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Saks Direct President Denise Incandela came from McKinsey & Co., where she consulted on Internet retailing, to launch Saks Fifth Avenue’s Web store in 1999. The operation numbers about 400 people, including fulfillment and customer service. This year it will be Saks’ second-largest store after the Fifth Avenue flagship. Here, Incandela talks about video, social media, the economy, and Saks’ innovative multichannel campaign with Theory, which concluded Monday.
This story first appeared in the May 14, 2008 issue of WWD. Subscribe Today.
WWD: How is Saks using video online?
Denise Incandela: The editorial portion of our site in the last year has really changed the way people shop. Especially video. Ninety-nine percent of our customers are now on high bandwidth connections. So it’s more like TV and it’s much closer to the in-store experience. We’ve incorporated video into our trend coverage. One thing we’re doing that we’re really excited about is designer interviews. For example, we had an interview with Christian Louboutin up in December. It generated over half a million dollars in sales. Think of it as a store personal appearance, but in the store only so many people get to go. This concept is taking technology and using it to expand beyond what we could do in the store.
WWD: Video is a big piece of your campaign with Theory.
D.I.: We’re doing a promotion with Theory that is a multichannel event, which is why it’s so powerful. You tell us your point of view on fashion. The winner will win a $3,000 shopping spree. We held events in five stores last month in the Theory areas. People could make a video in the booths. About half of the entries so far were submitted through the stores. About half were submitted through our outside partner Brickfish. [Entries can be viewed at the Brickfish site.] We also used Facebook. You can send a link [an application that shows the user’s favorite Theory outfit] in Facebook. It’s viral, you can pass on the link. We also had Theory video in New York store windows.
WWD: What are the results so far?
D.I.: We absolutely saw a lift on the in-store piece. For us, it was also a question of how do we reach a customer segment we’re not reaching today. There is social media out there that we think is cannibalizing our shoppers’ time. We need to be involved. Our online customer tends to be 10 years younger than in the store. Shopping used to be a form of entertainment and now with social media there’s competition for that form of entertainment. We don’t see a lot of retailers partnering with social media companies or sites.
WWD: Is Saks planning to do more Web 2.0 type things?
D.I.: Yes, we are, but I can’t talk about it yet.
WWD: Are you seeing any budget cutbacks? Is it possible you will have to shelve some innovations because of budget constraints?
D.I.: Everything we do is self-funded. We have a four-month target with each investment. And we’re more than achieving that, so it hasn’t been an issue. All our marketing is ROI [return on investment] based. All this stuff is not only really cool but it also drives sales. We’re in a tough economy now, so we’re asking what can we do that’s innovative and new. We don’t think of a recession as a time to sit back, we think it’s a time to get more aggressive.
WWD: Are you expecting online sales growth to slow, given the economy?
D.I.: It’s hard to say. We’ve had such a strong month. Across the board, the growth rate has declined a bit but it’s not as bad as the rest of the economy. We still have a healthy growth rate. Last year we were up close to 40 percent. This year we’re not expecting the growth rate to be as significant.
WWD: Is your online merchandise different from what’s in the stores?
D.I.: About 60 percent of our assortment overlaps with the stores. About 40 percent is our own, but the percentage is growing. Another thing we’re getting into is [categories] with [limited] floor space, such as children’s, electronics, gourmet food and home. We are starting to outperform our New York store in children’s.
WWD: What is the most expensive item you sell online?
D.I.: It would probably be an exotic handbag. We haven’t seen any price resistance. It’s all about convenience. When people want something, they want it.
WWD: Are you seeing any change in where shoppers are coming from? For example, are Saks shoppers typing in the URL, coming from search engines, or from blogs?
D.I.: One thing we’re seeing across the industry is that organic [traffic] is going down. Our conversion rate is going up. The people who are coming are coming to buy.
WWD: How do you deal with bloggers?
D.I.: We have someone who shares bestsellers and other news with them, who manages events and affiliates. It’s been a full-time position for about eight months.
WWD: What should we expect to see in the coming year?
D.I.: I think in general, not necessarily at Saks, there will be video in the product detail. We’re still adding more [product] views as we speak. We’re going to bring international shipping to the Web site next year. We do it now through our 800 number.
WWD: Would Saks do something like develop its own online community?
D.I.: I can’t talk about our go-forward initiatives, but we’ve discussed it. It’s not our skill set but the space is evolving so quickly we can’t rule anything out.