CHICAGO — Finding that chic black cashmere Donna Karan jacket in every size but the one the customer wants could soon be a thing of the past at Saks Fifth Avenue.
The retailer is entering into partnerships with two of its top vendors, Donna Karan and St. John Knits, that will enable it to reduce out-of-stocks, react faster to trends and boost sales of those lines by up to 20 percent.
According to industry sources, the two vendors account for 10 percent of Saks’ overall volume, which is around $1.3 billion.
Quick Response and Electronic Data Interchange, or EDI, will be the enabling technology, said Gay Millson-Whitney, Saks’ director of Quick Response/EDI. She outlined the retailer’s plans during a recent session at the Quick Response conference held at the Hyatt Regency Hotel here.
Elaborating on the store’s plans in an interview later, Millson-Whitney said Saks currently uses EDI for replenishing core products with fast turnover, such as women’s Coach handbags and intimate apparel.
Applying the technology to high-fashion merchandise is a first for Saks, she said.
The program, first discussed with Karan in February, is set to begin by the middle of May, Millson-Whitney said. It will start with Karan’s Essentials, a line of non-seasonal apparel basics where stock is maintained throughout the year.
According to Lee Goldenberg, Karan’s corporate vice president/chief information officer, Saks is the first fashion retailer to enter into this type of Quick Response partnership with Karan, although the vendor is discussing similar programs with other retailers.
Goldenberg explained how the program will work: Saks will set model stock replenishment limits such as a minimum of six size 8 black cashmere blazers, for example. The store’s point-of-sales system records each day’s sales and if stock falls below the minimum the system automatically generates a replenishment order.
This is transmitted electronically to Karan, which processes it and ships the merchandise, if it is in stock, within 48 hours.
The aim is to reduce total stock replenishment time to 72 hours, Millson-Whitney said.
“The main benefits for Saks are immediate increased weekly sales — anywhere from 5 percent to 20 percent, by having stock on the floor,” she said. Quick Response also means the store can reduce its average inventory because model stock replenishment kicks in so quickly.
“Quick Response gives us the ability to have what the customer wants when she walks into the store,” Millson-Whitney said.
Saks hopes to subsequently apply the technology to similar core products, such as DKNY jeans, and have the entire Karan range of merchandise, including shoes and fragrance, replenished via Quick Response by the end of this year, she said.
The technology will also enable Saks and Karan to react much faster to trends as they are happening on the sales floor, Millson-Whitney said.
“We want to set up EDI so you know what’s selling by size and color as it’s happening,” she said. “For example, is a particular item great in black or in smaller sizes? Or is something tremendous in the Southeast but not in New York?”
With St. John Knits, discussions are still at an early stage, Millson-Whitney said, but Saks hopes to have a Quick Response program up and running by early summer.
She noted the vendor is a good candidate for the technology because a large portion of its merchandise consists of core basics. St. John Knits declined to comment.