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08/12/2021

Saks Teams Up with WeWork to Open In-Store Co-Working Space

Saks Fifth Avenue has partnered with WeWork to convert parts of its department store into co-working spaces.
Saks fifth avenue sign

The first five co-working spaces will open in New Yorkaccording to The Wall Street Journal. The new venture will be called SaksWorks, with WeWork running and staffing the co-working spaces in buildings owned by Saks’ parent company Hudson’s Bay Company.

The co-working space capitalizes on the rise of remote work, while the retailer may benefit from having more people in their stores on a daily basis.

Executive Summary

The combination of a co-working space and a department store underscores a new trend in retail where the store acts as a platform, similar to how e-commerce websites act. Retailers with physical footprints are increasingly looking for innovative ways to leverage their spaces to include new categories and other brands. 

Hudson’s Bay also owns buildings that formerly housed department store retailer Lord & Taylor, which declared bankruptcy in 2020 and took its business all online. Some of the SaksWorks locations will be located in buildings once occupied by Lord & Taylor. The new spaces are banking on the desire of many Americans to continue working from home who may also want an office space from time to time.

“We think about, ‘What can we bring to the suburbs that we used to serve with retail concepts where our customers still live?’” SaksWorks President Amy Nelson told The WSJ.

Exec summary

SaksWorks is also reportedly considering adding the spaces in Los Angeles, Seattle, Philadelphia and Boston. The new spaces will require redesign efforts to adapt them to office space—and Nelson is working with architects to add more natural light, greenery and artwork to make the spaces more inviting for workers. The changes bring to light the struggles of retail’s brick-and-mortar businesses. Consumers looked to e-commerce during the height of the COVID-19 pandemic, leaving many retailers in a lurch. For Hudson’s Bay, which not only owns big retailers but also the buildings they occupy, the struggles were even more apparent. 

The deal is also beneficial to WeWork, which seeks growth without a massive lease liability. The co-working company told The WSJ that 70% of its new spaces in the future will be under a similar revenue-sharing model or other arrangements that avoid leases.