The news: Saks Global will close nine Saks Off 5th stores next year, a move that will help the beleaguered retailer cut costs as it navigates increasing headwinds.

The rationale: Saks is positioning the closures as an opportunity to “optimize” its off-price footprint and devote resources to elevating the customer experience at its best-performing stores, according to a statement provided to Retail Dive. However, it’s likely that the company’s cash-flow challenges and troubles with its vendors played a major role in its decision to downsize.

• Saks’ increasingly acrimonious relations with merchants are hindering its ability to get quality inventory for both its full-price and outlet stores.
• That is significantly diminishing its appeal to shoppers and opening the door for competitors like Nordstrom and Bloomingdale’s to gain share at its expense.
• While Saks is shrinking, both Nordstrom and Bloomingdale’s plan to expand their off-price reach: Nordstrom is on track to open 20 Rack stores this year, while Macy’s sees Bloomingdale’s outlets as one of the “primary ways” to extend the brand to more shoppers.

Our take: Off-price could have been a real opportunity for Saks to win over price-conscious shoppers and keep TJX, Ross, and other players from taking advantage of department stores’ decline. Instead, the retailer has become a cautionary tale about the importance of staying in vendors’ good graces and what can happen when those relationships falter.

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