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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.
This story first appeared in the June 9, 2009 issue of WWD. Subscribe Today.
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.
The chain sells a range from bridge to couture, with the third floor representing the most expensive. The second floor of the flagship also sells “best” brands, though the emphasis there is sportswear, with such labels as Donna Karan, Brunello Cucinelli, Piazza Sempione and Loro Piana, whereas the third floor offers more eveningwear, gowns and suits.
Planning the project began three years ago, with help from Mancini Duffy, the architecture design firm known for its upscale retail work. The process included about 18 months of arduous negotiations with designers on shop configurations, locations and adjacencies. One issue was that several designers wanted to be on the tower side of the floor, though some ultimately chose to locate on the Fifth Avenue side, convinced they could capture traffic headed to the Fifth Avenue Club, Saks’ personal shopping service which has been beefed up to 17 fitting rooms, each larger than before and supported by the latest technology. The club also has an expanded VIP room, views of Rockefeller Center and Saint Patrick’s Cathedral, vitrines to display jewelry and handbags, and easy access to some designer shops via behind-the-scenes hallways so customers can avoid the selling floor. Private trunk shows and possibly beauty launches will be held in the club.
Buttressing the floor’s service, which Saks officials repeatedly stress is critical to lifting designer sales, is the proprietary clienteling Web-based system built into the associates’ desks in each designer shop, making it efficient to update client books, e-mail customers about new products, sales or special events, and track down specific items and sizes that may or may not be at the Fifth Avenue flagship.
“The first question the designer customer asks when she visits the floor is ‘What’s new?’” said Boitano.
With that in mind, the front of the floor by the elevators is a flexible, 1,500-square-foot space, devoid of hard shops. “We didn’t want to have customers immediately get hit with something that’s strongly branded,” said Boitano. “It’s a neutral area. We are keeping the front of the floor versatile to highlight new designers [such as Erdem, Doo.Ri and Schwab] and create our own point of view.” It’s strengthened by a nearby circular space with a bronze beaded curtain and back-lit onyx walls for both highlighting new designers and special events. “We didn’t want to create a classic, modern, European or American zone. We wanted the floor to have a lot of flow to it,” Boitano said.
“Saks didn’t want another white box,” said Edward Calabrese, senior associate of the retail group at Mancini Duffy. “Saks is very sensitive to what the competition has done.”
The floor is filled with decorative laser-cut or carved-glass panels, and a mix of floor coverings from travertine marble to distressed wood and carpeting that collectively enhance the sense of unity and flow. There are dropped ceilings that seem like floating canopies, and bronze chandeliers shaped like tree branches, created by Michelle Oka Doner, and furnishings from India Mahdavi and Stephanie Odegard. Overall, there is an ivory and beige tone, offset by the bronze work and other artistic touches, and a greater sense of openness, achieved by three wide aisles instead of having one main one previously, and removing the walls that encased the escalators.
Adding to the effect is “a feeling of shops gently spilling into the aisles to avoid the more traditional row of shop fronts that characterize many other department stores, and so you can easily see things beyond where you are standing,” Calabrese observed. The floor was gutted for the project and is about 65 percent finished.
“It’s rich and luxurious without being intimidating,” said Bill Herbst, senior vice president of construction planning, design and visual at Saks. “We wanted to make it timeless. This is New York City. You’ve got to do it better than anyone else.”
Editing the floor is challenging. Saks has a customer base that’s broader than Barneys New York, Bergdorf Goodman or Neiman Marcus, so bringing in Chanel rtw and further adding to the roster has been important. Saks buyers also describe their client base as “a little more urban and international” compared with the competition’s.
Saks has a history of developing exclusive product, but this year, the initiative has been intensified. “We have a lot of projects with a lot of brands,” Frasch said. “We will have exclusive cocktail dresses from just about every brand on the floor. You will see them presented throughout the third floor. We will be taking over most of the windows to present the exclusives. All of them will be labeled with a special hangtag that we have created for the third floor.” Some of the items will be available this fall; some for fall 2010.
Saks is also said to be working on some exclusive collections in the bridge zone (the “good” segment) with designers such as Tory Burch and Elie Tahari. “I can’t think of a stronger statement than the third floor,” Frasch said. “There will be some ripple effect to the second floor,” where the company is finishing up shops for Donna Karan, Calvin Klein, Max Mara and Burberry.
There are also ramifications for the branches. “Things that work here are going to be carried in our out-of-town stores,” Frasch said.