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Saks Off 5th, which focuses on offering luxury goods at affordable price points, faced stiff competition this past holiday season, given the influx of promotions from full-price retailers.
NRF 2023: During a keynote session at Retail’s Big Show in New York on Sunday, acting CEO Paige Thomas, who took over just before the pandemic swept the nation in 2020, said the 2022 holiday season is “the most advertised yet.” he attributed it to high inventory levels.
From a purchasing perspective, high inventory levels ultimately play to the company’s advantage because it typically creates an “incredible environment” for purchasing teams to select “the best of the best,” Thomas said.
However, during the holiday, the discounts created “created an opportunity for the traditional full-price players to play in our sandbox a little bit, and it became absolutely competitive,” Thomas said.
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The executive said the company performed strongly throughout the season because of the “value component we have every day.”
Thomas expressed great confidence in the company, saying its value proposition is its “winning agenda,” something that bodes well in the current economy.
Over the years, he said, the off-price industry has outperformed and exceeded expectations “in a volatile environment, especially for consumers.”
Saks Off 5, a discount store in Orlando, Florida. (Jeffrey Greenberg/Educational Images/Universal Images Group via Getty Images/Getty Images)
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Thomas predicted that the first half of 2023 would be more difficult than the second half of the year, suggesting that there was still high inventory and continued promotion in January.
“It’s time for us to tend to be a little more conservative and then pursue the case as we see it,” he said.
Outside Entrance 5 at Saks Fifth Avenue, West Palm Beach, Florida. (Jeff Greenberg/Educational Images/Getty Images/Universal Images Group via Getty Images)
However, not only does the company have the “luxury of being price-sensitive,” but its fast-growing customer base is high-net-worth individuals who are not “price-sensitive,” Thomas said.
Since the pandemic, the company has invested deeply in customer research to better understand and engage with this customer.
“It was this wonderful discovery of a really fast-growing segment of our customer base. And that segment was highly profitable, very fashion-driven, and shopping everywhere,” Thomas said. “It was really important to tell us as an organization, how do we think about our merchandising strategy? How do we think about our marketing strategy? How do we think about our customer experience and our competitive set?”
5th Men’s Suits & Ties Show at Saks Fifth Avenue Off West Palm Beach, Florida. (Educational Images via Jeff Greenberg/Getty Images/Getty Images/Universal Images Group)
The company is really putting “the ammunition and the strategies behind the creation of this customer,” Thomas said.
“I always come back to who your core customer is and you serve them and you win,” Thomas said.
The chain has also invested in technology and created resale partnerships, helping to continue its mission of providing “modern luxury at affordable prices for everyone.”
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According to Thomas, the company launched its first app in 2021 and a loyalty program last year. The company has already registered more than 1.5 million loyalty programs in less than a year.
In recent years, the company has also announced partnerships with major players in resale 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 huge response, saying these partners are a “huge win” for the company.
Thomas expects to have additional resale partners in 2023.