Retail Management – Written Report
2 November 2011
Saks Fifth Avenue – Merchandising
Saks Fifth Avenue is a lead retail organization offering a wide assortment of luxury fashion apparel, accessories, shoes, jewelry, and cosmetics. Their main target market is the upscale customer that is willing to pay for main designer brands and products such as Louis Vuitton, Ralph Lauren, and many others. Currently, Saks has 46 stores through 22 states that are usually free standing in distinct shopping destinations or anchors in expensive regional malls as quoted from their annual report. Saks primarily focuses on providing luxury brands and unique merchandise to their core customers. Because of the recession, Saks Fifth Avenue changed their methods of merchandising to become more profitable as well as tailor more to their customers but still kept their main focus on luxury and unique brands. In 2009, their net profit margin was a negative 9.7% with their net profit being negative $54,512,000 and starting off net sales as $564,519,000. The CEO of Saks Fifth Avenue, Stephen Sadove, decided that the company needed to pursue an offensive strategy rather than a defensive one. In order to maintain this strategy, Saks implemented a 9-box grid strategy to chart their merchandise for each store.
The 9-box grid strategy helped Saks categorize the best mix of apparel and accessories for the main customers at each of their store locations. There are three price tiers to follow along the grid such as good, better, and best. Each item falls into one of these pricing tiers as well as three general lifestyle categories such as classic, uptown, and contemporary. These specific categories provide Saks with a better understanding of how their products are viewed by their customers as well as how much they are willing to spend on different items. Saks’s Senior Vice President of Marketing and Advertising, Kimberly Grabel, stated that they wanted to implement a strategy...