The NYC Luxury Retail World Is Already Crowded. Can Neiman Marcus and Hudson Yards Stand Out?

In a city of famed department stores, here's how these brands can succeed

The newly opened Neiman Marcus location at Hudson Yards Hudson Yards
Headshot of Diana Pearl

Perhaps more than any other city in the world, New York is a metropolis of department stores. The city boasts several famed flagships, including the massive Macy’s in Herald Square, the original Bloomingdale’s on 59th street, luxury epicenter Barneys New York and Fifth Avenue icons Bergdorf Goodman and Saks Fifth Avenue.

Last week, an outsider arrived in Manhattan as Dallas-based behemoth Neiman Marcus opened the doors to its first New York location at the newly opened shopping center at Hudson Yards. The store’s debut has been boosted by a widely-attended launch event as well as the publicity that’s surrounded the simultaneous opening of Hudson Yards, a newly built up stretch of Manhattan’s far West Side that includes luxury apartments, office buildings, a hotel, a 150-foot staircase structure called “Vessel” and perhaps most notably, a shopping center.

Hudson Yards, and Neiman Marcus in particular, are entering a crowded retail playing field. Already in NYC, shoppers have the opportunity to partake in some of the world’s most iconic retail experiences. A consumer can shop for a necklace at the Tiffany’s location that Audrey Hepburn stood outside of in Breakfast at Tiffany’s. They can buy a Louis Vuitton bag at the Bloomingdale’s where Rachel Green worked on Friends, or a pair of Manolo Blahnik pumps from Barneys New York, a go-to retailer for Carrie Bradshaw on Sex and the City. At Macy’s, they can browse at the same store that served as the inspiration for the classic film Miracle on 34th Street.

There’s an undeniable cachet that comes with shopping at these locations, and it serves to make the shopping experience more exciting and more of a true moment than making the same purchase at less-famous locale. And as brick-and-mortar retail has increasingly leaned on experience in the face of dwindling in-store sales, that prestige has become an even more powerful tool.

All this begs the question: Why would anyone choose to go to the city’s far-West Side to shop not only at a mall (an institution that may have waning widespread success, but is still a fairly omnipresent sight throughout the country), but at a store that does not carry the New York icon and flagship status that so many of its nearby competitors do.

The Jo Malone store at Hudson Yards

The key, Jason Goldberg, founder of Retailgeek and chief commerce strategy officer, Publicis Communications said, is to create an experience that’s just as compelling as what these other stores have to offer. For example, high-tier dining options, like you’d find at Bergdorf Goodman or Barney’s in-store restaurants, or exclusive brands shoppers can’t find elsewhere. That’s true not only for Neiman Marcus, but also the outposts of other Fifth and Madison Avenue luxury mainstays, like Cartier, Gucci, Dior, Fendi, Louis Vuitton, Tod’s and Kate Spade, among others, that also opened up at Hudson Yards. With these brands’ new locations, they face a formidable opponent—themselves. Many already have locations around the city’s more highly-trafficked areas.

“Manhattan is very much a flagship market,” Goldberg said. “They’re used to shopping at these much more extravagant, higher capital, richer flagship experiences. To compete in that market, you can’t just do the things that made you successful in expanding to the west coast, or something else. Not only do you have to break through on the awareness game, you have to break through with a flagship caliber experience to compete and win.”

There’s no doubt that Neiman Marcus is investing in these sort of diffentiating features in its Hudson Yards store. According to Theresa Palermo, svp brand marketing and public relations for Neiman Marcus Group, there are three restaurants, a spa, a nail salon, a blowout bar, a floral boutique from PopUp Florist, as well as a lounge where customers can connect with the store’s in-house stylists. These, they hope, will showcase the differences between Neiman Marcus and even its sister store, Bergdorf Goodman, which are both owned by the same parent company.

“We will attract customers who are looking for authentic experiences, incredible fashion, and luxury convenience,” said Palermo. “Bergdorf Goodman is a Manhattan retail icon. There are many different product and service offerings that will cater to different types of customers.”

