Saks is definitely confused and has been confused for years. It's not Barneys, it's not Bergdorf, and it's not Bloomingdales. They have been trying to be all things to all people, but obviously it's not working. I am not complaining, since their designer collections buying actually improved in recent years, but they don't have the clientelle to swallow anything other than the usual Chanel/Gucci/Ferragamo... which translates into Junya Watanabe and Dior at deep discount for me, and Ann Demeulemeester, Yohji Yamamoto and Comme des Garcons for my wife
Anyway, here is the article...
Saks Seeking Riches in Yet Another Incarnation
By TRACIE ROZHON
ast year, Saks Fifth Avenue spent an estimated $125 million in improvements that, among other things, turned the main floor of its flagship store in Manhattan into an array of high-price, big-name boutiques.
But the new management, shifting gears, now has a plan to rip out much of that renovation and spend $150 million more on an even more striking remodeling of the store at Fifth Avenue and 50th Street.
Fred Wilson, who took over as chief executive in December, said in an interview that he intends to overhaul the entire $2.6 billion chain, which includes 63 stores. As part of that rethinking, he said, he is considering the closing of a significant number of branches.
Changes are necessary, he maintained, to bring Saks "back to its roots" as a luxury emporium, better able to compete effectively with Neiman Marcus and other rivals in the $37 billion women's designer clothing market.
Responding to a question, Mr. Wilson acknowledged that he had asked the architect Frank Gehry to survey the chain's Fifth Avenue landmark and submit ideas for head-turning changes. And he has signed up a handful of executives he calls "the best men on the planet.''
But the hirings and the whispered grand plans - not officially announced yet - have so far only served to confuse retail analysts and industry experts, including former executives of the chain, who ask why Saks's new management team has not given a clearer indication of where it is headed.
"Their ads are weak, their selling staff is weak and the way they buy a lot of merchandise is old," said Alexander Vreeland, a partner in GAV, a company that designs and manufactures clothes for Calvin Klein. "But if they can tweak that, there is a lot of room on the table, without in any way damaging Neiman Marcus."
Mr. Wilson seemed irritated by questions about his management strategies.
"We're not mystified,'' he said. "We don't make a lot of noise - we just do things.'' His new team, which includes the former chief executives of Bergdorf Goodman and Holt Renfrew, is bringing "organizational clarity" to his company, he said.
Mr. Wilson acknowledged that there were some who might not understand what he and his executive team were doing. "We're like a duck paddling on the water,'' he remarked. "It looks smooth but under the water, his feet are going like crazy.''
The new management, he said, had already cleared 30 percent to 40 percent of the excess inventory, and had scattered many more mannequins, in glittering outfits, throughout the stores. "If you want women to shop every three or four days," he said, "we'll change the mannequins every three or four days."
Mr. Wilson said he was completing a review of Saks Fifth Avenue branches - he has visited 58 of the 63 stores so far - the 59th is scheduled for Thursday - and will institute a three-year plan in the next two months.
"There is a new level of enthusiasm around here,'' he said. "Even the sales associates are saying, 'It rocks.' "
Gabriella Forte, president of Dolce & Gabbana USA, the high-end fashion house, agrees - to a point. "For the first time in years, the buyers have a smile on their face,'' she said. Even though she is a big fan of the new management team, she says she still has questions.
"I am getting the merchandise; I am getting the point of view,'' she said. "But where are you going to put it? You need a setting. And how are you going to make it easy to shop? How are you going to create a sense of curiosity, of novelty, and not only in the flagship? How can Saks Fifth Avenue become a brand in itself, not just a series of branch stores?"
Riding the wave of a hot luxury market that began at the end of last year, Saks Fifth Avenue has picked up some momentum, as shown by an 18.3 percent increase in June in sales at stores open at least a year.
But analysts point out that the big gains came on top of figures a year earlier so weak that it was not hard to chalk up impressive figures by comparison. And they note that much of the merchandise on the floor this spring came not from the new team but from orders made earlier under Christina Johnson, the former chief executive.
"We give her full marks for starting this off,'' Mr. Wilson said. But the ideal time for judging his team's contribution, Mr. Wilson added, will be the holiday shopping season.
Christmas shopping season is also the time for a full marketing push, he said, providing an advance peek at the revamped advertising campaigns - which include a new, square Saks Fifth Avenue logo, a snowflake motif and "an homage" to the late fashion photographer Helmut Newton. He also showed off the latest catalog, with silhouettes on the front and back covers and sophisticated photography inside. Prices are discreetly tucked in at the back of the book. (If you have to ask. . . .)
