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Ron Frasch on the State of the Industry

Ron Frasch, Saks Fifth Avenue’s President and Chief Merchandising Officer, spoke with insight about the retail industry.

Ron Frasch, Saks Fifth Avenue’s President and Chief Merchandising Officer, spoke with insight about several issues touched upon by other execs for “The Power of Positive Thinking,” an article in today’s issue of WWD. Here, his extended comments:

“The best news is that, in my career, I have never seen the industry so engaged to change and adapt at every level. People are very openly looking at their businesses and challenging themselves — the brands and the retailers in particular — because everyone assumes that what we’re living with is going to be the future. The past becomes a lot less relevant, and we’ve all got to think differently about how we do business.

“From my point of view, the most energizing thing about this is the tremendous openess to adapting business models. Thinking differently about every aspect of our businesses, from delivery to entry price points within brands to marketing brands in a different way to developing zones of business within a brand’s product offer. For example, we may say to a brand, ‘We sell your cocktail dresses really well, but we haven’t really distorted them in terms of the product offer.’ So we’ll work with brands in terms of distorting categories of business, making the offer larger, going after classificiations of business more than we normally would. What’s also interesting is looking at overall delivery flow. Everyone would like to figure out a way to shorten the time between when the buy is done and the delivery. But that’s a complex issue that involves not just the brands, but the piece goods markets and all that. What we can do is look within each delivery, and see whether you need to have the breadth of content within each delivery that we’ve historically demanded. People are really open to it.

“We’ve spent a lot of time talking about the buy-it-today-wear-it-tonight approach in terms of the product and the deliveries, because nobody’s buying it today and putting it in their closet for three months from now. Those days are gone. Overall, there’s this tremendous level of cooperation and open-mindedness. There’s no defensiveness even to the craziest ideas. Everything’s open for conversation. That is the biggest positive I have seen. All the political barriers have fallen away, and all the defensiveness has gone away, because we all know that we’ve got to do something different and better. What could be more exciting than that?

“We’re looking at our service models. How do we improve? How do we take all that stuff off our stores’ plates that takes away from them doing what we want them to do, which is service? We’re very focused on that.

“There was a quote in WWD back in January, which I cut out at the time. It was by Lee Scott at Wal-Mart, who said, ‘If you’re off 1/30th of an inch, you have no chance,’ or something to that effect. Boy, oh boy, is that not the truth. We spend an enormous amount of time in best-seller meetings, worst-seller meetings. Yes, there are a lot more worst sellers than bestsellers, unfortunately. But this customer is so laser-focused. We’re learning how to be much better buyers….Obviously, the brands aren’t going to allow us to go in and just buy their blouses or something, if that’s what sells. But at the same moment, we don’t want to go in and buy something that we don’t think is going to sell. There’s an openess with the brands to work to make sure the assortments look balanced, but not to the point where you’re buying markdowns.

“We’ve been trying to impress that we have 53 stores in America. I have over 30 stores in what you might describe as the Sunbelt, and they need different things at different times. The current way for most brands that we deliver is one-size-fits-all, but the reality is that it doesn’t. We’ve been trying to get much more granular in the localization of product offer. We’ve been trying to press the European brands to have on-the-ground merchandisers here in America who can get feedback to their design studios about what the other localized needs are. The localized needs are more important than ever right now. It’s climatic, and it’s also lifestyle.

“During the fourth quarter, [the focus] is gift-giving. If you go into an apparel floor during the fourth quarter and say, ‘What can I buy my wife for Christmas?’ in most ready-to-wear areas, it’s pretty hard to figure it out. I don’t know too many people giving bikinis, for sure.

“That’s what makes now such a great time, because these are the subjects that we’re sitting down to talk about. I haven’t had anybody really push back, because we would all like to figure out a way to have an environment where it’s less about the deal and more about the product. We need to redirect that energy to product, and what makes people want to buy, and what energizes customers in a store.”