It might be all that Wall Street money, or the arrival of New York’s glitziest department store, but the poodle and parcel set in Beverly Hills has never seen a hotter shopping scene.
The result is a three-way battle between department store titans Neiman Marcus, Saks Fifth Avenue and the newest arrival, Barney’s New York.
“Barneys has definitely spruced up the neighborhood; it has shaken things up,” said Howard Ruben, a partner at fashion industry P.R. agency Ruben/Rottman & Co. “There were a lot of cobwebs there before.”
Barneys touched down on Wilshire Boulevard, near the intersection of ultra-glamorous shopping hub Rodeo Drive, in spring 1994.
The following year, Saks nearly doubled the size of its 9600 Wilshire Blvd. store by buying its former rival the vacant I.Magnin store next door.
This July, Neiman Marcus completed an expensive series of renovations including the addition of an Estee Lauder spa where clients can rest their tired feet from shopping and order up lunch, a massage and a body wrap.
It also renovated its lower floor, closed the upstairs cafe and opened a larger one downstairs.
The result, according to analysts and others, is a resurgence in interest in Beverly Hills by upscale shoppers many of whom had earlier defected for malls like the Beverly Center and the Century City shopping center.
“I think if you go back some years, Wilshire Boulevard was the great divide,” said Don Oblander, director of finance for the city of Beverly Hills. “One crowd went to Neimans and Saks and the people who came to the north side, like Rodeo Drive, tended to go there but not cross the street.
“There seems to be a lot of happy feelings that some of these new stores coming in have helped break down the barrier and people now see it … almost like an upscale mall,” Oblander said.
Oblander says retail in general is on the upswing in Beverly Hills, although he declined to reveal increases in sales tax figures.
None of the three department stores would provide sales figures, so it is difficult to tell how the competition has affected their bottom lines but some analysts point to Neiman Marcus as the most likely winner, based on the chain’s overall national performance.
Publicly held Neiman Marcus Group reported net income of $14 million in its fourth quarter ended Aug. 2, up from $3.2 million for the like period last year. The Beverly Hills store is the biggest in the 27-store Neiman chain.
Saks and Barneys, meanwhile, are struggling badly. Saks endured a net loss of $14.2 million in its fourth quarter ended Aug. 2, while privately held Barney’s New York is in bankruptcy proceedings and up for sale.
Nonetheless, the Beverly Hills stores for Saks and Barneys are believed to be performing strongly.
Since the arrival of Barneys, each store has worked to establish its own niche within the upscale retail category. Barneys, according to customers and observers, tends to carry a more hip, fashion-conscious line targeting a younger crowd, while Neiman Marcus is seen as more conservative. Saks is considered somewhere in between.
“There definitely is a Barney’s customer, who is hipper, younger, more in tune to what’s going on in fashion,” said Karen Mamont, a former apparel buyer and now a marketing executive at CaliforniaMart. “It’s a customer who probably wouldn’t go to these other stores (Saks and Neiman Marcus).”
But overall, say analysts, the three competitors are more complementary to each other than threatening.
“They do compete, but it’s not head-to-head. It’s not Macy’s and Gimbles,” said Richard Giss, a retail analyst with Deloitte & Touche LLP. “But in another respect they feed off of one another. Their very proximity makes (Beverly Hills) a destination shopping location.”
In fact, for upscale department stores, where the rich and famous think nothing of plopping down $6,000 for a Chanel suit or $3,000 for the latest designer handbag, competition over customers seldom results in price wars but rather, in image and marketing wars.
“Saks has been doing a lot to ingratiate itself into the upper class set that enjoys going to parties and seeing each other,” said Walter Loeb, president of Loeb Associates, a New York-based retail consulting firm. “Certainly, Saks sent a SWAT team to Los Angeles from headquarters in order to spruce up the store activities.”
If customers chose where they shopped based solely on the look of the store, Barneys New York would win hands down, customers say.
The museum-like store resembles a neo-Mediterranean palace. Beyond its cream-colored main entrance, a dramatic staircase wraps upward five floors. The 100,000-square-foot store is bathed in sunlight from a swimming-pool-sized skylight overhead.
Meanwhile, Saks and Neiman both have the feel of a Fifth Avenue apartment. Black borders, marbled floors, ornate lighting and glass cases.
“If I’m shopping with my mother I go to Saks, because it’s been a pillar in the community not only here but back in New York,” said Theresa Scott, a 35-year-old small business owner. “If I shop with my girlfriends, I go to Barneys it’s hip, and they’ve got Barneys Greengrass (restaurant) and you could meet there for lunch and do a little shopping afterward. If I want a whole outfit from shoes to purse to underwear, I go to Neimans.”
The three stores are helping attract more customers to the entire region, according to Beverly Hills merchants.
Many stores on Rodeo Drive refer customers to the big department stores for items they don’t carry, just as the department stores send people to the smaller retailers.
“All the businesses here want more customers,” said Sora Galinato, assistant manager Rodeo Drive formal wear shop Jessica McClintock. “They promote each other.”
Ruben, of Ruben/Rottman & Co., agreed that there is no reason all the stores shouldn’t be able to live together.
“Barney’s coming in, coupled with the fact that the economy has gotten better, has contributed to this improved climate of competition,” Ruben said. “Ultimately, it’s good for the consumer. And it should be good for the retailer, too.”
Business Journal Staff Reporter Larry Kanter contributed to this story.