As well, Neiman Marcus and the rest of these new luxury storefronts, might not be able to replicate a decades-long place in New York history, but by putting its first Manhattan location in Hudson Yards, it’s distinguishing itself as something else entirely, particular given all the chatter that’s surrounded Hudson Yards—it’s the biggest private real estate development in U.S. history. Associating itself with such a major project and hopeful destination in the city syncs the potential of Neiman Marcus with that of Hudson Yards.

The city may be pushing hard to see Hudson Yards become a success—it offered substantial tax breaks to make it happen, after all. However, because of this relatively isolated location (there isn’t much around Hudson Yards besides Hudson Yards itself), that prosperity relies on much more than just expecting tourists and locals to wander in.

"[Hudson Yards has] to draw tourists, it's got to draw visitors from other parts of the city. Anytime you try to change shopping patterns in a significant way, that's a hurdle."
Steve Dennis, a former Neiman Marcus executive and the president and founder of SageBerry Consulting.

“Obviously, you can’t make that site work just on neighborhood traffic,” said Steve Dennis, a former Neiman Marcus executive and the president and founder of SageBerry Consulting. “It’s got to draw tourists, it’s got to draw visitors from other parts of the city. Anytime you try to change shopping patterns in a significant way, that’s a hurdle.”

As a mall (a luxurious one, but still, essentially, a mall), a staple of the suburban areas many of these tourists likely come from, Hudson Yards’ best bet is likely to create a communal experience, something that the city’s other shopping epicenters can lack.

“Hudson Yards has created almost a community where people can shop, relax and have a nice time,” said Neil Saunders, retail analyst and managing director of GlobalData Retail. “And that is a contrast to perhaps the more harried experience of rushing up and down Madison Avenue and the hustle and bustle of the traditional thoroughfares of New York.”

However, Neiman Marcus’s place at the center of a new luxury mall on Manhattan’s far West Side can’t help but serve as a reminder of Saks Fifth Avenue’s failed expansion to Brookfield Place, a downtown Manhattan shopping center. The Saks location at Brookfield opened in late 2016, and closure of the women’s store was announced at the end of last year. At the time of the closure, a spokeswoman explained that the reason was because “we determined that their preferred format is a combination of our digital channels and our iconic Fifth Avenue flagship, where our grand renovation is creating an unparalleled luxury shopping destination.”

A Louis Vuitton store at Hudson Yards

Brookfield is similar in many ways to Hudson Yards—it’s so far west it looks out on the Hudson River, its directory features a lineup of luxury retailers including Gucci and Salvatore Ferragamo, and it’s a recent addition to the NYC retail landscape, officially opening in 2014. If Saks couldn’t succeed there, why would Neiman Marcus will be any different?

Palermo said the store is counting on projects like Hudson Yards being the shopping destinations of the future.

“All over the world, you’re seeing multi-use developments pop-up in urban cities centers,” she said. “Hudson Yards is truly what living and shopping looks like today. Hudson Yards houses a residential and work force community that Manhattan has never seen, whom we have the opportunity to build relationships with.”

Dennis said that the sheer size of the New York market makes it possible for any sort of retailer to succeed there. But again, something unique needs to be provided—and perhaps being the sole Neiman Marcus in the city (compared to Saks, which had its iconic Fifth Avenue location just a short subway ride away) is a good enough starting point.

“It’s such a huge market, I think there’s room for plenty of retailers,” he said. “Neiman Marcus is certainly wedging itself in between Bergdorf Goodman on the ultra-high-end, and Bloomingdale’s as a bit more mass market. It’s a unique mix of products and services.”

Those who are banking on Hudson Yards’ success are likely hoping that unique mix helps propel the whole complex to success. But it’s up to a lot more than Neiman Marcus to ensure that.

As Saunders said, “the fate of Neiman Marcus depends on factors that are outside of their control, that they haven’t engineered.”

@dianapearl_ Diana is the deputy brands editor at Adweek and managing editor of Brandweek.