The bricks seem to finally be accepting of the clicks. It’s an evolution made easier because e-commerce has become a source of double-digit growth in a retail world caught in the doldrums.
Saksfifthavenue.com is Saks Inc.’s second-largest store, and although it lags the revenue of the chain’s Fifth Avenue flagship, the luxury retailer’s e-commerce unit is generally twice as profitable as the brick-and-mortar business, Denise Incandela, president of Saks Direct, said during a panel discussion.
This story first appeared in the October 27, 2010 issue of WWD. Subscribe Today.
“When we first launched this business in 2000, we were arguing, ‘We’re not cannibalizing brick-and-mortar sales, it’s additive,’” Incandela said. “Now I have a very different point of view, because our business is growing 20, 30 percent a year and the brick-and-mortar is growing in the single digits. My view now is, ‘Yes, we are cannibalizing the brick-and-mortar sales.’”
The emphasis has shifted to making sure e-commerce continues to grow and takes a disproportionate piece of total market share as it does so. Just as her store counterparts look to increase sales per square foot, Incandela said she’s looking at “dollars per square inch.”
Saks, and the rest of the retail industry, is also trying to figure out how to push social media beyond brand-building.
“That’s the big question,” Incandela said. “How do you monetize it? It’s not driving a significant part of our sales yet. Time will show us how that evolves.”
Macy’s Inc., with more than 600,000 Facebook fans, is also using social media primarily for relationship building.
“We don’t necessarily use that social space to talk about our one-day sales,” said Martine Reardon, executive vice president of marketing and advertising at Macy’s, who joined Incandela in a panel discussion moderated by Kate Terry, founder of Internet consultancy Dash.
Reardon oversees a broad marketing portfolio, from TV and print ads to parades and fireworks displays. Digital garnered about 10 percent of Macy’s media spending this year — compared with zero three years ago — and the percentage is expected to double in another couple years. When it comes to digital media, Macy’s knows what it’s getting.
“Unfortunately for the digital space, we hold them to a much higher standard, simply because the metrics are there,” Reardon said. “You can really follow what people are doing in the online space.”