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Saks' Luxury Battle Plan: Focus on Shoppers' Needs To Redefine Retail Image

Saks Fifth Avenue is banking on “world class” customer service to replenish its cache in the fiercely competitive luxury segment.

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NEW YORK — Saks Fifth Avenue is banking on “world class” customer service as a linchpin to help replenish its cachet in the fiercely competitive luxury segment.

The retailer outlined a strategic plan to Wall Street investors and analysts on Monday that centers on improved customer service, as well as an edited merchandise assortment, redesigned job responsibilities and changes in the management structure to emphasize the store associates.

Without giving away too much detail, top management said the evolution of Saks involves a “DNA change,” which suggests a refocused merchandising strategy, perhaps with a push into more designer sportswear and contemporary sportswear.

The presentation by the senior management team of Saks Fifth Avenue Enterprises Inc., the SFA division of Saks Inc., was led by Stephen Sadove, vice chairman and chief operating officer of Saks Inc., on behalf of R. Brad Martin, chairman and chief executive officer of Saks, who was unable to attend because of a family emergency. The SFAE team included Fred Wilson, chairman and ceo; Andrew Jennings, president and chief operating officer; Ron Frasch, vice chairman and chief merchant, and Terron Schaefer, senior vice president of marketing.

Wilson stressed the need for SFA to target a younger, aspirational demographic without giving up its older customer base. Toward that end, the retailer’s goal is for customers who walk in with a sense of fashion insecurity to see Saks as the sage of personal style. Key to this is enhanced customer service. And to help store associates cultivate loyalty among customers, the refocused SFA will operate in the form of an inverted pyramid, with the associates taking on greater leadership.

Saks Fifth Avenue had been outpaced by competitors such as Neiman Marcus and Nordstrom during the luxury boom, but rebounded in the fourth quarter of 2004, reporting double-digit increases in same-store sales for December.

“It was accepted [practice] to follow Neiman Marcus,” Frasch explained. “We’ve taken that out of the equation. We have to have our own strategy and point of view.”

To do that, Frasch said there’s been a focus on fine-tuning opening price points for all product categories. It has meant also that if a woman buys ready-to-wear, there must be a handbag in the store to coordinate with the outfit.
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