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Despite the fact that a lot of bricks-and-mortar retailers are in trouble, and the fact that the department store business is not what it used to be, not by a long shot, New York City continues to be a magnet for some of the nation’s most prestigious retail names.

That’s the gist of a new Bloomberg story tied to the recent opening of a 188,000 square foot Neiman Marcus in the new Hudson Yards development on the west side, and the scheduled opening this October of the city’s first Nordstrom, a 320,000 square foot store near Columbus Circle. That’s in addition to the money being spent on expansion and redevelopment by retailers such as Bergdorf Goodman, Bloomingdale’s and Macy’s on their flagship locations in the city, which can have a n outsized impact on those chains’ financial performances. (The 2.5 million square foot Macy’s in Herald Square, for example, is the most productive store in the chain, while the 815,000 square-foot Bloomingdale’s on 59th Street generates close to one-fifth of the chain’s total sales.)

That’s not to say that New York City is a safe space for all department store chains. Bloomberg writes that “there are around 30 department stores on the island, ranging from discount shop TJ Maxx to luxury emporium Bergdorf Goodman, each vying for New York’s 8.6 million residents and the 65 million tourists who visit each year. Their selling floors take up a lot of space, nearly 6 million square feet in all, about the size of 100 football fields.” However, stores that have closed there in recent memory include the “gargantuan Lord & Taylor and the Henri Bendel flagship and the Saks Fifth Avenue women’s store downtown.” In fact, “on a net basis, the city will lose about 340,000 square feet of department stores this year - the equivalent of two Walmart Supercenters.”
KC's View:
Of course, there are no Walmart supercenters in Manhattan - the result of extreme pressure by powerful union interests placed on local politicians, who have so far prevented the nation’s largest retailer from opening a store there.

I was a little surprised that the Bloomberg story didn’t mention this. It always has struck me as farcical that Walmart has been essentially banned from Manhattan, while it is safe for the likes of Costco and JC Penney to operate there.

Ironically, of course, Walmart is in Manhattan now. Sort of. Its Jet e-commerce business delivers in the city, and it has established a small beachhead with its Jetblack upscale delivery business, which only operates in Manhattan for the moment.

(Walmart isn’t the only mass merchant to have found New York to be inhospitable. Amazon - the “everything store” - found that across the East River in Queens, many people who didn’t want it to build part of its HQ2 campus there gave it the Bronx cheer.)

The stores that are the focus of the Bloomberg story are, for the most part, upscale operations that serve not just locals but the tourist crowd - and the story makes the point that these high-end department stores depend on a balance of the two to be successful.

Still, the turnover in square footage mans that an “unprecedented shift” is taking place, the story says, which is “a rarity in a market where stores can stay open for more than 100 years, through every downturn and depression.”

I have to wonder if these stores’ situation is a little more precarious than they used to be because of the extraordinarily high rents and labor costs that can be associated with their operation, and that doesn’t even take into account online competition.

Granted, these flagships are designed to be highly experiential environments that can survive in an increasingly digital world. But is it possible that we live in a world that is less forgiving than it used to be?

I suspect so. It is worth noting that what used to be Lord & Taylor’s New York City flagship is now a WeWork location.