Bloomingdale's but with deals

A Bloomingdale's the Outlet Store may be a kind of retail contradiction: One of those cross-pollination concepts that were never meant to be.

Not anymore, say Wall Street retail analysts. It's a growing trend among major department stores in struggling malls, as online shopping expands and luxury brands try to broaden their clientele.

Those on board are Saks Fifth Avenue (Off 5th), Neiman Marcus (Last Call), Nordstrom (Rack), and now, Bloomingdale's (the Outlet Store).

"It's like they've all awakened," said national retail consultant Howard Davidowitz. "The outlet concept [for high-end retailers] has been around for the past decade. But it's really accelerated in the last of couple years as department stores in malls are getting killed."

On Friday, at 9:30 a.m., Bloomingdale's unveiled its outlet store at 1625 Chestnut St. at the posh Shops at Liberty Place. The two-level store covers 22,700 square feet of space and sells a range of discounted apparel and accessories, for men, women, and children and for the home. Most of the items are marked 25 percent to 70 percent off. For example, Kenneth Cole Podington biker boots are selling for $79.88, compared with the $179 suggested retail price.

It follows on the designer heels of two other Bloomingdale's outlet stores, which opened in New York's Upper West Side (Nov. 20) and San Diego (Nov. 21).

"Whether you're a wallet-conscious shopper or not, everyone loves a treasure," said Michelle Israel, senior vice president of outlets for Bloomingdale's, during a tour Thursday afternoon as the Center City store had a "soft opening" at 3 p.m. to work out kinks before Friday's official launch. "We're excited to be here."

Center City has welcomed new outlet offshoots for Century 21, Nordstrom Rack, Factory Store, and Banana Republic over the last year. Kohl's opened Off/Aisle by Kohl's in June on Route 70 in Cherry Hill.

And the Gallery at Market East is being renovated and renamed Fashion Outlets of Philadelphia by mall owner Pennsylvania Real Estate Investment Trust (PREIT).

"Everyone is opening outlets," said retail analyst Simeon Siegel of Nomura Securities Inc. "Companies need to broaden their distribution channel. It's clear who is being successful right now, and in this current environment, shoppers are demanding value. That necessitates the retailer in finding a value option."

Macy's Inc., the corporate parent of Bloomingdale's, announced the Center City store opening in August. It becomes the 16th Bloomingdale's outlet in the country. It joins Bloomingdale's department stores at King of Prussia mall and Willow Grove Park Mall. "I'm ecstatic," Quadir Lewis, 30, of Southwest Philadelphia, said when told of Bloomingdale's urban arrival in space once occupied by the Warner Bros. studio store and later a Christopher's Men's at Liberty Place.

Lewis, who owns a construction company in the city, was shopping at King of Prussia mall with his wife and young daughter earlier this week. He said he loves high-end brands such as Louis Vuitton and Gucci. Among his favorite stores are Saks, Nordstrom's, and Neiman Marcus.

"When I see the word outlets next to the stores' names, it makes a difference," he said. "I immediately think of big savings on quality stuff. I love outlets."

D.J. Busch, a mall analyst for real estate tracker Green Street Advisors L.L.C., said: "Most investment by the department stores is, in fact, going to an off-price concept or building out e-commerce. Nordstrom has been growing its Rack business for some time. Bloomingdale's off-price is still very small, but they are looking for opportunities. Macy's Backstage is brand new and looks like it will be taking more space."

Luxury brands "are trying to figure out how accessible they have to be" to turn a profit, Siegel said. "At the end of the day, they have to juggle exclusivity with distribution. You are not going to do a lot of business if you are only catering to a luxury clientele.

"The question becomes, 'How do you create a high-end line and channel it as OK for a different customer to broaden your reach without hurting the brand's image to your full-price shoppers?' It's a tricky balance."

There was another reason department stores were taking the outlet route: cheaper rent.

"The further away from the mall a retailer goes, the lower their rent will be," Siegel said.

Online shopping was a factor, too. Brick-and-mortar stores for retailers such as Macy's - a perennial mall anchor - are closing in droves, making an off-price, off-mall location even more alluring.

Retailers "have to compete with the abundance of online discount sites that sell the same merchandise," said Andi Pesacov, senior director of the retail division at Cushman & Wakefield, who negotiated the deal to take Bloomingdale's to Chestnut Street. "This is them controlling their market share."

All of that was of little concern to Violette Hobbs of University City, who was draped from head to toe in red designer wear. She sauntered into Bloomingdale's outlet store's soft opening on Thursday.

"I didn't even know Bloomingdale's was coming to urban Philadelphia" she said, holding a shimmering silver top over her own for size. "The fact that it's an outlet store, even better.

"The prices are much more reasonable."

sparmley@phillynews.com 215-854-4184 @SuzParmley