Saks Fifth Avenue caters to a very upscale clientele but the department store's management knows that there's rich and then there's super rich. That's why the company has developed a three-tier price point strategy to meet the needs of its range of affluent shoppers.
Saks Inc. chairman and CEO Steve Sadove told attendees at the Reuters Consumer and Retail Summit in New York that the company is making strides in competing against the likes of Neiman Marcus.
"There's an enormous amount of work that needs to be done, and building the customer base is part of it," he said.
The customer, according to Mr. Sadove, makes $200,000 or more annually and looks for internationally recognized brands such as Chanel and Fendi. The department store offers goods from these designers but also alternatives for those shoppers who seek them. Think of the Saks' approach as a good, better, best strategy with price points reflecting the level of style and quality in each tier of goods.
"Our low end would probably be a high end of a Nordstrom and Bloomingdale's," he said.
Discussion Question: Considering the consumer base, is Saks on the right track with its three-tier pricing strategy?