape, in addition to our continued investment in Galeria Kaufhof,” said Jerry Storch, chief executive officer of Hudson’s Bay Co. “As HBC continues to execute on its organic growth strategy in Europe, the introduction of Saks Off 5th to the German customer is integral to building a diversified consumer base and strengthening our market position.”
“We see great potential for Saks Off 5th in Germany,” added Wayne Drummond, president of Saks Off 5th Europe. Drummond said the retailer will offer “exclusive brands at an exceptional value in a premium store environment. The concept is entirely new in the German market. We are creating a point [of] difference that will increase the appeal of the city centers and revive the shopping streets. We are constantly offering our customers new products,” generating more frequent visits to the stores. “We believe the city centers will benefit from this.”
Executives said Off 5th will offer more than 700 brands in women’s, men’s, children’s, shoes, accessories, sportswear and home products. They declined to identify brands sold, but the U.S. web site indicates a wide range of top designer and contemporary brands including Cole Haan, Vince Camuto, Alice + Olivia, Calvin Klein, Cosabella, Dsquared2, Elie Tahari, J Brand, Karl Lagerfeld, Kenneth Cole and Levi’s, among many others.
“There are off-price centers in Germany, but HBC is putting Off 5th in the center of the city of Düsseldorf where there is no off-price competition,” said retail analyst Walter Loeb. “Off 5th will be a new experience for the Germans. The perception of high-quality brands will be very well-received in Europe. If they treat the stores right, it will be terrific. Business is getting a little bit better in Germany. It’s picking up. The timing is pretty good for Germans to see some of this quality merchandise.”
Outlet centers in Germany include Adidas, Armani, Bogner, Daniel Hechter, Diesel, DKNY, Dockers, Fossil, Lacoste, Levi’s, Mexx, Michael Kors, Puma, Samsonite, Columbia, Esprit and Tommy Hilfiger, among others.
One retail source said many people in Germany will need to be educated about Saks Off 5th. “They don’t know Saks as well as Macy’s,” the source observed.
“Germany is a very off-price market — Germans don’t like paying full price,” said another retail source from Europe. “I don’t understand the Saks location [in Düsseldorf] as it’s in a prestige shopping area, but if they get the sizing ratio in line for larger German customers I think they could be successful.”
HBC’s off-price business could use a lift. Last year, comparable sales at Off 5th and Gilt combined were down 7.4 percent. In the first quarter of this year, comparable sales were down 6.8 percent. Recently, HBC said it’s planning “a more elevated” merchandise mix at Saks Off 5th and would start selling Off 5th inventory via Gilt by the end of the year.
In Europe, HBC said it’s bringing in new brands to Galeria Kaufhof, and is soon opening Hudson’s Bay stores in the Netherlands, up to 20, beginning in Amsterdam, to fill a void left by the recent closing of the V&D department store chain.