By Rick Moss
As "Step One in a multistep process" to turn around the luxury department store chain, Saks is re-tailoring its offerings to appeal to the older, more affluent clientele that has historically been their market base, reports the Associated Press.
The last eight years have been marked by a diversity of troubles and poor decisions for Saks Inc. - a merger with mid-market Proffitts Inc. (eventually divested to Bon-Ton Stores); a veering off-course into youth-oriented fashions; and last year's SEC accounting scandal concerning improper vendor collections.
To get things back on track, the chain's newly streamlined management team has crafted a multi-tiered makeover, according to vice chairman and chief merchant Ron Frasch. It begins with a rebuilding of Saks' branded fashion approach with classic labels such as Ellen Tracy - essentially a return to an unabashed luxury image in efforts to climb aboard the wave of success enjoyed in recent years by Nordstrom and Neiman Marcus.
Remodeling its regional stores, somewhat ignored of late in deference to its Fifth Avenue flagship, is also a big part of the plan. With the recently renovated Saks Atlanta store serving as the prototype, the company will spruce up its Boston and Beverly Hills locations with open cosmetic counters and more enticing fashion displays.
Executives have been very clear about their mistaken strategy of pursuing younger customers and, in so doing, alienating their core group said to average 48 years in age. Consequently, this fall will see Saks Fifth Avenue Private Collections, featuring trendy labels and, overall, a broader selection of merchandise on the floor to win back the well-heeled crowd.
Discussion Questions: Do you approve of Saks' new turnaround strategy? Do you expect the growth in the luxury market to continue and for Saks to profit from the trend?