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Stephen Sadove Talks Luxury at CUNY

As a leadoff speaker at “Initiatives in Art and Culture,” Saks Inc.'s ceo didn’t dance around the retail fallout from the recession.

NEW YORK — Given the various initiatives underfoot at Saks Inc., it was fitting that chairman and chief executive officer Stephen I. Sadove opted to stand and occasionally walk across the stage at CUNY’s Graduate Center while talking shop Friday morning.

This story first appeared in the December 4, 2012 issue of WWD.  Subscribe Today.

As a leadoff speaker at “Initiatives in Art and Culture,” he didn’t dance around the retail fallout from the recession, e-commerce opportunities and international expansion plans. In “Saks Fifth Avenue: One-of-a-Kind Luxury in the 21st Century,” Sadove repeatedly demonstrated how product and service continue to be the bedrock of Saks 87 years after it was founded. “We are a $3.5 billion retailer, which sounds big but it’s really not in the world of retail. Macy’s is a $30 billion retailer. Within luxury, we are a big player but within totality of retail, we are not,” he said.

As part of its effort to deliver luxury experiences and strengthen relationships with shoppers, Saks flies in hundreds of its top customers twice a year during New York Fashion Week for the VIP treatment. The company’s personal shoppers often host those clients — many of whom they have become close friends with. Sadove said the more entrepreneurial ones sell a variety of products to their customers, not just their area of expertise. In certain locations, anywhere from 10 to 20 percent of a store’s volume is being generated by these individual associates, Sadove said.

Saks plans to expand such top-performing categories as footwear, accessories, handbags and jewelry. Jewelry accounts for 10 to 15 percent of the retailer’s business, Sadove said. And only three months into Louis Vuitton’s first freestanding shoe store at the retailer, Saks currently ranks second in volume for the company.

 

While the age of the average Saks shopper is 52, the company’s e-commerce shoppers tend to be in their mid 40s and more item-driven with their purchases. The company now ships to more than 100 countries via its Web site. That, coupled with the fact that in certain stores international tourists generate 15 to 20 percent of the business, has made it unnecessary for Saks to open a bevy of new stores overseas. Shoppers from emerging markets such as China, Brazil and Russia are contributing to that growth, Sadove said. Bombarded as Sadove is with new opportunities for apps and other types of digital technology, he must ask, “What is really going to change the behavior of the luxury customer?”

As for what’s selling post-recession, Sadove pointed to unique, one-of-a-kind items and exotic leathers. “They have come back in what has been a V-effect. They went down a bit and have come back over the last couple of years,” Sadove said.

If Saks’ sales were broken into three categories — good, better and best (with good being bridge level clothing) — each would account for one-third of business, Sadove said. The company’s own private label accounts for between 5 and 7 percent of Saks’ volume, Sadove said.

Having Terron Schaefer appear as a judge on NBC’s “Fashion Star” caused a lot of controversy in the company, but his involvement has proved to have been a valuable one for the retailer, Sadove said. He will once again be a judge in the show’s second season, which starts in March. Noting that no fees were paid to NBC, Sadove said Saks typically got more than 100,000 hits on its Web site after each show ended at 11 p.m. as well as hundreds of thousands of dollars in sales. Now a minor celebrity in his own right, Schaefer generated $250,000 in sales last week during a personal appearance in Saks’ Miami store.

Not about to glaze over the impact of the shaky economy, Sadove said when the recession struck the luxury industry saw 20 to 25 percent of its entire business disappear overnight. “Nobody felt wealthy and they said they could shop in their closet. All of a sudden the industry had $1 billion of excess inventory that went to Gilt and other flash sites,” Sadove said. “Now the availability of [that degree of] inventory for flash sites has dried up. What has happened with Gilt and others is they moved into other areas like travel and dining.”

Estimating that the amount of crossover shoppers patronizing luxury stores and flash sale sites is less than 10 percent, Sadove said, “There is a role for these sites but I wouldn’t worry about them taking over the industry in the future.”

The designer Mary McFadden was very much focused on the past when she spoke of “A Lifetime in Design: Inspirations from the Ancient World.” Interspersing slides from ancient civilizations and her far-flung travels, she illustrated how both sectors influenced her collections. McFadden, who introduced her collection in 1973 and won her first Coty Award three years later, does not have any plans to part with her early designs. “I do have a vintage collection that has toured and been shown in five different museums, but I don’t plan to sell it,” she said.

Visitors could find some of those creations in her Rizzoli-published book “A Lifetime of Design, Collecting, and Adventure,” which McFadden signed copies of afterwards.