NEW YORK — Talk about a makeover. After 18 months of thinking and rethinking how to elevate the shopping experience, the Saks Fifth Avenue team has finalized a three-year, $250 million master plan for overhauling the Manhattan flagship — and they’re ready to reveal what’s in store.

This story first appeared in the September 10, 2015 issue of WWD. Subscribe Today.

The strategy represents a convention-breaker that is almost certain to shake up the industry — the beauty floor is moving from the ground level up to up to two, the main floor will convert to handbags and accessories; fine jewelry is moving down to a new concourse level, and a world of eveningwear and evening accessories will be created on nine. “We do not look at this as a renovation. This is a reinvention. A reimagination, and a redevelopment,” Marc Metrick, president of Saks, said about the plans in an exclusive interview, where he was joined by Tracy Margolies, Saks’ chief merchant, and Kerry Mader, senior vice president of store planning, design and construction at Hudson’s Bay Co., which owns Saks.

The project will impact most of the 91-year-old, 11-story flagship. It ambitiously calls for creating “dominant” assortments, remerchandising to catch up to changing shopping habits, and as Metrick likes to say, “de-departmentalizing” the department store. The intent is to draw shoppers through more of the store by providing greater vertical transportation and easier sight lines and set an environment that is less harried.

Among the biggest changes ahead:

* The highly productive beauty floor moves up a flight to two, contrary to the industry norm of beauty being a main-floor business, or in some recent cases, housed on the lower level such as at Barneys New York and Bergdorf Goodman. Beauty will be 53 percent larger and “all about the romance, the intimacy and the femininity of the experience,” Margolies said.

* All handbags, leather goods and accessories will be on the main floor, providing 60 percent more space for those categories, including 81 percent more space just for handbags.

* Women’s apparel will consolidate from four to three floors and be remerchandised by lifestyle with varying price points in single locations. “There will be designer on every ready-to-wear floor,” Margolies explained. “Three will be core designer collections, with some new designers that are not carried currently. Four is designer as well, more lifestyle and the fifth floor will be advanced designer and contemporary collections.” The idea is to encourage greater cross shopping. “Today that’s how the customer shops,” Margolies said.

* Precious and fine jewelry and watches move down from one to the concourse level, which will be branded as “The Vault.” The strategy reflects the marketing success of Saks branding its footwear floor as 10022-Shoe in 2007. There will also be jewelry on two, on the tower side of the store.

* On nine, Saks will create “The Ballroom” for everything that’s evening – evening gowns and dresses, evening shoes, evening handbags and jewelry. Bridal will be part of the 8,000-square-foot area.

Right in the middle of the main floor, Saks will create a glass elevator with a grand, 23-foot-high spiral staircase wrapping around it to transport shoppers from one to two and down to the concourse. “It’s going to be an architectural beacon,” said Mader. Next to the staircase, there will be an escalator to two.

Floors six and seven will still be men’s, but separated by lifestyle, remerchandised for “big dominant classifications,” and linked by a new staircase.

The Saks restaurant on eight, called Cafe SFA, will relocate to nine and will be operated by a third party that Saks will disclose later. That move will enable an expansion of 10022-Shoe on eight, which will add shop concepts along the perimeter.

Also on eight, there will be a Champagne bar with a patio overlooking Rockefeller Center and St. Patrick’s Cathedral and a staircase to the ninth-floor restaurant, which will be able to expand into an event space. Intimates will stay on nine, where there is also office space. On 10, John Barrett will open a beauty salon in a partnership that will lead to other Barrett salons at Saks locations.

The flagship project is expected to be completed by mid-2018. In the meantime, Saks is making other big maneuvers, including relocating its headquarters to Brookfield Place in lower Manhattan, where a Saks Fifth Avenue store will open, and launching its first stores in Canada, and its first freestanding shoe store in Greenwich, Conn.

