Saks Fifth Avenue Merchandising Essay Example for Free

Saks Fifth Avenue Merchandising Essay 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 that had a good coverage for everyone to produce a really blended customer base. From their findings along the 9-box grid, Saks tailors each of its stores to fit that customer base in that area. Fashion apparel located in their New York location will be different from the products presented in their Indianapolis store. As mentioned earlier, they specifically choose their store locations in their respective markets to target their core customers that value their merchandise. The most important products to evaluate within this grid are Saks’s private labels and exclusive products. These products build a loyal customer base because shoppers cannot find them at any other retail store and improve company profit margins. One of Saks’s private labels is called â€Å"Saks Fifth Avenue Private Collections† where they offer more â€Å"timeless† clothing rather than trendy. Within this collection, they have three distinct lines such as signature, classic, and sports with prices ranging from $98 to $1,000 as stated in the New York Times article. Saks Fifth Avenue’s exclusive products are where they differentiate themselves in the luxury market and remain unique. In their annual report, the company states that they have key relationships with designers like Giorgio Armani, Chanel, Gucci, Prada, and Burberry, among many others. Just recently, they expanded one of their exclusive offerings in the men’s collection with Valentino. At the moment, Saks Fifth Avenue’s presence of private labels and exclusive products in their stores are in the lower teens, but their goal is to reach 20%. Since exclusive products and private labels are so important to Saks merchandising, they promote these brands by in-store displays and catalogue layouts. Within their stores, each mannequin is dressed with only one specific designer. This gives an advantage to the exclusive designer of the featured clothing because a customer might see the entire outfit and want the complete package besides just a blouse. An article within The Wall Street Journal states that within Saks’s holiday catalogue, four out of six items shown are exclusive, so their customers know where to get that exact product. Because of these unique products as well as their 9-box grid strategy, Saks Fifth Avenue has returned from the recession on an â€Å"ok† note, and they continue to improve. In 2010, they began with net sales of $593,145,000 which was a 5% increase since August1, 2009. Their net profit was still in the negative at $32,234,000, but they had an increase of 4. % in their net profit margin. Within 2011, their margins increased even more with a 13% increase in net sales to $670,180,000, and a 4. 2% increase in net profit margin resulting in only having a negative net profit of $8,369,000 as stated in their SEC filings in the 10Q reports. In order to remain successful, Saks Fifth Avenue focuses on offering luxury brands and unique merchandise. With their distinct store locations throughout the country, Saks is able to reach their intended upscale customer and satisfy their needs and wants. By creating value with their products, Saks Fifth Avenue continues to be a lead retail organization.