By  on June 9, 2009

Saks Fifth Avenue may be reducing the buy on some designer collections, but when it comes to remaking the selling floor that showcases the top tier, there’s no retrenchment.

Construction on a renovated, bronze-trimmed, artistically detailed third level at Saks’ Manhattan flagship is nearing completion. At 61,000 square feet, the area is the nation’s most spacious designer floor and home to a panoply of haute European and American collections such as Chanel, Giorgio Armani, Oscar de la Renta and Ralph Lauren — 49 in total and 20 with hard shops.

It’s also undoubtedly been among the most expensive selling floors to create. Industry sources estimated the cost of the project at north of $30 million and said Saks is seeking sales surpassing $3,000 a foot next year, from the current $2,700 to $2,800. Only the main floor for cosmetics, designer handbags and fine jewelry is more productive.

“We worked enormously close with each brand to make sure the shops are distinctive for Saks,” observed Ron Frasch, president and chief merchandising officer of Saks Inc. “It could have very easily felt like a mall or a floor with just a sea of shops without any distinctive personality if we didn’t handle it correctly. There are many architectural details, and more elements coming in between now and August.”

“We think this is a huge opportunity to attract a new customer and to enhance our current customer base,” added Joseph Boitano, group senior vice president and general merchandise manager of women’s.

Since last fall, shops have been opening one by one. Chanel was first, and the springboard for getting other designer shops in motion. Vendors make contributions to the build-out of their shops, or loosen merchandise terms as their in-store shops are created, but each situation is different. For many years, Saks didn’t carry Chanel ready-to-wear in what represented a glaring omission from the merchandise lineup. However, last fall, new shops for Chanel cosmetics, accessories and rtw opened simultaneously in the Saks flagship and to help secure the rtw, Saks gave Chanel the most visible and trafficked spot on the third floor, right at the landing of the escalator.

Other new labels to the floor already in place or on their way include Jil Sander, Louis Vuitton, Martin Grant, Proenza Schouler, Erdem, Marios Schwab and Doo.Ri.

The east side of the floor, known as the tower, houses Chanel, Marni, Marc Jacobs, Armani, Sander, Gucci, and a group shop for Japanese designers including Yohji Yamamoto, Junya Watanabe and Issey Miyake.

The west side, or main portion of the floor, is still under construction, and will house shops for Ralph Lauren, Christian Dior, Roberto Cavalli and, the last expected to be done on the Fifth Avenue end, Akris, Dolce & Gabbana and Louis Vuitton.

They should all be finished in August and in time for the $3 billion, 53-unit Saks to unleash a high-octane marketing campaign on Sept. 9, relaunching and branding the third floor, in a manner not seen since the store rebranded its shoe salon 10022-SHOE two years ago.

Along with restoring a floor that has barely been touched since the Eighties, Saks hopes to regain sales momentum in a business that last year was battered by markdowns, shrinking margins, and a few tales of overly exuberant discount hunters shoving each other to grab merchandise. With sales still slow, markdowns remain frequent but relatively under control with the Saks team working hard to pare the inventory and keep it fresh.

With the luxury sector among those hardest hit by the recession, Saks is shifting its designer assortment so that its top tier, designated as “best,” will eventually account for 25 percent of the chain’s total volume, from the current 33 percent. The “better” and “good” price zones will account for roughly 75 percent of the offering. It’s more about getting designers to lower their prices than eliminating labels entirely, Saks officials said.

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