Lord & Taylor is reopening in New York less than a year after shuttering its flagship department store. But the new store will only be open for a limited time.
Le Tote, which recently bought the struggling brand, is opening a pop-up store in the city’s prime shopping neighborhood, SoHo. The store will sell items like Lord & Taylor’s cashmere and beauty products. It will also showcase Le Tote’s clothing rental subscription service.
For Rakesh Tondon, CEO of Le Tote, the store’s purpose is to remind Lord & Taylor’s customer base that it’s still around.
“That community felt betrayed when the flagship store was shut down and we’re about bringing Lord & Taylor back to New York,” he told CNN Business. The company plans to bring the brand back to the city in similar ways next year.
The store opens December 11 and closes on Christmas Eve. Located on Wooster Street, it neighbors other luxury brands such as Celine, Canada Goose (GOOS) and Moschino. At roughly 2,400 square feet, the new store is a mere fraction of the 676,000-square-foot location on Fifth Avenue. A typical Lord & Taylor store is around 120,000 square feet.
The SoHo location was picked because it has the “right demographic,” Tondon said between the Le Tote customer and the average Lord & Taylor shopper. Lots of foot traffic could also introduce the aging department store to Millennials who might be in the area.
Lord & Taylor still has 38 stores open, primarily on the east coast in the US It opened its first store in New York in 1826, making it the nation’s first department store and a mainstay of high-end fashion at the time. The New York location on Fifth Avenue closed in January 2019. The building was sold to WeWork for $850 million.
Tondon describes Le Tote as a “data logistics company” because it closely tracks its customers’ preferences and offers them relevant clothing. He’s aiming to take that philosophy and transfer it to the remaining Lord & Taylor stores, which he remains bullish on because they still drive a “fair amount of traffic.”
“We want to start taking the tech-first approach, so we’re integrating more systems in a better way than [Hudson Bay] has done in the past,” he said.
Stores won’t be fully remodeled, but there will be some changes, including a new section in each store promoting the Le Tote brand and better technology for sales people.
He envisions that the future of retail isn’t filled with mega department stores of the past, but rather the “world is going toward a more curated experience of 5,000-to 25,000-square-feet stores that will be personalized to the cities they are located in.”
Similar to other brick-and-mortar stores, Lord & Taylor has faced a downward trajectory because of competition from a growing swath of lower-priced rivals and the internet. Lord & Taylor was acquired by May Department Stores in 1986, and in 2006, it was taken private by NRDC Equity Partners in a $1.2 billion deal. Hudson’s Bay (HBAYF) acquired Lord & Taylor in 2012 and sold it to Le Tote in August 2019 for $75 million.
Le Tote’s purchase showed that rental clothing is becoming a big business, which includes several rivals, including Rent the Runway and Stitch Fix (SFIX). Shoppers are eager to wear new looks frequently and are not always keen on buying pricey outfits to wear just once or twice. The clothing rental market is estimated at around $1 billion today and will hit $2.5 billion by 2023, according to GlobalData Retail.
SoHo has become a hub for retailers experimenting with the pop-up store format. Retailers use the locations to reconnect with customers and ignite sales around the holidays. Tupperware (TUP) recently opened a small store to reignite excitement for the struggling 73-year-old brand.
“Everyone is trying to engage with the Millenial customer,” Tondon said of the approach. “The internet has democratized the access to brands and everyone is trying to stand out to show how their product is superior to other brands. Pop-ups are a great way to test out the hypothesis or just create an interesting experience for customers.”