Warning: Having caught so much flack for its unrestrained discounting last year, Saks is hoping to reintroduce a "full-price mentality" among consumers this holiday season. Analysts, however, seriously doubt whether Saks will stick to its guns when its competitors start getting sale-happy.One rival in particular is expected to cause trouble for Saks: "Big bets on holiday inventory by Bloomingdale's will likely force continued discounts through early next year," one source tells The Post. [NY Post]
We, for one, don't think Saks -- or the brands it's trying to appease -- understand just how much the Web is affecting the marketplace. Along with the success of designer discount sites like Gilt.com, specialized e-tailers (most of which we list on the left) are multiplying like mad, and obviously resorting to price-reductions to compete.
I doubt smaller e-tailers are having an impact on Saks. They don't reduce all that much, and when they do it's usually no returns.
ReplyDeleteIn fact, I don't think bargain shopping has changed much in the last fifteen years. The basic deal is this. As brands get larger, they start to sell more and more through discount channels. These include Gilt, Bluefly, factory outlets, 'sample sales' and the sales rack of stores like Saks, Bloomingdale's and Barneys (more and more, these stores, with their end of season sales that seem to last for three months, perhaps followed by a 'warehouse sale' seem to be evolving to a year-long permanent sales rack situation). Paying full price for brands like Steven Alan, Marc by Marc Jacobs, and Trovata at this point is just absurd (don't loose any sleep over their profit margins either; they are undoubtedly making money when they sell stuff '60% off retail'). Eventually, they are selling so much through these channels that the more prestigious boutiques start to drop them.
Saks knows this game perfectly well. I'm sure they have no real plans to try to change it. I think this article is a bunch of nonsense invented to impress Saks investors.
A friend works for a large women's fashion e-tailer. she says her company's actually doing well this year. In bad economy people shop more from home (does that make sense? i am not so clear). Anyhow, the markup is so how she says they still make profit at more than 60% off. While they have to discount everything they're moving a lot of volume.
ReplyDeletebrand management is tough. Saks definitely took a big hit from critics for its sales and deserved it because they were compromising their brand, and were devaluing their brand identity by taking the route their competitors were.
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