I read that Saks Global’s owners, who also own Neiman Marcus, will close the original store. The real story is unclear. I read that the landlord had enough, but it appears that the landlord is Saks Global, so who knows? There have also been rumors that the original Macy’s store that sits on an entire block on 34th Street might be up for sale too.
When Fred and I traveled across the country after graduating college, we stopped in Dallas, and of course, I had to go to the store. I worked in DC at the Neiman Marcus store during the summer of my freshman year. The original owners from 1907, Herbert Marcus, Carrie Marcus Neiman, and Al Neiman, must be rolling in their graves.
In the retail world, 30 net days is the classic form of payment, as you have 30 days to pay the invoice. The word on the street is that Saks has not been paying their bills for some time. It is not easy on the brands, particularly on the up-and-coming brands.
The CEO of Saks Global announced last week that they would shift from 30 days to 90 days payment, and not surprising brands are pissed. Not only are they forced to carry the costs on their backs, but the owners of Saks Global have been throwing lavish parties and are developing hotels. On top of this, Saks Global will start a luxury shop on Amazon. What that looks like is to be seen.
In the 80’s, department stores were king. During this time, chains, such as Gap, started eating up some of the market share from the department stores, and since then, they have been scrambling to figure it out. The luxury brands began building out their own stores, eating up even more market share. The internet came along, and many of the department stores did not get it. Instead of selling direct to consumer from the inventory on the floors, many of them doubled down thinking of online as a separate store. Fast forward, most of been trying to figure it out since.
Where does all this end up? Does Saks Global close countless stores that they own and sell the buildings to offset the losses? Was it always about the real estate? Do they start to license their brands in Asia, as they have with Barneys? Do they get to write off all these losses? How about all the employees?
There are so many questions, but my guess is that it won’t end well. Retail recruited the best and the brightest at one point, but then Wall Street amped up. Many went there instead after college, and the generations after didn’t choose retail as their career path.
I have been watching all of this from afar forever, and it makes me sad. One of the reasons I opened Gotham is that retail stores are essential to communities, cities, experiences, and more. We are seeing a resurgence of small independent stores, including restaurants.
Small businesses with less than 500 employees are vital to our economy. There could be countless studies on how big business has destroyed many of them. It is time for more small businesses to work with real estate owners to bring back the beat of the street.
