I can't believe I haven't heard of this sooner but Nordstrom now has one of its Rack discount stores directly in the heart of Union Square. This store carriers merchandise from Nordstrom stores but at 50-60% off! When I walked in briefly the store was a bit of a mess, but hey that's what you let a bunch of fashion hungry new yorkers around discount designer duds!
Nordstrom Rack
60 East 14th Street
New York, NY 10003
(212) 220-2080
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