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December 4, 2024
Does Saks Deserve a Lump of Coal for Canceling Its Holiday Light Show?
Saks Fifth Avenue drew a huge outcry for canceling its renowned holiday light show at its Fifth Avenue flagship store after two decades. Many attributed the move to cost-cutting measures.
CEO Marc Metrick told CNBC on Nov. 12 that the retailer decided to nix the light show over the summer after seeing “softer” sales over the past year.
Reports arrived in early August that Saks had been late in paying scores of vendors. Officials from HBC, Saks’ parent company, later indicated the late bills largely reflected the underperformance of Hudson’s Bay in Canada rather than Saks Fifth Avenue or Saks Off 5th.
Vendors were particularly annoyed seeing the late payments as HBC in early July reached an agreement to acquire Neiman Marcus for $2.65 billion.
However, Metrick in his CNBC interview also implied that Saks was looking to explore a new direction for its holiday flagship showcase as it celebrates its 100th anniversary. He said, “We have to be very prudent and careful in where we’re investing, but more important, we always knew we were going to want to take a step back and assess.”
Some believe Saks was looking to align with the “quiet luxury” trend, focusing instead on the holiday windows and fashion. The retailer said in a media statement, “In our 100th year, which also marks the anniversary of the flagship, we are celebrating the season by honoring the architectural significance of this iconic building, elegantly illuminating the facade and framing the holiday windows, as well as highlighting the fashion for which Saks Fifth Avenue is known.”
Saks’ holiday windows and light displays showcasing the building’s 10-story façade have become a cultural fixture in Manhattan during the holiday season, complementing nearby visits to the Rockefeller Center Christmas tree and Radio City Rockettes.
The production, which took place every few minutes during the evenings from late November to early January, started modestly in 2004 with 50 giant snowflakes blinking to “Carol of the Bells” before graduating to digital projections in 2010 and then a mix of both physical and digital effects in 2015, according to Vice. Last year featured a stunning Zodiac theme with fireworks in partnership with Dior, while designs from recent years prior included a color-changing castle and a rocket ship-clad Elton John AIDS Foundation collaboration.
Disappointment arrived on social media and elsewhere after the luxury retailer announced this year’s cancellation.
“That’s terrible,” Joe Defeo of Brooklyn told CBS News. “That’s a tradition, everyone comes to town to see it.”
Many consumers felt investing in a light show spectacle was more critical to celebrate the retailer’s 100th year.
“What better year to make an extravaganza?” said KaVonna Holloway, the host of “The Introvert’s Social Hour” podcast, in a video on TikTok.
Posting on LinkedIn, RetailWire BrainTrust member and The Robin Report contributor Warren Shoulberg wrote, “This is a colossal miss and while it might look good on a P&L, it will look terrible on Fifth Avenue for all the disappointed viewers — and Saks shoppers.”
Metrick in his interview with CNBC indicated that the media reaction was overblown. He said, “I think some of the press has gotten away. We’re still lighting the store. We’re going to have music. It’s going to be festive and holiday-focused and of course, we’re going to have our fantastic and beautiful Saks holiday windows, which is truly what we’re known for.”
Discussion Questions
Did Saks make a mistake in not investing in its holiday light show at its flagship store?
Could they have done a better job managing the public relations fallout?
Poll
Loading …BrainTrust
Bob Amster
Principal, Retail Technology Group
John Hennessy
Retail and Brand Technology Tailor
Perry Kramer
Managing Partner, Retail Consulting Partners
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It’s a great shame the light show has been cancelled but the truth is that Saks is not doing well financially. It needs to conserve cash and protect its finances. While management can be blamed for allowing Saks to get into this state, they can’t really be blamed for this act of financial prudence. Whether the cancellation of what was, in essence, a big marketing effort impacts sales remains to be seen.
I doubt something two decades old that I’ve never heard of – ! – counts as “renowned”, but that’s really not the point…is it? Why scrap any minimal cost outlay that has a chance at building brand equity? So yes a big ole lump of coal – for the climate squeamish we’ll descibe it as a nouveau pet rock – for them; and, sadly, it’s pretty much returned me to my impulsive reaction when the parent bought Lord and Taylor years ago: Real estate guys can’t do retail
Iconic brands deliver on tangible and intangible elements as they create and emphasize their uniqueness and how they stand apart and above the market. In the luxury space, the intangibles become more significant as emotional connective catalysts that transcend line items on a P&L. While the decision by Saks to cancel the Holiday Light Show at its flagship store on its centennial celebration is poorly timed, it demonstrates fiscal responsibility and the dire state of Saks business condition. Admittedly, Saks is ending a relatively young 20-year tradition, but could we imagine being without Macy’s Thanksgiving Day Parade?
