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Saks Off 5th, which focuses on providing luxury goods at affordable prices, has faced stiff competition this past holiday season amid the influx of full price retailer promotions.
During a keynote session at NRF 2023: Retail’s Big Show in New York City on Sunday, CEO Paige Thomas, who took office just before the 2020 pandemic, said the 2022 holiday season was “the busiest” it’s ever had experienced, which she attributed to high inventories.
From a buying perspective, high inventories ultimately play in the company’s favor because it typically creates an “incredible environment” for its purchasing teams to select “the best of the best,” Thomas said.
However, during the holiday season, which was fueled by discounts, “there was an opportunity for traditional full-price players to play a bit in our sandbox, and that got really competitive,” Thomas said.
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The chief executive said the company was still performing strongly throughout the season because of the “value component that we have every day,” she said.
Thomas expressed great confidence in the company, saying its value proposition is its “profit agenda,” and that this is something that bodes well in the current economy.
Over the years, the off-price industry has exceeded and even exceeded expectations “in a volatile environment, especially for consumers,” she said.
Saks Off 5th, discount department store in Orlando, Florida. (Jeffrey Greenberg/Education Images/Universal Images Group via Getty Images/Getty Images)
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Thomas predicted that the first half of 2023 will be more challenging compared to the second half of the year, suggesting that there is still high inventory and ongoing promotions in the January period.
“It’s about time that we tend to be a little more conservative and then go after business as we see it,” she said.
Saks Fifth Avenue at the 5th entrance in West Palm Beach, Florida. (Jeff Greenberg/Education Images/Universal Images Group via Getty Images/Getty Images)
However, not only does the company have “the luxury of leaning on price,” but its fast-growing customer base is a high-earning individual who isn’t as “price-sensitive,” Thomas said.
Since the pandemic, the company has invested heavily in customer research to better understand and engage with this customer.
“We had this wonderful discovery of a really fast growing segment within our customer base. And that segment made a lot, was very fashion conscious and shopped everywhere,” said Thomas. “It really gave us a bang as an organization to say how we feel about our merchandising strategy? How do we think about our marketing strategy? How do we feel about our customer experience and our competition?”
Saks Fifth Avenue Off 5th Men’s Clothing and Tie Show in West Palm Beach, Florida. (Jeff Greenberg/Education Images/Universal Images Group via Getty Images/Getty Images)
Thomas said the company really “put ammunition and strategy into building this client.”
“I always go back to who your main customer is and serve them and you win,” Thomas said.
The chain also invested in technology and established resale partnerships to further advance its mission of offering “modern luxury at affordable prices for all”.
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The company also launched its first app in 2021 and a loyalty program last year, both of which Thomas says have been very engaging. The company has already attracted more than 1.5 million registrations to its loyalty program in less than a year.
In recent years, the company has also announced partnerships with big players in the resale space, starting with LXR in 2020. In 2022, they announced three more partnerships, including Rent the Runway.
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The company has already seen a great response, saying these partners have been a “great asset” to the company.
Thomas expects to have more resale partners in 2023.