Wednesday, February 11, 2009

Saks is playing with a stacked deck.....

Have you heard that Saks Fifth Avenue is planning on a continuing practice of the slash sale pricing strategy? They feel it is the answer to move forward. This means that the designers , suppliers and all others who put merchandise in their stores will no longer be the masters of their own destiny. So that Saks can keep it's head above water , or level with the surface are going to use, abuse and sacrifice the very companies which have made it so great.
When their credit rating was downgraded to "RISKY" , they instituted this brilliant business plan.
Personally, it looks like a huge red flag. Sell merchandise to Saks at your own risk. What is so insidious about this whole deal is that they know how desperate companies and designers are to sell and to sell in their stores. The cachet of selling Saks is so tempting. There are many temptations in life with horrific downsides. This could very well be one of them. One false move and one risks total destruction. It's a gamble with the odds stacked against you.
Saks isn't the only one who's credit was down graded: Neiman Marcus, Nordstroms, Macys and others were too. That means what we knew as the MAJORS have all become risky minors. Companies like Chanel,Ralph Lauren,Dolce and Gabbana, Calvin Klein, Marc Jacobs, any and all of the LVMH stable are as much at risk as the smaller houses only they have the capital to take some of these knocks. Others will be much less prepared or protected.
Designers: Proceed with Caution.

1 comment:

Anonymous said...

So Saks is going to become Filene's Basement?

Maybe I'm old-fashioned (I'm 40), but shopping is a seasonal special occasion for me, and the stores I visit on these occasions are not jumble-sale fire traps with manhandled clothing available only in size 2 or 16. I thought that was why Saks had outlets, so they could offer this "experience" to customers looking for a bargain.

Saks abandoned my home city about 4years ago, but I have a good relationship with a few salespeople at Saks Boston where I shop in the summers and in the winter by phone. The Boston store is about perfect because of their size (not too big), the variety of price-points, the attentive and experienced staff. I've been to the Saks outlet south of Boston, and it's something, but it isn't a Saks.

The lone good department store in my hometown is Halls, owned by Hallmark cards, and I'm happy to notice that they have not taken the all-sale-all-the-time approach. When I was in yesterday buying spring gifts for family members I noticed that they have less merchandise so the store looks cleaner, but also more mid-tier representation, like more Tory Burch, Stuart Weitzman, etc. than past seasons. Happily they are still carrying higher end items like Bottega, Prada, Loro Piana, and the service was as fine as usual. Their sales racks were cleared by the end of January so the store looked spring-y, clean and helped put you in the mood to buy for the new season.

My advice to Saks as a long-time customer is to focus on service and showing the merchandise off to best effect. Bring in more designers for trunk shows, special events. People will respond to these, and you will retain your core customers.