Saks Fifth Avenue and Hudson’s Bay have “an absolute right to win,” stated Helena Foulkes, chief executive officer of the Hudson’s Bay Co., which owns both retail brands.
And the strategy, as outlined by Foulkes, involves an intensified focus on customers; personalization; remaking the matrix at the Hudson’s Bay division in Canada with fresher, modern brands, partnerships and exclusives; investing in stores; sharing more data with vendors, and furthering Saks’ more fashion-forward appeal.
After selling off Lord & Taylor, Gilt, its European operations and closing Home Outfitters, the downsized Hudson’s Bay Co. now operates the 42-unit Saks Fifth Avenue, the 90-unit Hudson’s Bay, and Saks Off-5th, which has more than 100 stores.
“I don’t see us expanding our fleet size,” Foulkes said during the summit.
But she made the point that despite the huge streamlining of what had been an “overly complex” company given its size, the Toronto-based HBC is not bereft of opportunities and has an agenda focused on the customer and organic growth. According to Foulkes, Saks Fifth Avenue has been making progress, becoming much more fashion-forward and is on a path to bring greater personalization to the Saks experience by arming its 4,500 stylists across the country with data and information on customers to help them service them better.
Hudson’s Bay in Canada is “modernizing” its assortment, and in the past year has added 100 brands, including Anthropologie Home, L.L. Bean and Mango, while dropping 300 other brands, Foulkes said. The division is also innovating with pop-ups and collaborations, such as with Levi’s.
There could also be a growth opportunity with Barneys New York. There’s talk of putting Barneys shops inside Saks and other possible tie-ins between the two luxury brands. “If something were to happen with Barneys, I see a huge opportunity for us to learn what (shoppers) have loved about Barneys and how do we tap into that,” said Foulkes.
There have also been talks between HBC and the Neiman Marcus Group. Richard Baker, executive chairman and governor of HBC, has not been shy about his interest in bringing NMG and Saks under the same corporate umbrella.
Baker, a consummate deal-maker, is in the process of taking HBC private. A deal led by him and a group of investors owning 53 percent of the business was approved by the board two weeks ago, and a vote by shareholders is expected in December.
“What I say all the time internally is whether we are private or public, it really doesn’t matter,” said Foulkes. “We got a strategy we are going after. My job is to make sure we don’t get distracted by this. What we really have to do is deliver for the customer. You have to put the customer first. You don’t win in retail unless you care about the customer.”
With all the sell-offs behind the company, “I am thrilled now to be in a position where we can focus on Saks (including Saks Off5th) and Hudson’s Bay. Those are what we describe as the two crown jewels of this business. When I arrived about a year and half ago, we had many many businesses in our portfolio. I came from a much bigger retailer (CVS) from a sales perspective. But in this company, I found much more complexity for its size and it wasn’t clear to me how HBC was making each of these businesses better. So we embarked upon a process of simplifying the portfolio. We started by selling Gilt. We sold half of our European business. We then announced we were selling Lord & Taylor to Le Tote, then we finished selling the rest of our European business. Now we are left with the two businesses we think have an absolute right to win — Saks and Hudson’s Bay.
“I am trying to empower those teams to go win and be as customer-focused as we can. In many ways the corporate structure we had was holding them back. We are trying to unleash them and most importantly, with things like digital and personalization where quite frankly, we were too far behind. So we have taken massive steps forward in the last year-and-a-half and brought in a great new technology and digital teams.”
Explaining why Hudson’s Bay has a “right to win,” Foulkes said there’s “massive love” for the store among Canadians. “This is a 350-year-old brand. We have 90 stores all across the country. Fifty percent of Canadians live within 10 miles of Hudson’s Bay. People talk to me about growing up and learning in fourth grade about Hudson’s Bay. It was part of the land grant from King Charles II. There is a real pride about Hudson’s Bay and we are very connected to the community. We are huge sponsors of the Canadian Olympic teams. We do a lot of good things in the community. The strength to build on is we are the only major department store in Canada, whereas in the U.S. you have massive competition. In Canada, we are it. People really want us to win. We have businesses that are doing really well right now — cosmetics, kids, home.”
