Saks Off 5th outlet store opens Thursday in City Center

Saks Off 5th, the outlet store of the Saks Fifth Avenue, is reopening Thursday in downtown Minneapolis, just across the street from a location it closed last year.

"We're really excited to be back," said Jonathan Greller, president of Saks Off 5th stores. "Minneapolis is very much part of our growth strategy."

The decision to close the Minneapolis store was made before Saks was acquired by Hudson's Bay Co., Greller said. After the 2013 purchase, Hudson's Bay decided to keep the Saks brand in Minnesota. But by that time, it was too late to retain the space it had in Gaviidae Common. It has now moved into two floors of City Center, just across Nicollet Mall, that was formerly occupied by Office Depot.

The 40,000-square-foot space will be divided into 24,000 square feet on the street level and 16,000 square feet on the skyway level. That is a bit larger than the 28,000-square-foot Saks Off 5th outpost that anchors Twin Cities Premium Outlets in Eagan. The downtown location will include the same selection of women's, men's and kids apparel and accessories as Eagan, but it will have a larger selection of shoes and handbags.

Keeping stores downtown has been challenging for many U.S. cities. Minneapolis lost Saks' full-line store and Neiman Marcus, as well as several high-profile restaurants. And Gap left the IDS Center last year.

Rumors have circulated since last year that Nordstrom Rack, which has long been eyeing a downtown location, would create a two-level store at IDS, using the former Gap space on the first floor and the former TJ Maxx space, which hasn't been used since 2004, in the lower level.

Deb Kolar, general manager of operations at IDS Center, said the building is "in the middle of negotiating with a great national retailer," though she wouldn't identify it by name.

In a visit to the Twin Cities last fall, Blake Nordstrom, co-president of Nordstrom, said "Downtown Minneapolis is a very attractive location with a strong customer base." The Seattle-based company plans to add more than 100 Nordstrom Rack stores in the next four years.

Hudson's Bay plans a similar expansion for Saks. In 2015, there were 90 Off 5th stores and 38 Saks Fifth Avenue stores in the U.S. This year, Hudson's Bay plans to add 32 outlet stores in the U.S.

Department store outlets continue to outperform the full-priced stores. In Saks fiscal year, outlets saw same-store sales gains of 6.3 percent while its department store group fell 1 percent.

Online sales at Saksoff5th.com showed the biggest increase at 63 percent. "Our digital traffic draws more traffic to the stores," Greller said. "Customers preview it in the store and buy it online or vice-versa." Customers who buy items online at Saks Off 5th can return them in the stores.

Saks Off 5th also recently changed its pricing strategy to make all discounts be reflected on price tags. In the past, many sales racks featured "take an additional percentage off" signs so that customers were often surprised by the price at the register. "Now they'll know exactly what the price is before taking it to the register," Greller said.

Saks Fifth Avenue opened 26 years ago in Gaviidae Center downtown. In 2005 it was reworked as an outlet as its department store business declined. City Center, located at 33 S. 6th St., is owned by Shorenstein Properties of San Francisco.

John Ewoldt • 612-673-7633