Neiman Marcus bows out of Manhattan, showing limits of NYC luxury market

Neiman Marcus bows out of Manhattan, showing limits of NYC luxury market

Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.

Neiman Marcus for years craved having a store in luxury’s global capital, New York City. The high-end department store chain finally reached that goal last year, but it proved to be fleeting.

The company, which filed for bankruptcy protection in May under the weight of massive debt obligations and shriveling sales, will permanently close the store—located in the sprawling Hudson Yards development on Manhattan’s West Side—after only a year in operation, according to federal bankruptcy court documents filed on Thursday.

The store, whose glitzy opening party in March 2019 featured a special performance by Liza Minnelli, was meant to give Neiman a horse in Manhattan’s luxury race and enable the Dallas-based chain to go toe-to-toe with Saks Fifth Avenue, Bloomingdale’s, the defunct Barneys New York, and Nordstrom, which also opened its first New York City department store last year.

The hope for the 188,000-square-foot Neiman store was that it would draw tourists and office workers from a sprawling new $25 billion multiuse development with office towers, apartment buildings, a luxury hotel, and even a cultural venue. But given the COVID-19 outbreak that first hit in March, tourists are largely absent from New York, and most office workers are working from home. According to CNBC, the developer, Related Cos., is planning to repurpose the store to create more office space in the development.

Neiman pointed to that as a reason for exiting Hudson Yards, even though the retailer spent years developing the store. “A physical location in Hudson Yards is no longer an ideal space for us given the preponderance of restaurants and future office space in that mall,” a Neiman spokesman told Fortune.

Neiman, whose stores are well-appointed and luxurious, had already been forced to rein in its New York ambitions—the three-floor store had originally been meant to have five stories. And the company’s financial problems impeded its ability to make the store a true standout by its own standards and compared with its rivals. Saks has spent hundreds of millions of dollars on remodeling its flagship, while Nordstrom’s New York City store is similarly state-of-the-art.

But well before the pandemic, there were signs that the market for luxury department store shopping had reached a saturation point. Last year, Saks Fifth Avenue, owned by Hudson’s Bay Co., closed its Lower Manhattan outpost after only two years, while Barneys New York went out of business altogether in February.

Neiman Marcus is also closing stores in Fort Lauderdale, Palm Beach, and Bellevue, Wash., according to the court filing. That will leave it with 39 department stores. Neiman operates four stores in the New York City area as well as the Bergdorf Goodman store in Manhattan.

More must-read retail coverage from Fortune:

  • What Starbucks learned about COVID-19 from its China stores
  • Pop-up retail was made for the pandemic
  • Walmart will be closed on Thanksgiving for first time in decades
  • Chipotle to hire 10,000 more workers as it expands mobile-order drive-thru
  • Malls are dying, but Nordstrom has no intention of being dragged down with them
Author Image
Mala

Leave a Reply

Your email address will not be published. Required fields are marked *