The money for the flagship remodeling will come in part from increased profits. "In the first quarter," Mr. Wilson said, "we've reduced the number of sales promotions by half." The money the store made by selling at higher profit margins "will be funneled into capital improvements."
Nevertheless, experts question whether changes like remodeling the flagship store yet again will solve what they consider Saks's biggest problem - its undefined image.
"They need to bring back the historic dominance of Saks Fifth Avenue,'' said Gilbert W. Harrison, the chairman of Financo, a Manhattan investment banking firm that specializes in retailing.
Analysts say that will hardly be easy. Even though Saks has a greater sales volume and broader geographic reach than Neiman Marcus, its principal competitor, Neiman's has "a much more disciplined approach,'' said Maggie Gilliam, an independent retail adviser. Saks Fifth Avenue, she said, "has hung onto some locations they had no business opening in the first place,'' adding that it "tried to be too big, too fast.''
If Mr. Wilson decides to shut down unprofitable stores, he will face a major obstacle, an industry executive said. Getting out of many of the long-term leases, the executive said, could be expensive, which is why the previous management avoided such a step.
Further complicating the question of Saks Fifth Avenue's future, industry insiders said, is whether its corporate owners are thinking of selling.
R. Bradley Martin, chief executive of Saks Inc., the $6.5 billion parent company (which, besides Saks Fifth Avenue, owns Proffitt's and Parisian department stores), announced a spinoff of the Saks Fifth Avenue chain in July 2000, but dropped the idea seven months later, citing a decline in the luxury market.
Given the hefty $3.2 billion that May Department Stores agreed last month to pay for the Marshall Field's chain, industry executives say this might be the right time to revive the plan - that is, after Saks Fifth Avenue is "fixed."
On Friday, Steve Sadove, chief operating officer and vice chairman of Saks Inc., strenuously denied that he and Mr. Martin were thinking of splitting off or selling Saks Fifth Avenue. "We think this is clearly a big growth opportunity for Saks Inc.,'' Mr. Sadove said.
Yesterday, the stock of Saks Inc. closed at $13.18, down more than 40 percent in the last five years. By comparison, the Class A shares of the Neiman-Marcus Group have risen nearly 120 percent.
Mr. Wilson, with his mandate from Saks Inc., has brought in one of the most experienced retail teams in the business - executives who, in the estimate of some analysts and retail consultants, may be a little too high powered.
"No one understands the organizational structure," said Marvin Traub, the former chairman of Bloomingdale's, who heads his own retail consulting business in New York. Nevertheless, after a lunch with Mr. Wilson, he tried to explain it anyway.
For his part, Mr. Wilson said his management choices take advantage of each person's strengths.
Ronald L. Frasch, the former chief executive of Bergdorf's (which is owned by the Neiman-Marcus Group) will be the chief fashion merchant, attending the Paris and Milan runway shows.
Andrew Jennings, most recently president of the Holt Renfrew Specialty Store Group, will oversee operations: merchandise, management, planning and stores. He will report to Mr. Wilson. Mr. Frasch will report to Mr. Jennings, and so will Terron Schaefer, a former marketing director at Harrods and Bloomingdale's, who, as senior vice president for marketing, will be in charge of interior design, advertising and events. He is responsible, Mr. Wilson said, for "the look of things.''
According to retailing insiders, Mr. Frasch and Mr. Jennings are particularly strong personalities, used to having their way.
One executive who was told about the negotiations said that Saks persuaded Mr. Frasch to come in part by offering to double what he was making at Bergdorf's - and add an equity stake. Yesterday afternoon, Mr. Frasch said he had been offered more - but not double.
Staffing aside, how is the new Saks Fifth Avenue going to be different?
Mr. Wilson maintains that it will be a much more exciting place to shop. Besides younger, more aggressive fashion, he said, "we're going to have a lot of fun here."
At Holt Renfrew in Toronto, Mr. Jennings was responsible for in-store events like Viva Italia and Flick, a theme fashion-and-film exhibition. Mr. Wilson vows to recreate this kind of store-as-entertainment concept on Fifth Avenue.
Although Mr. Wilson was guarded, the newest makeover may include cutting a huge hole in the main floor of the flagship store, allowing the basement to serve as a forum for events - similar to what was done in the new Bloomingdale's home-furnishings store in Chicago. The extravaganzas might resemble those every six months at Selfridges in London, where naked people have ridden the escalators in an event called Body Craze and Indian movie stars have celebrated Bollywood.
"But Selfridge's only does it twice a year," Mr. Wilson remarked.
i used to like saks...but i feel like they've been steadily going downhill...i don't think re-modelling will solve all their problems...but since i don;t like the current state of things...i'll be interested to see the changes...
"It is not money that makes you well dressed: it is understanding."