Women’s and men’s apparel, however, have been struggling, but change is happening. “We have really been on a journey to bring in new fresh modern brands. Our stores are the place where if you want to enter Canada, you should.…We have added over 100 new brands in the last six months in our stores and taken out 300 brands. And quite frankly, just got rid of things that are a little bit old and tired.”
Foulkes said HBC is also focused on customer experience. A net promoter score was introduced last year. “When I arrived I was struck by the fact that there was no way to measure what the customer was seeing every day. Now we measure net promoter score every single day. Our store team starts their huddles with how they are doing on net promoter score. What were the key detractors yesterday and what are they going to do about it. That’s led to some really innovative things in our stores like central cash in some, open-sell shoes,” formats springing up organically from customers.
The ceo also cited “a huge push on digital,” at the Bay. “We just launched our app a couple of months ago and that’s doing phenomenally well. Our digital business is up high, high single digits.”
For awhile, Hudson’s Bay was on a role, capitalizing on the closing of Sears Canada. Fifty three Hudson’s Bay stores were right next to Sears. “We made a mistake where we started buying for that Sears customer more broadly. That quite frankly was too downmarket from where the Bay is. That’s the piece we are returning to. That doesn’t happen overnight. We are really encouraged by what we are seeing and excited about what the future holds there.”
At Saks Fifth Avenue, “We talk about the new luxury, that starts with having product and merchandise that is spectacular. The team including Marc Metrick, president, and Tracy Margolies, chief merchant “had an eye a few years on how to become more fashion-forward. Saks had become a little too safe. If you look at our success, you see we are really winning in more fashion-forward brands. I’ve met with every one of our top suppliers, and hear really great marks from them, about the choices we are making, the edits we are making, how fashion-forward we are becoming and that’s allowing us to win share in the marketplace.”
Foulkes alluded to the $250 million-plus transformation of the Saks Fifth Avenue flagship, and a doubling of the number of stylists, who each sell $1 million or more in merchandise annually. “These are people who really know their customers and have intense relationships with them,” said Foulkes.
At Saks, Foulkes explained, “digital just doesn’t mean e-commerce. E-commerce is a significant portion of our business, but it’s actually about being smarter about digital tools and information and feeding that to our store stylists, arming (them) with information about their clients, what they are looking for, so they can close the deal for their clients. And that’s a different approach to digital and personalization. We are on a very exciting journey. Things are starting to work there. There is a long path forward, too, in terms of how much more we can do.”
In Manhattan, Saks has been up against some new and formidable competition, with Neiman Marcus opening in March in Hudson Yards and Nordstrom opening a women’s flagship on Broadway and 57th Street on Oct. 24.
“I never take the competition for granted. I always see an opportunity to visit competitors’ stores and learn something from them. In the case of Neiman’s and Nordstrom entering, they have both done really great jobs and I think it’s always great when retailers are doing well. This is not a finite space where we all can’t win. It’s great when we can win collectively. So far we have seen no impact to our business from Neiman’s entering. We are feeling very confident about that.…We serve a bit of a different market than Nordstrom. And I think Barneys is an example of how tough it is out there.
“Eighty years ago, what attracted people to department stores was personalization. It wasn’t called that then. But it was about the sales associates knowing you, your family, and the special occasions in your life, be it a birthday, a wedding or a job change. You had that personal touch. What’s exciting today is how do you create that in an digital world. That’s exactly what the team is doing.”
And for the vendors in the audience, Foulkes had a message of working together on a higher level. “I have spent my whole career thinking about how to win together,” she said. “We want to be the partners who bring in more values, data and personalization consistent with what I did at CVS. There is a wealth of data that all of us retailers have. You have it as well, but ours is unique. We can see customers shopping across all of the brands. We see an opportunity to provide that to you to make you smarter and capable of winning business and helping us win as well.
“There’s always this conversation around the inherent competition that exists because you also sell outside our stores,” said Foulkes. “You have your own stores. I see it as much more of a symbiotic relationship that we need to tap into to figure out how can you make us smarter and better and how do we help you win as well.”