Neiman Marcus Finally Arrives in New York at Hudson Yards

(Bloomberg) -- More than a century after it opened its first shop in Dallas, Neiman Marcus has finally arrived in the department store capital of America.

On Friday, the luxury chain will throw open the doors of its new three-story playground of handbags, lipstick and blazers at Hudson Yards, a $25 billion development project by Related Cos. and Oxford Properties Group on Manhattan’s far West Side. Many blocks away from such midtown rivals as Saks Fifth Avenue, Bloomingdale’s and Barneys New York, the retailer hopes to capture its own shoppers in a gleaming new mall.

“Emotionally, I think we look at it as a very big opening,” said Geoffroy van Raemdonck, chief executive of Neiman Marcus Group Ltd. The retailer sells $100 million of merchandise to New Yorkers online each year, and the CEO considers them part of his “core business.” Yet, after spending decades slowly expanding across the country, this will be Neiman’s first store in New York City.

What took so long?

The story involves a sibling rival, Bergdorf Goodman, arguably the grandaddy of all luxury department stores. In the 1970s, Bergdorf became part of the same company that controls Neiman, and was eventually spun off as part of Neiman Marcus Group. As part of a lease agreement with the Goodman family, Neiman was restricted from opening one of its stores in the same area as Bergdorf’s Fifth Avenue flagship, effectively denying Neiman access to Manhattan.

So for years, New Yorkers were denied the special pleasures of perusing the aisles of a famous retailer the rest of the country had grown to love. At some point (Neiman wouldn’t say when) the Bergdorf restriction was lifted. Neiman, which had been eyeing a fitting home inside the Big Apple, had fewer excuses not to try. Hello, Hudson Yards.

Neiman Marcus Finally Arrives in New York at Hudson Yards

There are many things the new Neiman store, its fifth-largest, has that other department stores both in New York and elsewhere do not. First off, it’s in a mall, and as such is located on the fifth floor, requiring city dwellers notoriously pressed for time to march up escalators (or find the express elevator). Beauty counters here look nothing like their suburban brethren, arranged instead as an open-plan rather than a sea of kiosks manned by smiling associates. And instead of its traditional location in the main selling space, fine jewelry can be found near the lavish evening wear for sale on the top floor.

In the men’s section, old-school stand-up video games like Pac Man and Galaga are sprinkled among bomber jackets and sweatshirts. The department store’s own watering hole, the Zodiac bar and restaurant, is already fully booked for the first two weeks. (The Hudson Yards location is Neiman’s only outpost with three different food and beverage spots.)

Inside the personal shopping suite, shoppers can expect some larger fitting rooms featuring variable lighting—all to assist discerning shoppers gauge how an outfit looks at the office, in a dance club or by candlelight. For those looking to build on the sartorial remake, a beauty salon on the top floor offers a laser bikini service for $425 and eyelash extensions for $185.

“We are not in the world of need, we are in the world of wants and surprises and delights,” said van Raemdonck. “So we’re bringing a lot of new things that the customer hasn’t seen.”

Neiman Marcus Finally Arrives in New York at Hudson Yards

The typical New York City shopper has likely heard of Neiman Marcus, but many haven’t seen one. From the start, the company set out to be a style leader in its home state of Texas, leaning very much toward fulfilling luxury tastes.

In 1907, Al and Carrie Neiman and Herbert Marcus organized Neiman Marcus Co., the first specialty store in the southwest, according  to the Texas Historical Society, offering ready-to-wear clothing, which was a novelty at the time. In its early days, the store stood out by focusing on selling exclusive merchandise. Stanley Marcus, a late son of the store’s co-founder, is considered a pioneering retailer who brought chic couture to the Southwest. He sold labels like Chanel and Saint Laurent in places where people had never seen—let alone been able to buy—French luxury products.

