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Saks Fifth Avenue at the Cherry Creek Shopping Center has been closed for more than 3 years. However, the major part of demolition is happening this week and will continue for the next few months.

Restoration Hardware will take its place with four stories, which will include a huge atrium, rooftop deck and outdoor garden. The full line design gallery will showcase design galleries for high end bed, bath and lighting, among other product lines.

It will take up 53,000 square feet. Saks was about 87,000 square feet. The rest of the space will go to smaller, specialty stores, which will be revealed at a later date.

University of Denver finance professor Mac Clouse says smaller stores are a trend, as brick and mortar retailers try to reduce inventory, which is a big overhead cost.

“Dollars are tied up in inventory,” Clouse said. “There may be storage and handling costs just to get the inventory. So to the extent that you can reduce the inventory is going to reduce overhead a lot. It can help the margins make difference whether you’re profitable or not.”

However, Clouse says in Restoration Hardware’s case a large space could be beneficial because it has products you are more likely to buy if you see them in person.

A showroom puts the merchandise in a context you won’t get from a computer. You can’t buy an identical item someplace else. If you buy at the store or online, Restoration Hardware still gets the sale. That’s different from Best Buy’s situation where customers shop the showrooms then have the option to buy the exact same item from a different online retailer, sometimes at a lower price.

Restoration Hardware will be called RH when it opens late next year.