Saks to Expand in Southland in Battle for Upscale Market

Escalating the battle for upscale shoppers, the operator of Saks Fifth Avenue said Friday that it will nearly double its presence in Southern California over the next two years, opening three stores in the region and 17 others nationwide.

“This is a clear endorsement of the high-end market, particularly in Southern California,” said Richard Giss, a partner in the retail services division of Deloitte & Touche, an international accounting and business services firm.

“With the opening of Bloomingdale’s and expansion of Saks, there is a war for the upscale market. This is a market that stores were abandoning a few years ago.”

Saks, which operates at the high end of the luxury spectrum, faced new competition in the Southland last month when Bloomingdale’s entered the market and opened three stores. The venerable Bloomingdale’s chain caters to both moderate and upscale shoppers.

Saks also goes head-to-head with Neiman Marcus, operator of three Southland stores, for the high-end market. Nordstrom, which has 20 stores in Southern California with moderately priced and upscale apparel, also is a rival.

All of the stores have been benefiting from a healthier economy and renewed consumer interest in quality.

For example, Saks said its recent store expansions have contributed to the company’s 17.2% sales growth for the first 10 months of 1996.

The retailer’s parent, Saks Holdings Inc., plans to open three Saks stores in Northern California by 1998, and to expand in Texas, Florida and New York, states with large concentrations of wealth.

The new Southern California stores will be in Santa Barbara, Pasadena and the San Diego area. (The company has not completed lease arrangements and did not name specific locations.)

Saks already has four stores in Southern California, in Costa Mesa, Palm Springs, San Diego and Beverly Hills.

The Beverly Hills store--Saks’ 260,000-square-foot Southland flagship--will be expanded by an additional 12,000 square feet, the company said. The Beverly Hills site is to be one of 12 store expansions nationwide over the next two years.

It was just a couple of years ago that upscale retailers were retrenching. Saks closed a store in La Jolla in 1994 and the owner of the upscale I. Magnin chain decided to close those stores the same year.

Saks regrouped in 1995, acquiring the I. Magnin store in Beverly Hills next to its existing location.

The expansion plans announced Friday are part of Saks’ “growth strategy of building regional dominance in key markets,” Saks Chairman Philip Miller said.

“These plans build upon our previous expansion initiatives in California and Texas, further extending Saks’ nationwide network reach in areas with significant profit potential,” he said.

Saks now has six conventional stores and six outlet stores in California. The chain plans to open another outlet store in the City of Orange at a mall that the Mills Corp. is developing.

Nationwide, Saks has 50 conventional stores and 35 outlet stores.