Makeover for Saks' Off 5th outlet in Riverhead

Saks Fifth Avenue's Off 5th outlet unit is bringing its modern luxury loft design to its Riverhead location, as Saks Inc. continues to invest in its growing outlet division.

The loft concept, which first rolled out in its new Off 5th stores in 2008, debuted on Long Island at the Deer Park store in Tanger Outlets at The Arches in October of that year.

The top-performing outlet stores have tended to be the newer ones sporting the loft design, said Robert Wallstrom, president of Off 5th. And the outlet division, which has 55 locations, has done relatively better than the full-price stores, he said.

The Riverhead store, which has a strong customer base, will be the first of the existing outlet stores to be renovated.

"We found the value channel was growing when the economy was good, and when the economy became more challenging the value channel held up better than the regular-price channel," Wallstrom said. "And that's not just Saks Fifth, but retail in general."

The new design promises more open space, spiffier changing rooms and improved checkout areas, as well as brighter lighting. Its incarnation in Riverhead, which is under way while the store remains open, also will add a fine jewelry business, offer updated restrooms and boost staff by about 40 percent for fast service, Wallstrom said.

Luxury retailers took a hit during the recession but have been starting to see sales come back, especially over the past several months. In March, Saks Inc. saw a 13.6 percent increase in sales at stores open for a year or more.

Even with an improving economy, luxury department stores are continuing to develop their outlet or off-price divisions. Saks has announced three new stores so far this year. Nordstrom, which has continued to expand its off-price Nordstrom Rack stores for more than 30 years, is expecting to open 17 locations in 2010, including one in Manhattan's Union Square. Neiman Marcus is planning two new Last Call locations this year.

Macy's Inc. is testing the off-price sector with four new Bloomingdale's outlets to open this year. And In February, Lord & Taylor opened a 15,000-square-foot outlets in Elizabeth, N.J., and is weighing whether to roll out more in the future.

"This is the way that Saks, Neiman Marcus and Nordstrom can quietly compete in the moderately priced department store arena," said Marshal Cohen, chief industry analyst for The NPD Group, a Port Washington market research firm. To grow volume, Saks has to sell to a broader audience, he said, "and Off 5th allows them to do that."