SAKS: READY TO DUKE IT OUT IN HOUSTON

Byline: Rusty Williamson / David Moin

HOUSTON — By the time he cut the ribbon last Thursday on the new Saks Fifth Avenue here — the chain’s largest and most luxurious branch — Philip Miller had let the whole story out.
The Saks chairman and chief executive officer projected the company would double its volume in the area and talked tough against what’s been the only real luxury game in town: Neiman Marcus. And with Saks stock losing favor on Wall Street, he vowed to bring the skeptical analysts to the Houston site and pitch it as a prototype and centerpiece of a renewed Saks assault on the luxury market.
In a season of disappointments, marked by slumping sales, a depressed stock price and the resignation of Saks’ president Rose Marie Bravo, Miller finally had something he was anxious to discuss.
“It’s a real high to pull something new together, something that’s been created for lasting value,” he said while touring the Houston Galleria store, which replaces a small store in the nearby Pavilion Center.
Another Saks in Houston is opening Friday in the Town & Country Center.
“Texas has a tradition of supporting very high-level retailing,” Miller said. “But for one reason or another, those high-end stores have almost all gone away. Customers have had one main choice — Neiman Marcus. We’ve been in Texas for 23 years, but we have not optimally served the customers. In Houston, we’ve been in an undersized facility. We’re now of the size and scope of our competitor, Neiman Marcus, here. The opening of the two new Houston stores marks a new day for Saks in Texas.”
The three-level, 207,000-square-foot store shows that Saks is serious about grabbing a bigger share of the luxury market in Texas and creating more productive units around the country.
The store has a restored Philip Johnson gold-leaf mozaic facade, a soaring 56-foot-high atrium capped by a silver-leaf dome and 15-foot-wide aisles. Shoppers have vistas of much of the store from almost any vantage.
It also has a residential ambience, with touches such as Lalique lamp replicas, sofas, imitation fireplaces, fur-trimmed draperies in the fur salon and quilted-silk walls in the 5th Avenue Club, which caters privately to big spenders. Club members run up an average $15,000 annual tab.
Major merchandise departments are framed by cherrywood entrances. There’s a bar and a men’s “fitting complex,” which, in the mood of a men’s club, offers TV, a stock market ticker, newspapers and drinks.
The first floor contains Prada, Gucci and Ferragamo accessories boutiques; cutting-edge contemporary apparel; a beauty department distinguished by some lines exclusive to Saks in the Houston market, including Francois Nars makeup, and the first Institut Clarins spa. Accessory exclusives include Dior, Celine and Longchamps.
The second floor is a gallery of luxury-driven women’s apparel, including shops for Isaac Mizrahi, Zoran, Calvin Klein, Gucci and Celine that are exclusives in Houston, as well as Jean Paul Gaultier, Issey Miyake, Thierry Mugler, Yves Saint Laurent, Rena Lange and Valentino. It’s also home to a Jose Eber hair salon.
In spending over $50 million to convert the former Marshall Field’s space at the Galleria, Saks hopes to double its current yearly volume of $35 million within 18 months, according to Miller. For the first year, “we’ll do north of $60 million,” he said.
Attempting to further chip away at Neiman’s dominance, Saks will open a 105,000-square-foot unit here Friday at Town & Country Center, a suburban mall that includes Neiman’s. That Saks unit is expected to ring up between $17 million and $22 million in first-year sales, while Neiman’s reportedly does between $25 million and $30 million annually.
Neiman’s 206,000-square-foot unit in the Houston Galleria is the chain’s number two sales leader, with at least $115 million in total yearly volume. The Galleria store, though, rings up the most designer business of any Neiman’s. Its exclusive Chanel boutique is a magnet for the wealthiest women in town. Other local exclusives at Neiman’s include Giorgio Armani Black Label, John Galliano and Givenchy.
Miller certainly isn’t shy about firing across Neiman’s bow. “This store makes the statement that Saks is absolutely at a parity with our primary competitor,” he said. And Saks noted that the new store posted over $2 million in sales in its first three days.
Burt Tansky, Neiman’s chairman and ceo, seemed unfazed by the Saks assault. “I’d say we dominate in fine apparel in Houston. We’re at the top of the mountain and proud of it,” he said. “Over the years, we’ve stayed extremely sensitive to our customers’ needs and taken care of them. We will stay focused and won’t take our eyes off what’s important.” Neiman’s moved into Houston in 1955 and at the time had only two other stores, both in Dallas.
“Saks will have to do things bigger and better to overcome Neiman’s home field advantage,” said Arnold Aronson, managing director and retail strategist at Kurt Salmon Associates. “If Saks doesn’t come close to doubling their volume, their investment [at the Galleria] won’t be justified.”
Saks reportedly dropped another $250,000 on last Wednesday’s black-tie preview. It drew 2,000 guests, with numerous designers, including Bill Blass, Mary McFadden, Mark Badgley, James Mischka, Carolina Herrera, Bob Mackie, Zoran, Isaac Mizrahi and Diane Von Furstenberg and raised over $600,000 for the Nellie B. Connally Breast Cancer Fund at the M.D. Anderson Cancer Center here.
Such lavish affairs are important to Houston’s huge cadre of designer customers. “I shop at both Saks and Neiman’s,” said Linda Brown, a wealthy Houstonian. “I particularly like Saks for the service and my personal sales associate. She doesn’t put me in a room with six outfits and come back in an hour. She will come to my house if I want. Saks caters to you hand and foot.”
But she added, “I like Neiman’s a lot, too. Until now, Saks hasn’t had the capability to carry everything that Neiman’s has had. They’ll give Neiman’s a run for their customers.”
Dianne Connally, daughter-in-law of the late Texas governor John Connally, also shops Neiman’s and Saks and thinks the competition will be good for shoppers. “Both stores offer equal service and have different lures. I buy Thierry Mugler at Saks and Chanel at Neiman’s. The two stores should keep each other on their toes.”
“It’s a new standard,” said Carolee Friedlander, who pointed to the fixturing. “It’s more like furniture than general case lines, and there’s a graciousness in the aisles. But it is kind of sad that Rose Marie is not here. She was one of the strategists, particularly in identifying the resources.”
“Thank God it’s got space,” said Bill Blass. “It’s been so lacking. In Houston, Saks was always an afterthought. Saks has made the decision to make retailing glamorous again.”
Saks branches are generally about half the size of the Houston unit, and smaller than Neiman’s units, though Saks has been enlarging stores. In Houston, Miller said, “We’re able to have every category of business that Saks is in — even gifts, which we really haven’t been in — in a dramatic and generous way.”
Future Saks units will mimic in varying degrees the merchandising and design of the Galleria store. Saks’ agenda in Texas includes opening a Main Street concept store in Austin on Nov. 14, expanding its presence in San Antonio and relocating its current Dallas unit, in that city’s Galleria mall, to a space now occupied by Field’s.
Saks also has tentative plans to build additional units in the Dallas-Fort Worth area. The Texas push is one of four key regional expansions for Saks over the next two years, when the chain will also target California, Florida and the New York metropolitan area.
The company plans to build about 20 new stores and expand 12 others in those regions during fiscal 1997 and 1998.

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