Saks Fifth Avenue CEO, Stephen Sadove
In the wake of Black Friday, Saks Fifth Avenue CEO Stephen Sadove made a stop in Richmond yesterday to rally his troops at Stony Point Fashion Park. Sadove makes a habit visiting various locations in the 45-store luxury chain. “I’m playing chief cheerleader,” he says, adding that his current string of store visits — including Chicago, Detroit and Raleigh — is a way of keeping in touch with how Saks fits in cities that are decidedly nothing like New York City. During his quick visit to River City, he took time to talk to Richmond magazine.
RM: So, this wasn’t a white-glove inspection of Stony Point’s Saks location was it?
SS: Absolutely not. They’ve got a lot on their plates, a lot going on. A lot of marketing programs and this was just a chance to understand how they’re approaching things.
RM: Saks fits in the luxury-retail sector, and do you find that people are more or less likely to come into a Saks store during tighter economic times?
SS: People love luxury brands. They like the experience. They like what’s on the runways, what’s on the Oscars. There’s a cultural phenomenon that people value brands, and people like the kinds of brands that we sell. When the recession hit, the luxury sector took a hit. Overnight, when you had the Lehman Bros. bankruptcy and you had the stock market crash, the high-end consumer said they didn’t feel wealthy whether they had a million dollars or $100 million. They didn’t feel wealthy, and they said they’d stopped shopping. They shopped their closet and pulled back. And the aspirational customer went away. You’ve seen that change dramatically. The higher-end consumer’s feeling much better about themselves and they’ve been shopping. So, the high-end customer is back.
RM: With your customers it seems to have more to do with perception of their own economic strength, as filtered through the economy.
SS: Even when tax rates go up or down, it’s more about how do they feel, and the perception is driven a lot by the Dow or S&P because they’re looking at their portfolio accounts. For example, people say if tax rates go up, it’s going to hurt the high-end consumer. It may or may not, because if the markets respond positively, that would be viewed as a positive by that consumer.
RM: When the customer’s level of consumer confidence rises or falls, does Saks adjust its strategy to reach that customer?
SS: Saks is about luxury. We’re a high-end player, but we’re about high-end and accessible luxury. One of the things that we did early on was to create a concept of good, better and best luxury. So you want to be luxury at multiple price points. For example, you may get fancier leathers, more embellishment, more hardware on a handbag. You might sell the same brand of a handbag at $500 or $1,500.
RM: In being a luxury retailer, do you have a problem that some consumers perhaps don’t see you as accessible for their pocketbooks?
SS: That’s one of the things we want to do is to make people understand that we’re not just for the very rich, that we are more accessible. One of the reasons we participated in a television show on NBC last season called Fashion Star was to show that we are more accessible. I think one of the reasons that Target and Neiman Marcus are doing a promotion together right now is to show that Neiman Marcus is a little more accessible and not just for the very rich. I’m assuming that’s their strategy. So, if you walk the floors [in our stores] you’ll find that the items aren’t just for the very wealthy.
RM: How has Richmond fared so far as a market for Saks?
SS: I think Richmond’s a very nice market. It’s not a large store. It’s more of a “home-town” store. We have a very strong local client base, a very loyal client base. The store’s performing very nicely.
RM: How do you measure loyalty?
SS: We look at one-time users, two-time users and so on. We have a loyalty program called Saks First. We’ll look at the percentage of customers in that program, who tend to be the higher spending consumers.
RM: Local marketing is a keen focus for you. What exactly does that mean for a place like Richmond?
SS: Every market is different, and we’re very much about being a part of the local community. We do a lot with local charities. We do a lot of involvement with what’s important to our customers. And what’s important in one city is going to be very different in another city. And a result of it was that we shifted a lot of our marketing dollars from a national basis to a local basis.
RM: Judging from how a certain store performs in sales, can you gauge how fashion-forward a certain place like Richmond compares, say, to New York City?
SS: This is a younger, contemporary market. It’s a fashion-forward market.
RM: You describe the Richmond Saks as a “home-town” store. Does that fact challenge you somehow to offer a different level of service here than you might in a bigger market?
SS: Service is critical in every store. We measure service scores and do anonymous survey testing in every store. It’s important. And this store happens to be one of our best service scores in the country. So, you have a very high level of service. I mean, there are only two reasons why someone shops in one of our stores: it’s product and service. You can buy most of the products we sell somewhere — on the Internet or a competitor’s store. So, it’s about the service, the relationship that differentiates Saks from somebody else.