BOSTON — A year ago, Marigay McKee had just been named president of Saks Fifth Avenue and was starting a 25-city U.S. tour. Thursday night, McKee came to Harvard Business School to share lessons from a whirlwind year.
This story first appeared in the November 24, 2014 issue of WWD. Subscribe Today.
McKee’s speech, given as the second annual Marvin Traub Fellowship lecture and the announcement of the endowed Fellowship in honor of McKee’s friend and mentor, ranged from current strategy for Saks to career reflections. She said Saks, at 40 stores currently, will add 10 doors by 2018.
Deals have been inked for stores in San Juan, Puerto Rico; Waikiki, Hawaii; downtown Manhattan (Brookfield Place, near the World Trade Center); and Brickell City Centre, in Miami. She said the company’s “highest productivity” stores were in Florida, buoyed by Latin American shoppers and investors.
“We are seeing huge buoyancy” in that market, she noted. “Everyone is investing in Miami.”
Throughout the talk, she spoke about the need for Saks to be an experiential brand rather than a “landlord” for luxury brands. All 11,000 employees recently viewed a video with the firm’s new mantra: “The experience is everything.” The holiday windows unveiling on Fifth Avenue will feature fireworks and 77,000 lights (last year, there were 5,000).
She’s determined, in other words, for Saks to dazzle.
“A year ago this week, I started on a tour of 25 cities in America, in a three-week period. I had no agenda, no notepad,” she recalled. “I saw stores everywhere — and often I found myself asking myself, Am I in Saks? In Neiman’s? Or am I in Bloomingdale’s? I found a lack of differentiation, a lack of exclusivity, and a lack of understanding of environment, place and positioning.”
For Saks, a regional assortment is critical, McKee noted. In San Francisco, Asian consumers produce 60 percent of sales. In Bal Harbour, Fla., 90 percent of sales are Latina — Mexicans, Brazilians, Colombians, with the remainder rung up by Russians and a smattering of locals. In Atlanta and Houston, African-American clients generate half of sales.
McKee called Saks’ current roster of 2,227 brands “impossible” and said merchants were in the process of cutting 35%. She said Saks currently has more than 2,000 vendors.
“We are cutting out brands that generate only five percent of our returns and probably zero percent profit,” she said. At the same time, she stressed the importance of discovering and sponsoring new talent. The shopper comes in to see something she’s already researched online, McKee observed, but she comes back “because you’ve shown her something unexpected.”
She said co-op advertising is up 30 percent because the catalogue is now a “magalogue” with coffee-table appeal.
“Last year, people didn’t want to even be in it,” she said.
But McKee admitted that the Saks transformation has been daunting, in part because of the clout major luxury brands hold. She predicted that U.S. retailers would soon have more leverage.
“The Chinese market is starting to soften. They’re facing corruption issues, which will benefit the U.S.,” she said. “With the softening of business in Asia, every luxury brand that comes to see me is much more preoccupied with what’s going on in the U.S. It bodes well.”
Overall, she characterized luxury’s top- and entry-level items as performing well, but with the middle being “tough.”
She’s investing heavily in burnishing Saks’ aura. Among other things, that means elevating the logo — an unsurprising move for a woman who was recently Harrods’ chief merchant and spent 15 years surrounded by iconic gold and green.
She asked 30 vendor ceo’s to describe Saks’ shopping bag and was not surprised when only one could (Jacki Nemerov, of Polo.)
“You had all these different themes. Snowflakes at Christmas, a Yeti if you were lucky,” she quipped. “It’s very dangerous to mess around with branding. You would never see Tiffany change the turquoise or Hermès switch out the orange. Some brands in the world have got that emotional connection. Frankly, I don’t care what’s in that orange box. I am already excited the minute I see it under the tree.”
McKee has restored Saks’ 1924 script logo and added a black-and-white ribbon bow to bags and boxes. All associates received bow-tying lessons. The “Experience is Everything” employee video mentions, specifically, that packages will be “wrapped with care.”
“I’m sure they were thinking, That crazy Brit,” she said. “But the bow is the luxury, the difference of good to great.”
She’s also blanketed the Fifth Avenue flagship facade with black-and-white flags, after viewing it from a cab and realizing it would be difficult for visitors to know what the grand building housed.
But McKee’s moves are not all from the Harrods playbook. She’s studying the interaction between mobility and commerce, convinced that two-stage transactions will become the norm in retail (a virtual interaction that spurs a brick-and-mortar transaction.) Her social media department currently employs no one older than age 22.
“People question hiring someone [age] 19 to do this job, but I say, ‘Look what she can do!’ At age 25, they’re already old-fashioned in their approach,” she said.
McKee, too, got her start young. At 16, she was hired as a “Saturday girl” at Harrods because she was fluent in Italian and French, and could coax affluent Continentals to buy dresses. Later, after stops at Estée Lauder and a regional department store operator, she returned to Harrods, rising from beauty director to chief merchant. During her 15-year tenure, revenues soared from roughly $400 million annually to $2.2 billion.
She talked about working for former Harrods owner Mohamed Al Fayed, and then for the Qatari Sovereign Wealth Fund. She had 100 buyers and $75 million each year to keep the door looking “best in class.”
“When I needed something, I would go to the Embassy to request an audience with the Prime Minister,” she said. “It seems difficult to run a country and Harrods, too, but, apparently, it can be done.”
She confessed she’d spent a summer in Boston in 1989 as a foreign exchange student, strolling Newbury Street and fantasizing about “marrying one of those Bostonians who wore pastel sweaters draped over their shoulders, drove vintage cars, and lived on Beacon Hill.”
It wasn’t to be, though many decades later she experienced mild culture shock when the pace of New York life turned out to be far more hectic than Brahmin Boston.
“In my corridor, all the offices are full by 7 a.m.,” she said. “In London, we worked 9 in the morning to 7 o’clock, and we thought we were working hard.”