Saks Off 5th, which focuses on providing luxury goods at accessible prices, faced stiff competition this past holiday season due to an influx of promotions from full-price retailers.
During a keynote session at NRF 2023: The Big Retail Show in New York City on Sunday, CEO Paige Thomas, who took over just before the country’s pandemic in 2020, said the 2022 holiday season was the “most promotional” for her. than ever before, which was attributed to higher inventory levels.
From a purchasing perspective, higher inventory levels ultimately play in the company’s favor because it typically creates an “incredible environment” for purchasing teams to choose “the best of the best,” Thomas said.
However, during the holiday fueled by write-downs, “it created an opportunity for traditional full-price players to play in our sandbox a little bit, and so that became quite competitive,” said Thomas.
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The CEO said the company continues to see strong performance throughout the season because of the “value component we enjoy 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, she said, the non-price industry has outperformed and even exceeded expectations “in a volatile environment, especially for consumers.”
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Thomas predicted that the first half of 2023 will be more difficult compared to the second half of the year, indicating that there are still high inventories and ongoing promotions in the January time period.
“It’s time for us to be a little more conservative and then chase the business as we see it,” she said.
However, not only does the company have “the luxury to rely on price,” but its fast-growing customer base is a higher-income individual, who is not “price-sensitive,” Thomas said.
Since the pandemic, the company has invested deeply in customer research to better understand and engage with that customer.
“We had this kind of great find for a really fast-growing segment within our client base. And that segment was high-income, fashion-driven and shop-everywhere,” said Thomas. “It really gave us a starting point as an organization to say, How do we think about our marketing strategy? How do we think about our marketing strategy? How do we think about our customer experience and our competitive group?”
The company really put “the ammunition and strategies behind building this client,” said Thomas.
“I always go back and serve your core customer, and you win,” said Thomas.
The chain has also invested in technology and forged partnerships in the resale space, helping further its mission of providing “modern luxury at an affordable price.”
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The company also launched its first app in 2021, and a loyalty program last year, both of which had already high engagement, according to Thomas. The company has already garnered more than 1.5 million registrants to its loyalty program in less than a year.
In recent years, the company has also announced partnerships with major 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 noted a great response, saying that these partners have been a “huge win” for the company.
Thomas expects to have additional reseller partners in 2023.
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