Saks' Plan to Bring Luxury to Online Shoppers
In a presentation at the ICR Conference in Orlando, FL last week, Marc Metrick, CEO of Saks, a digital platform for luxury fashion in North America, discussed winning over digital-native consumers and the concept of accessible luxury, among other topics.
Metrick is a self-described "lifer" at Saks, having spent more than half his life at the company. He was named CEO of Saks Fifth Avenue in 2020, and was at the helm when HBC split the Saks e-commerce business from the Saks Fifth Avenue stores business in March 2021 (HBC is the majority owner of Saks, the e-commerce business, and wholly owns the Saks Fifth Avenue stores business). Here are some highlights from his interview at ICR.
On Splitting Off the E-Commerce Business
"We split for the consumer," Metrick said. "The luxury consumer was finally moving online. We picked up our center of gravity and moved it to the online business."
Metrick noted that this wasn't entirely different from the origins of Saks Fifth Avenue, with the company's first store located on 6th Avenue in Manhattan's Herald Square before the company followed the consumer and moved uptown to 5th Avenue.
Acquiring the Digital-Native, Luxury Customer
Metrick noted that while Saks was shifting from a legacy department store to an e-commerce pure-play in March 2021, the Saks website was launched in 2000. Therefore, the brand had an established digital presence that it could leverage in its goal to acquire even more digital-native luxury shoppers. In addition, the brand awareness that Saks' physical stores had engendered was an advantage during this transition. Part of the strategy was redefining the "luxury shopper."
"I don’t define the luxury consumer as rich people," Metrick said. "It’s an end consumer, and there are those qualified for luxury purchases but they need to make decisions [in their spending habits]. We need to get them and build relationships over time."
Metrick noted that because of its strong brand awareness, Saks benefits from a much lower customer acquisition cost (CAC) than its digital pure-play competitors.
Growth vs. Profitability
The first chapter of Saks' digital story is growth with a new hierarchy of KPIs, said Metrick. He noted that running a department store is very different than running a pure-play. Chapter two is about efficiency and scale.
"We need to remain focused on profitability," Metrick told the audience. "Chapter three is international expansion.
"Profitability was always going to be important and needed to be there," added Metrick. "It’s changing for everyone else, leveling the playing field. The pure-plays operated without regard to profits. The consumer didn’t care if the pure-plays made money."
Luxury in 2024
"She's an 'and or or' customer," Metrick explained. "You have the core luxury person that's entrenched in her life. Then you have the 'or' customer that has to make choices to buy luxury."
As for the luxury market in 2024, Metrick said that Saks is expecting to see a little bit of a lift in the second half of the year.
"Our job is to drive consideration with the high awareness that we have," Metrick said. "That comes from the customer experience that we give on the website. We’re never going to be in a perfect end state. I’m always going to say we’re in the sixth inning."
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