The Saks flagship is considered one of the most valuable retail properties in the world, recently assessed at $3.7 billion, and one of the underlying reasons why the Hudson’s Bay Co. bought Saks two years ago. The 646,000-square-foot flagship is indispensable to the business, accounting for more than $700 million in sales last year and about $1,700 in sales per square foot. The main floor and 10022-Shoe floor are the most productive levels. The flagship sets the tone for the luxury chain and accounts for roughly 20 to 22 percent of the overall business. It’s believed that executives see the flagship as capable of topping $1 billion in sales, though they won’t confirm that.

The Fifth Avenue store is central to HBC’s drive to close the profitability gap between Saks and Neiman Marcus, which maintains a huge lead over Saks.

“You are coming up on 100 years for this store. It’s old, and when it was developed, the customer shopped differently,” Metrick said. “She no longer shops just for utility. What people want can be gotten anywhere. One of our biggest challenges we face is how do we make these stores exciting? How do you make it an experience, so when a customer wants something they don’t want to just pop on their phone and buy it. Especially with luxury, as somebody said to me, it’s a dream. It’s aspiration. It’s supposed to be enjoyable. You have to have an environment that matches that. It can’t be just a place to get stuff. There are product categories that didn’t even exist, or if they existed are completely different. You need to change and you need to be more flexible.…One of our guiding principles was, this needs to feel very different.”

For years, Saks flirted with renovating the beauty floor but budget concerns and the recession interfered. The main level is energetic and always busy, but congested and hampered by walls and fixtures blocking visibility. “We’re creating an environment where people can see what’s in front of them and that there are other floors and other places to go,” Metrick said, noting that beauty shop walls and fixtures rise eight-and-a-half feet on the main floor, but will drop to five-and-a-half to six feet, excluding perimeter shops, when it moves to the second floor.

“One of our guiding principles was to have more disciplined sight lines and open up the store for improved customer circulation. The store needs to be more actively shopped,” Metrick said.

Moving beauty up to two does pose a risk to productivity, but Metrick thinks it will be fine, based on some past experience. “When we moved our footwear business up to the eighth floor, people thought we were crazy. Shouldn’t it be right on the main floor? The trick is, if you build beautiful, category-dominant assortments, in New York City on Fifth Avenue in the 50s, people are going to go there.”

“The vendors are thinking differently about each floor,” added Mader. “The old paradigms are shifting. They are not looking at the back or the front. They are trying to figure out what is the best possible space for them based on how we are creating different verticals and sight lines within each floor.”

During the development process, handbag duplexes were considered, reminiscent of the duplexes at Harrods and Macy’s Herald Square. “We were really struggling with that from a customer perspective because we wanted her to come in and see the world of handbags, to see a dominant category,” Margolies explained. “It’s also very bold to bring beauty to two. What we want to do is expand beauty and by bringing it to two, it allows our customer to have the experience” in a proper, relaxed environment and greater services. “Today she is sitting on the main floor having her makeup done in the middle of a leather goods shop. While it’s very profitable, you don’t feel like you want to spend the day there.”

The Vault will occupy 25,000 square feet on the 60,000-square foot concourse, which has stock and receiving areas and electrical equipment. The high ceilings, at 12 to 15 feet and typical of Saks’ upper floors, will help create ambience. In its current location on the east side of the main floor, behind the elevators and escalators, jewelry seems detached from the rest of the store.

“The Vault will be a destination,” Metrick said. “We can market it. It’s being branded. It will mean something more than the brands inside of it. Imagine marketing collateral, imagine separate packaging. We are going to do whatever it is to make sure people understand it’s a unique environment. I do believe jewelry is an underserved category at Saks.”

One of Saks’ “hidden assets,” added Metrick, are the windows. Many have been covered up in one way or another. “Where we can we are activating our views, which no one can mimic. People can put Champagne on their footwear floors, but they can’t put up a balcony  outside on Fifth Avenue and look at Rock Center.”

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