Oscar de la Renta's Bloomingdales Leased Store May Be the Future of Retail

If you're boycotting Barney's because of the nasty racial profiling claims being leveled against the store, you're probably also wondering which department store should take your millions now. Nordstrom? Saks Fifth Avenue? We think the scales are tipping in favor of Bloomingdales — for the first time in 20 years, Oscar de la Renta's ready to wear, shoes, handbags, jewelry, and home items will now be available at Bloomingdales' 59th Street flagship store in New York City.

But this isn't just about Bloomingdales stocking up on a few pricey designer gowns. De la Renta is actually renting the 1,000 square foot space from Bloomingdales, a savvy move that's referred to as a getting a "leased department" inside a store. Leasing from department stores is already popular in Europe, but not so much in the U.S., although it's possible that this will change — WWD reports that brands like Christian Dior, Fendi, Burberry, Gucci, Prada and Miu Miu have all been pushing for an increase in leased departments in the U.S.

When a brand leases from a department store, the brand pays rent and may give the store a percentage of their profits; in return, the brand gets to hire their own staffers, manage their own merchandising, and set up the display space however they want it. Profit margins are higher (since it's retail versus wholesale) and it's the perfect arrangement for those who want creative control and the perks of a being associated with a department store setting.

For example, walk inside the new Oscar de la Renta store inside Bloomingdales and you won't just see clothing racks, you'll experience the entire world of Oscar. A de la Renta necklace accessorizes a de la Renta blouse, which is offset by a de la Renta champagne bucket. Without a lease, the brand wouldn't be able to set up their home and jewelry offerings next to their ready-to-wear in a store like Bloomingdales. They wouldn't be able to set up the space at all.

Leased departments are already popular in department stores like Harrods in London, Galeries Lafayette in Beijing, and El Palacio de Hierro in Mexico. Aspiring design houses, take note: leased departments may be the way of the future. Never underestimate the power of creative control in an industry that's all about image.