NEW YORK — It’s not such a wild idea, but would a casino inside Saks Fifth Avenue really work?

When Richard Baker, chairman of Saks Fifth Avenue’s owner HBC, proposed creating a casino on the top three floors of the retailer’s flagship, many in the industry were skeptical, some even aghast, seeing it as a poor fit with the luxury department store and beyond its expertise.

Saks Fifth Avenue’s parent, HBC, would have to find a casino developer and operator to partner with, deal with regulatory issues, canvas the opinions of designers, and figure out how a setting for gambling integrates with the store rather than interferes with it.

What would be the impact on Saks Fifth Avenue’s retail sales and the luxury brand’s image? Would it be called the Saks Casino? Could a visitor use their Saks card to buy chips?

A casino on floors nine, 10 and 11 of Saks, as proposed by Baker, would change the tenor of Fifth Avenue — a destination for family shopping, Radio City and the Rockettes Christmas Spectacular, ice skating in Rockefeller Center and for worshippers at St. Patrick’s Cathedral. The church is an influential force in Midtown.

RELATED: Sir Elton John Performs at Saks Fifth Avenue’s Window Unveiling and Light Show

Las Vegas, Nevada-March 10, 2017: Casino machines in the entertainment area at night

Casino machines in Las Vegas.

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“It’s exactly the kind of bold maneuver that retailers need to be considering,” said Ray Graj,  owner/principal at the Graj + Gustavsen branding firm. “The marketplace is moving very quickly, retailers must respond to changing demographics, and people are interested in experiences and experiencing things in bold ways. I would advocate for this, if HBC handles this in a tasteful and discreet way, and frames it out as a pilot experiment, so if the experience is a failure, it doesn’t undermine the whole ship. You don’t have to necessarily brand it as the Saks casino, and if it’s handled in an upper-end, discreet way, it could bring new traffic to the store. The devil is in the details.”

“At first I thought it was a crazy idea, but now I think it’s interesting,” said Ron Frasch, former president of Saks Fifth Avenue who operates a consulting business under his own name. “Compared to other casino operations, this is more of a Monte Carlo-type upscale initiative that could attract a different crowd. My guess is that it would drive traffic and would be good for a luxury marketplace if handled correctly, and treating gambling in a unique way, how they handle access and the entrance, how they keep it quite special, with private gambling rooms for those high rollers.”

Frasch also said a casino inside Saks opens up possibilities for forming new kinds of partnerships with hotels and airlines, providing special rates, to attract a larger luxury audience.

“Luxury is about quality experiences, not just quality products,” Frasch added. “All retailers are looking to engage more in the lives of their customers and figure out how to make the shopping experience more unique. A luxurious casino is definitely a fit with a Saks crowd.”

“It’s ludicrous,” said one former retail chief executive officer. “But I can understand wanting to monetize those upper floors. It makes a lot of sense to try to do that.”

Mark Cohen, director of retail studies and adjunct professor at Columbia Business School, clearly questioned the judgment of adding a casino to the Saks flagship. “Richard Baker is focused on any way he can monetize unproductive space,” Cohen said. “Saks Fifth Avenue has trouble enough retaining its age-old cachet. I hardly think a New York gambling crowd, whether residents or tourists, would be compatible with a so-called luxury department store. New York isn’t Las Vegas or Monte Carlo.”

“I first thought the idea of a casino would bring more traffic to the store,” said veteran retail analyst Walter Loeb. “The store needs more traffic and from what I hear, it’s not getting enough. On the other hand, Saks does attract a certain quality of person that doesn’t necessarily want to gamble. You can’t make Las Vegas out of Saks Fifth Avenue.”

Loeb noted that casinos operate with much longer hours than stores, some 24 hours a day, others opening early in the morning and late into the night, at times when Saks would not normally be open for business. An entrance to the Saks casino would have to be on a side street, rather than upsetting the century-old, landmarked limestone facade on Fifth Avenue. The Saks flagship is situated between 49th and 50th Streets, and Fifth and Madison Avenues.

By having the space already, Saks could put up a casino faster than others needing to build from the ground up. But HBC’s chances of getting the casino license appear slim considering several major players in the real estate and entertainment businesses are also vying for a casino license in the city. They could create splashier marquees, easier access and provide more space by building anew. Three licenses to operate a casino are being offered by New York State to New York City.

Those vying for a license to open a casino in the city include Mets owner Steve Cohen, who wants one near Citi Field in Flushing, Queens; a consortium composed of real estate developer Thor Equities, Saratoga Casino Holdings and The Chickasaw Nation and Legends sports and entertainment firm, together eyeing Coney Island for a casino; Stephen Ross, chairman of The Related Companies, who could build a casino in or around his Hudson Yards complex on Manhattan’s West Side, and real estate firm SL Green Realty, which is eyeing Times Square.

“The whole idea to drive maximum return to the state of New York. A Saks casino may not be able to deliver the lift the state wants,” Frasch suggested.

In Las Vegas, designer shops abound. The desert city is a mecca for vacationers, conventioneers and gamblers. Out-of-towners do tend to open their wallets and shopping is a big part of the fun of being away from home.

One former Saks executive said the retailer should stick to its knitting. “Do what you do better than anyone else. Don’t try to do things you know nothing about it,” the source said. However, Saks would partner with a casino developer/operator.

Several sources said Baker’s plan should be viewed as a real estate play, rather than a strategy directly aimed at driving sales and traffic at Saks and enlivening its retail experience. HBC does want greater productivity out of its flagship real estate, particularly on those upper floors which aren’t as productive as the lower floors. The ninth floor houses women’s swim, lingerie and outerwear; childrenswear including infants, designer labels and shoes, and the L’Avenue at Saks restaurant. The 10th floor houses Saks Works, which is the partnership between Saks and WeWorks, and the 11th floor houses offices for Saks workers. According to Frasch, given the size of the Saks flagship — about 600,000 square feet on 11 levels — “they could easily consolidate lingerie, children’s and the other categories into other floors.”

In the past, Baker has orchestrated some shrewd real estate deals, including selling Zellers properties in Canada to Target, buying Lord & Taylor and selling off L&T’s Fifth Avenue flagship and other L&T locations. HBC has profited in a big way through real estate deals and eliminating debt.

But major casinos on the Las Vegas Strip, like the Bellagio and the Wynn Encore, are splashy and big, filled with amenities like bars, restaurants, and large venues offering leading entertainment acts. Would Saks be able to deliver that level of entertainment given its location and square footage? Floors nine through 11 combined represent under 200,000 square feet. Ross, for example, could create a grander project that could couple a casino with a hotel, theater, dining and shopping, and pull in a greater return for the city and the state. One source suggested converting the former Neiman Marcus store in Hudson Yards into a casino, which has a wide frontage on Tenth Avenue, three levels and more than 200,000 square feet, though reports have centered on converting the former store to office space. 

“What I like about the Saks proposal is essentially it would be like a private club, modeled after Annabel’s in London,” said Jerome Barth, former president of the Fifth Avenue Association, and an urban planning consultant. “My understanding of the proposal is that it would be discreet, and not necessarily very noticeable from the street. It wouldn’t rely on dragging in the general public and could focus on a smaller population of wealthy clientele. It would not prey on the poor, and of all the proposals out there, I believe this one is the least bad idea and would have the least impact on the quality of life in the city. The church might feel differently.”


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