The turn-around
strategy at Saks Fifth Avenue
appears to be working. According
to their latest operating
results income grew to $32.6
million and comparable store
sales rose a huge 14.4 percent.
Although excitement over top
line growth should be tempered
with caution on the bottom
line because net profits fell
86 percent. Stephen I. Sadove,
Saks chairman and ceo expects
operating margins to be 4%
this year and expressed confidence
in achieving 8% net year.
Even if Saks is successful
in doubling their margins
they are still below the double-digit
margins of competitors like
Nordstrom and Neiman Marcus.
If you are
a vendor to Saks, or want
to be, spend a few moments
looking at the turn-around
strategy they have put in
place and you can find good
insights into how to better
partner with Saks. Here's
what they are publicly disclosing
about their strategy:
- Saks
is working on sharpening
assortments at each door
to better meet local demands.
- Saks
is putting greater attention
on smaller markets like
Raleigh NC, and Birmingham
AL.
- Saks
ncreased inventory by 19%
this quarter.
- Saks
is tailoring assortments
by door through a nine-box
grid strategy, and providing
store level management with
a road map for how to balance
inventories. The nine-box
grid classifies merchandise
along the lifestyles of
classic, modern, or contemporary
and the price points of
good, better, best.
So what
does this mean if you are
a Saks vendor? First, take
note of the focus on door
level planning. Saks will
provide vendors with sales
and activity data at a door
level using EDI 852. You can
read more on Saks web
site. So if you want to
partner with Saks buyers right
now you are most likely to
get their attention if you
are taking to them about specific
doors. If door level planning
makes you head spin go
here for help. Next, notice
the focus on getting the assortment
correct along with the increase
in inventory. It would seem
Saks is willing to bring in
extra inventory if they feel
they have the right color,
size, etc. to get in front
of customer demand. So, if
you are a Saks vendor and
you can create simple and
effective door level assortment
plans using unit sales by
door, and then a stock out
exposure report by door using
units on hand you are going
to be in a great position.
We have seen vendors who align
their reporting strategy to
support retailers business
needs win big.
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