Saks CEO on ecommerce split and luxury spending

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NEW YORK (AP) – Eight months after Hudson’s Bay Co., the Canadian owner of Saks Fifth Avenue, parted ways with…

NEW YORK (AP) – Eight months after Hudson’s Bay Co., the Canadian owner of Saks Fifth Avenue, split the luxury retailer’s e-commerce business into a separate entity, changes are already underway at its site.

The number of styles sold by Saks.com has increased by 40% and the number of brands available has increased by 30%. Saks.com is also increasing its offerings of children’s clothing and home furnishings as well as sportswear. Buyers can now take advantage of free shipping and returns. And ultimately, buyers will see faster deliveries and more premium packaging for their items – with an eco-friendly twist.

Behind all the changes is Marc Metrick, formerly President and CEO of Saks Fifth Avenue, and now CEO of the new Saks.com company called Saks. Metrick says the stand-alone company with new funding means the business can grow much faster. So far, there are signs that the spin-off, announced in early March, appears to be working. Saks.com now has 1 million visits per day, up from 500,000 two years ago. And the total merchandise value rose 80% on Saks.com, while in-store sales rose 30% in the second quarter ended July 31 compared to the same period in 2019.

Venture capital firm Insight Partners has invested $ 500 million for the new company Saks.com and values ​​the stand-alone business at $ 2 billion. Hudson’s Bay, which also owns Saks Off Fifth and the Canadian department store chain Hudson’s Bay, closed almost two years ago.

The changes come as online shopping exploded during the pandemic, even for high-priced luxury items, as shoppers avoided physical stores. Online sales rose 21.1% and overall sales of luxury goods nearly doubled in the first nine months of this year, according to Mastercard SpendingPulse. In comparison, total retail sales excluding autos and gasoline increased 10.8% over this period.

Meanwhile, reports are circulating that an initial public offering is in sight for Saks’s e-commerce business. It comes as activist investor Jana Partners is reportedly pushing for a spinoff from Macy’s e-commerce business.

AP recently interviewed Metrick at Saks headquarters in New York on a wide range of issues, from the reasons for the split to the resumption of luxury spending. His answers have been edited for clarity and length.

Q. Why did Saks launch its e-commerce?

A. About 20 years ago, the first example of e-commerce… none of us – us being traditional department store people – were really able to get into the maid’s space race. way. We had a lot of bricks and mortar to deal with. We had customers who liked to shop in a way, and we had to be consistent and it was very complicated. And then, as we sat even before the pandemic watching the channel change, watching this digital native consumer come to life, we realized … we can’t miss this one, as the industry missed the first one. . So we decided to really structure our business so that we could win with both channels in the right way.

Q. What’s the biggest difference?

A. Ever since we started Saks.com in the late 90s, we have been an “or” company. We can invest online or in stores. We can buy inventory online or in stores. We could focus on marketing online or in stores. Now we have become an “and” company. We can invest in our line and our stores. We can spend marketing dollars on our online stores and our stores. We can buy goods for online and our stores

Q. How is the luxury sector doing?

A. I am very satisfied with the way the company resisted and the way the company weathered the pandemic. There are people who really want to get dressed, even if they go back to the office or go out to dinner again and go out to see friends. These are the outing and travel companies that really work.

Q. How does the consumer benefit?

A. They have more choice and selection than they’ve ever had before. There are new categories that we weren’t really in a meaningful way or were there, but they weren’t really powerful. We amplify them and really pursue them.

Q. How do you improve the speed of delivery?

A. We were focused on getting it to you when we could. Now we are trying to get it to you as quickly as possible. There’s probably a day or two of faster delivery, and that’s not really where we want it to be yet. But it’s a work in progress right now.

Q. Why can you be faster now?

A. It starts with having inventory in our distribution centers. When you’re a fully invested omnichannel retailer, which we were, some of your inventory is in your Fulfillment Center and some in one of 40 stores. And it just takes longer when you run out of the distribution center and have to go out to stores to be filled. It will take longer for the customer to get it. It’s less efficient for the consumer, and it helps move this process forward in a meaningful way.

Q. Are there any plans for Saks.com to go public?

A. My job and my team’s job is to focus on the customer experience doing everything we say we’re going to do and building this business. What is happening from a capital market perspective, who knows?

Q. What about acquiring new customers?

A. We have acquired about half a million new customers in the last seven months while maintaining all the right economic conditions, and I think of the economy in a very different way. So I don’t just think about my customer acquisition costs being moderate to low. I think of the lifetime value of these clients, of what they bring to us.

Q. How do you deal with obstacles in the supply chain?

A. It was not a question of diversifying where we were going. This was to make sure we had enough that if there was any spinoff or if you received less than you always received. He arrived early, so if he arrived late, he still arrived on time. So it was really about being strategic about the quantities you invest. And we weren’t crazy.

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Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

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