NORFOLK, Va. (WAVY) – The Dillard’s at MacArthur Center will soon convert its three-story store into one of the companies clearance models.

A spokesperson for Dillard’s confirmed the news to 10 On Your Side Thursday afternoon that “once the existing merchandise at MacArthur location is liquidated” the store will become Virginia’s only Dillard’s Clearance Center.

“Under this format, the store will receive clearance merchandise from full-line Dillard’s locations in the region and offer it to our customers at deeply discounted prices,” Julie Guymon, corporate spokesperson for Dillard’s, said.

Guymon continued by saying there were many factors that affected their decision to make the change. While she didn’t go into specifics on the factors, its well known the one-time shopping mecca has fallen on hard times.

Jim Wofford, the general manager for the struggling shopping mall, said the store has already told employees and has put up signs announcing the changes to customers.

Dillard’s opened with much fanfare along the mall in 1999. It has been the Arkansas-based upscale department store’s largest location in Virginia. The store employs an in-house tailor and includes a salon and spa on the second floor.

Those will soon likely be another part of Norfolk’s history.

“(Dillard’s Clearance Centers) are typically jam-packed with heavily-discounted merchandise sold at a minimum of 65% off retail price,” according to Forbes article.

The article goes on to say ‘these centers consolidate merchandise onto one floor, operate under reduced hours, and are frequently closed on Mondays. All sales are final, no returns.”

Guymon confirmed that all merchandise will eventually move to the first floor of the 250,000 square-foot building in Norfolk.

When asked if any jobs would be lost, Guyman said no and that any employee who is “not remaining there (MacArthur location) after the transition are offered continued employment at other Dillard’s locations in the area.”

Dillard’s still has its regular operations at Lynnhaven Mall, Greenbrier Mall, and Patrick Henry Mall. Dillard’s operates nearly 250 department stores and around 30 clearance centers across the country.

However, that number fluctuates as clearance centers are often signs of the retailer winding down operations.

“This is consistent with how Dillard’s deals with stores with declining sales in locations that they own or have ongoing lease obligations,” Nick Egelanian, president and founder of SiteWorks Retail, said. “They often don’t have a specific long term plan depending on the circumstances. On the other hand, if they have a lease that is expiring soon, it would usually be a first step to closing the store when the lease expires.”

Dillard’s owns their building at MacArthur Center but the ground is owned by the Norfolk Housing and Redevelopment Authority.  

However following a recent purchase of the rest of MacArthur Center by the City of Norfolk, the Dillard’s site becomes the only parcel not completely controlled by the city government.

Mayor Kenny Alexander and other city officials didn’t return requests for comment on if they were aware of the news. However a source not authorized to speak publicly about the matter said Dillard’s is negotiating with the city about a possible sale.

Dillard’s is the only remaining anchor store in the mall that has seen a steady decline in tenants and value over the last five years. As of last month, the occupancy rate for the mall was just below 58%, according to court records. Popular restaurant chain Chili’s just closed Sunday.

The city is spending $11.1 million to buy the majority of the 21-acre site that cost them roughly $100 million in the late 90s to build as part of a public-private partnership. The Dillard’s site was last assessed by the city at $8.7 million.

Declining foot traffic has been mostly attributed to competition from online shopping and other local retail opportunities.

CORRECTION: An earlier version of this report incorrectly stated the square footage of the Dillard’s owned parcel over the square footage of the store. WAVY-TV regrets the error.