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How New York’s department stores are fighting back against e-commerce

New York’s department stores are the stuff of legend. There’s Bergdorf Goodman, which took a starring roles in films like 1953’s How to Marry a Millionaire; Saks Fifth Avenue, which saw hordes of society doyennes in pearls flocking through its art deco doors when it opened at the height of the roaring 20s; and of course Macy’s, whose annual Thanksgiving Parade is world-famous.

However, not even a globally revered reputation and heritage that dates back decades provide the likes of Saks, Bloomingdale’s, Barneys and the rest immunity against a shaky economy, a technology revolution and the recent invasion by mass-market retailers. Gimbel’s and Bonwit Teller were both glamorous departments stores, but paid the price for not changing with the times and went out of business.

Meanwhile, competition for all corners of the market remains relentless; Sweden’s stylish HM offshoot Cos opened its first US store in New York’s SoHo this month, and in November UK retail juggernaut Topshop opened its second-biggest store in the world on Fifth Avenue, directly across the road from Saks.

However, much like New Yorkers, the city’s department stores won’t go down without a fight. They’re upping the ante with cross-genre collaborations, million-dollar revamps and upgraded customer service both on- and offline.

“The economy is on the up and e-commerce and online sales like Cyber Monday continue to show very strong growth as a proportion of total consumer purchases, so department stores and traditional retailers would be feeling the pressure to innovate”, says Bloomberg economist Josh Wright. To cater to shoppers’ changing needs, he says, they need to “adjust their business model, determine their market share and establish a new equilibrium.”

So what does the superstore of the future look like?


Such an impetus has seen Saks Fifth Avenue undergo a $250m transformation. The 120-year-old department store is now led by former Harrods CEO Mark Briggs, determined to “dust it off to put it back in its rightful place at the forefront of the fashion world”.

Briggs sees his mission as “redefining first impressions”. To that end, customers can expect a more tony environment, the 80 new fashion brands (Alexander Wang and Balmain are recent arrivals), a glossy magazine replacing the catalogue, and upgraded packaging. This follows a revamped of beauty floor, the announcement of a Harrods-style luxury food hall, an overhaul of the intimates section – rebranded “lingerie” – and the introduction of an at-home personal shopping service. Those who sign up will get a van laden with high-end fashion garb arriving at their house accompanied by a stylist and tailor.

Meanwhile, as part of their five-year plan to expand market share in Manhattan, Bergdorf Goodman (owned by the Neiman Marcus group) is undergoing the first renovation of the women’s store in a decade and the first for the men’s in its 20-year history. The first stage is to convert the sixth floor into a “designer lab”, featuring new labels and artistic collaborations.

Barneys is in rebranding and expansion mode, reclaiming its foothold on New York’s downtown district with the opening of a second flagship store in Chelsea in January 2016. Barneys originally opened on this site in 1923 but was forced to close 17 years ago when the company was in bad financial straits. “It’s the best idea and will bring them good luck because they’re going back to their DNA”, said designer Diane von Furstenberg.

New arrivals

Neiman Marcus will open their first Manhattan store in 2018. The company, which has headquarters in Dallas and 41 department stores throughout the US, is set to become the flagship of the $20bn Hudson Yards development on New York’s lower west side – the biggest development since the Rockefeller Center went up in 1930. Online, the brand took ownership of German luxury fashion e-tailer mytheresa.com – a rival to Net-A-Porter.com – to galvanize its own digital presence in the US.

Meanwhile, the Seattle-based department store giant Nordstrom, which has more than 100 stores across the country, will open its first Manhattan store in 2018 on West 56th Street to anchor a new residential skyscraper that will be taller than the Empire State Building. The company, which shelled out $102.5m for the eighth-floor, 285,000 sq foot site is also busy refurbishing some of over 100 stores they have across the USA.

As part of their bid to attract new customers, last year the company appointed Olivia Kim, formerly of edgy boutique Opening Ceremony, as director of creative projects, who instigated a series of themed pop-up shops. The first for 2015, Zone Zella, will be sportswear themed, followed by a Topshop and Topman exclusive series, then the launch of Nordstrom Signature, a collection of 25 garments created in collaboration with Caroline Issa, fashion director of Tank magazine.


Out to revamp its image as a “store of the future”, Bloomingdales is firing back with the #100percentbloomies campaign, which opened in the autumn. Keen to ramp up the cool factor and draw fashionistas into the store to get pieces they can’t buy elsewhere, this initiative will see 1,000 exclusively created items from more than 100 designer labels including Helmut Lang, Armani, Tory Burch, Chloe and Coach. “If you don’t start with great product, we are not going to succeed”, said the company’s new CEO Tony Spring.

At the smaller end of the market, stores such as Jeffrey, Five Story and Dover Street Market are vying for custom through in-house art and music performances, creative collaborations, and a carefully curated mix of designer labels. Celebrating the first anniversary of the opening of its New York store this month, Dover Street Market, the brainchild of Comme des Garcons founder Rei Kawakubo, boasts an installation made from thousands of issues of ArtForum magazine and an unlikely clothes collaboration between Comme and the Disney film Frozen.

“We are going to see a more tailored offering that caters to individual preferences and having more options is a win for the consumer”, says Wright. So far, it seems to be working; the economy has already seen a rise in retail sales during the holiday shopping season.

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