For almost 70 years, Neiman Marcus was a Texas brand only. It didn’t open a store outside the state until 1971, when it landed in a high-end mall in Miami Beach. The Florida developer said it took him years to convince Neiman executives to come over. Slowly, they opened more venues throughout the Southeast, with locations eventually popping up on the West Coast as well. But Manhattan always eluded the retailer, even as it opened shops just over the river in New Jersey and out on Long Island. 

Back then, having a New York brick-and-mortar store wasn’t as important for brand reputation, according to Jan Whitaker, a historian who has written several books on American department stores. Customers in U.S. cities that had a Neiman Marcus store didn’t view them as a chain—they viewed them as “their stores,” she said.

“It was not as much of a nationwide culture where you go, ‘Oh are you in New York?’” Whitaker said. 

As time went on, that changed, and a department store that came to New York and flourished was seen has having arrived. But these days, department stores including Neiman face a larger, existential question: how to stay relevant in the e-commerce era. In New York, big-name stores have become more reliant on tourists, who are more likely to frequent New York City than, say, Dallas. This will be a central component of the success of Neiman Marcus at Hudson Yards, the chain’s 43rd store.

If it succeeds, that is.

Neiman Marcus Finally Arrives in New York at Hudson Yards

Historically, Neiman executives longed to come to New York City, the company said. Even without the earlier Bergdorf restriction—the subject of negotiations going back more than a decade—there were other hurdles, including finding the right location while avoiding sky high rents.  

Webber Hudson, the executive vice president who heads up retail leasing efforts at Related, said the developer had talks with multiple department stores in its search for an anchor tenant. Though conversations didn’t progress with Bloomingdale’s, discussions were at one point “very far along” with Nordstrom—but in the end the retailer chose a midtown location it plans to open this fall. (Bloomingdale’s and Nordstrom didn’t immediately respond to requests for comment.)

“The attraction for us to Neiman’s was obvious,” said Hudson. “It’s extraordinary to think that such a storied luxury retailer never had a store in Manhattan and we were able to help unlock the restriction that existed.”

Neiman’s entry, however, comes as New York’s department store scene is in upheaval. Some century-old names closed this January: Lord & Taylor and Henri Bendel shuttered their main stores, and Saks darkened its women’s outpost just two years after it opened in a lower Manhattan mall. 

The remaining competitors have been busy prepping for Neiman’s arrival. The Saks flagship is nearing completion of a $250 million renovation project—recently unveiling a main floor full of handbag boutiques and a dazzling escalator that’s more art than people-mover. Bloomingdale’s is undergoing a multi-level facelift, with a revamped cosmetics floor debuting in December, complete with beauty services and spa rooms. 

Neiman Marcus Finally Arrives in New York at Hudson Yards

At Hudson Yards, the mall itself is a $2 billion wager by Neiman and developers on uncertain odds. Can the store coax shoppers in from the nearby High Line, let alone the surrounding neighborhoods? Many of the center’s more popular shops—Neiman, Sephora and Lululemon—are located on the upper levels, forcing customers to walk the mall and pass dozens of other stores. Will this be a hindrance to those big names? 

The Shops at Hudson Yards will have one built-in advantage: Once complete, thousands of residents and office workers in the towers above the mall will present a ready made pool of shoppers. Neiman is depending on that captive foot-traffic: Last quarter, the retailer reported a $29 million net loss as same-store sales, a key retail metric, inched up 0.7 percent, marking the sixth consecutive quarter of positive comparative sales. Meanwhile, the company has been negotiating with lenders to restructure its debt.

Management is seeking to bolster loyalty among New York shoppers with its new store, gauging success by engagement. Sales are key, but not everything needs to directly lead to a purchase, said van Raemdonck. The chain already rakes in millions of dollars online—but having a location in Manhattan still carries a level of cachet you can’t put a price on.

“We’re not coming to plant the flag in New York and say ‘We’re going to have a big store, we’re going to have a big revenue there,’” he said. “We’re going to New York to mature the customer relationship we have with the New Yorkers.”

For now, it’s the city’s shiniest newest shop—at least until Nordstrom opens in a few months.

©2019 Bloomberg L.P.