Sure, it’s disappointing that Saks had to cancel its annual light show but in the long term I would rather see Saks survive. It was a tough decision, but if Saks is having financial issues it’s the right decision.
This no lights year presents a unique research opportunity to measure the impact of years with lights versus year without lights.
Yes, a mistake. Taking away something to which the people of NYC and holiday visitors to NYC have seen for years is not a wise move. Can’t wait to see Merrick’s next ‘bright’ move
It is a tough decision. However, I think the big red flag that says don’t shop here because we may not be around in January to return you purchase is worse than any minor short term impact it might have on the P & L. I seams like the opportunity to find some Partners to Co-brand with on the lights festival may have been missed. This would have resulted in greater consumer confidence.
Saks is not obligated to host a holiday light show in front of one store in New York City. The event has not demonstrated a significant recent impact on generating additional business or profits, and currently, Saks is focused on ensuring its long-term viability.
It is important to note that a light show is not necessary for shoppers to remember Saks exists. In fact, research indicates that only a small percentage of consumers are unaware of Saks, and an even smaller fraction actually shop there. The customers who do frequent Saks are not the target audience for a light show.
Additionally, there are 40 other stores located on various streets across North America, and Saks OFF has approximately 100 locations in the U.S. and Canada. Therefore, the light display in New York will have no effect on any of those stores.
There is also the issue of crime rates being sky high, and now even more so with thousands of illegal migrants residing in downtown hotels.
The light display is not an issue for anyone that actually matters from a business perspective.
Financial and marketing decisions are difficult and hopefully Saks will pull through with fulfilling all their announced initiatives. It also needs to focus on the saks.com operation, which, from a shopper’s perspective has room to improve.
Can you blame them? If Saks is having financial struggles, it makes sense to cut certain costs and promotions in order to survive. There may be some people that are upset they don’t get their Christmas lights, but I think people who lose their jobs because the company they work for is not controlling cost will be more upset. While it is a tough decision, and an emotional decision, Saks is doing the right thing for the company and it’s employees.
Over 125 million people visit the Rockefeller tree every year – that’s more than watch the Super Bowl. Rubbish the store is lit and it is still magical. It is a black eye on 5th Avenue and a conversation starter – they must really be in trouble. It was reported MasterCard was going to sponsor half of it – what happened? I was in Saks last week and there were decidedly fewer shoppers. It’s a shame after all the money they put into the interior the past several years.
Another example of retail being controlled by Financial people rather than merchants. It is always hard to tie promotions, directly to retail sales; but that doesn’t mean they don’t drive more sales than they cost.
My prediction is sales will be down dramatically because of this decision, and SFA will state it’s because of the Internet or some other vague reason.
Although good business means you need to control cost you can never make a store profitable by cutting costs; you must drive revenue. This decision drives revenue into a brick wall or should I say anunlighted side oa building
It’s a terrible look for SAKS. Experiences and a show of glamour are keys to luxury success. Related, many of SAK’s problems can be traced back to the terrible decisions made in 2021 to split the physical and e-commerce businesses into two entities when most retailers understood the need for fully integrated online/offline business.
The number of financial, operational, technology, and shared services issues created by that decision is too long to list here.
Businesses need to make money to sustain their existance. Light shows in NYC, won’t drive enough profits to offset the tremendous expenses that they incur, for such a limited market (NYC). HBC has a presence in both Canada and the USA, to spend such a large amount of money for 60 days of exposure in just a small market (a portion of NYC). Recognizing this and leveraging the savings to better manage their cash flow to pay all of their vendors on-time, is key for HBC continuing to stay profitable and understanding their entire market!
I’ve seen Saks’ holiday light show and it was fabulous. That said, the more interesting component of this article is how this situation illuminates a fundamental truth in retail: subtracting signature experiences is exponentially more challenging than adding them, especially when they’ve become woven into the cultural fabric of a destination. Business conditions change and the criticality of these types of brand development events fluctuate, especially as leadership regimes come and go; however, consumer expectations have inertia and there are consequences to disruption. We will see what those are for Saks (*prob more qualitative than quantitative*). The real missed opportunity here wasn’t the light show’s cancellation, but rather Saks’ failure to proactively own the narrative around their centennial celebration strategy. Consumers could have agreed with the decision or voiced their dissatisfaction (or both) but this article highlights a potential void that consumers and media inevitably filled with their own interpretations.