Dive Brief:

• Hudson’s Bay Co., parent of Canadian Hudson’s Bay department stores as well as Saks Fifth Avenue and Lord & Taylor, announced that Lord & Taylor will be venturing into the off-price market.

• The department store’s off-price brand will be called Find @ Lord & Taylor” and will open Nov. 19 in a space once occupied by off-price favorite Loehmann’s, which just resurfaced as an online-only retailer.

• Hudson’s Bay Co. CEO Jerry Storch acknowledge that the off-price space is crowded but said that his company knows how to operate in it successfully. “But not everyone has done well in this area. It’s not as simple as hanging out a shingle and marking things down,” he told the Wall Street Journal.

Dive Insight:

It’s not really any surprise that Hudson’s Bay Co.-owned Lord & Taylor would head into this space, considering the success of its Saks Off Fifth stores and the general good health of this type of retail in general. But the move also carries with it several risks, including contributing to an already saturated space and diluting the still-highly respected Lord & Taylor brand.

Hudson’s Bay Co. CEO Jerry Storch appeared to acknowledge that, dismissing the cannibalization worries by noting the company’s demonstrated success and expertise in the space already.

“We want to appeal to young people starting a family,”he told the Wall Street Journal. “This is an opportunity to introduce a new customer to the brand, who might eventually migrate to the higher-end store.”

That is what Storch says is happening at Saks and its off-price Saks Off Fifth stores. But that’s not necessarily how it works, says Mark Cohen, retail studies professor at Columbia University. Off-price stores lure customers away from flagship ones, and can really hurt a brand if they include lower-quality merchandise, he told Retail Dive earlier this year.

In fact, TJX Cos., owner of Marshall’s and T.J. Maxx stores, operates on the notion that consumers of all income levels like the treasure hunt aspect of getting a deal. So, not only might Find @ Lord & Taylor customers never go over to regular Lord & Taylor, they may also steal customers away from regular Lord & Taylor.

“They’ll do a lot of business. The question is: How much is truly incremental, how much simply represents transfer sales,” Cohen said when Macy’s announced its own new off-price unit, Backstage. “And more insidious than that, how much will it further erode Macy’s brand equity?”