Buyers need to take more chances
In the years since the Great Recession, we’ve run numerous stories on this site stressing the need for retailers to tightly edit their inventories. I think it’s fair to say that many retailers became more conservative in their approach to buying during that time. One such retailer, according to The Wall Street Journal, is Saks Fifth Avenue, but that appears to be changing now that Marigay McKee, the former chief merchant at Harrods, has taken over as the president of the chain.
Ms. McKee, who once told Women’s Wear Daily that her intent was to leave customers "breathless," has brought that same attitude to Saks.
According to the Journal, she has asked the company’s financial guardian to give buyers more leeway to buy based on "instinct." That means the fall 2014 collection, the first full lineup under Ms. Mckee, will include some new and upcoming designers and a variety of price points including coats up to $20,000. The retailer had concentrated on more lower priced luxury items in recent years.
"Our customers already have everything they really truly need," Ms. McKee told the Journal. "We really have to offer rarer, more unique things."
In a RetailWire poll taken in September of last year when Ms. McKee’s hiring was made public, 75 percent of respondents were somewhat (31 percent) or very (44 percent) optimistic that Saks’ performance would improve under her leadership.
Discussion Questions
What is your view on Marigay McKee’s philosophical approach to buying? Should buyers at retail rely more on their gut when making purchasing decisions? Should the leeway be greater in luxury fashion businesses as opposed to other segments?
I described buying earlier this week as a left brain/right brain profession, even before reading the article about Saks. Being a successful merchant does require a balance between the analytical and the instinctive, and I’m glad to see a fashion-forward retailer like Ms. Mckee shifting the focus back to gut instinct. Merchants need to be on top of the numbers, but not at the risk of “analysis paralysis” when it’s time to make a fast decision.
As retail consolidation has created bigger public companies operating coast-to-coast, there is no doubt that buyers have become more risk-averse. At the same time, many retailers have become overly bureaucratic or top-heavy with “deciders.” Let’s hope that the Saks experiment to provide more balance works, and becomes liberating for other retail organizations.
Interesting. I’ve actually been on a rant about this for a while now.
On the plus side, merchants have finally embraced science as a tool to support their activities. But there’s a negative to it, and Ms. McKee has got it for sure.
In fact, our data showed this to such an extent that we put a caveat in the recommendations section of the report…”Don’t forget about the art of merchandising” You know something is wrong when the next electronic gadget is considered sexier than the new line of clothing.” Or words to that effect.
Good for her! Balance is key.
McKee knows her buyers. Tapping into mindset and innate demand is the name of the game, and she knows it. This is less of a question of “inventory control” and more a question of creating real demand.
I think it’s a lovely and thoughtful approach, assuming she has the right people in her buying organization. That being said, it’s a lot harder to live by your gut when you need to stock a whole chain of stores, whose customers are unlikely to have the same wants/desires. In a world where one size does not fit all, it sure is nice to have some analytics to back up one’s “gut.” I’m guessing she’ll employ both in her bid to make over SFA.
If you want to know about customer behavior through transactions to find patterns and trends, then technology will beat out human instinct every time. Also, if you want to detect broader social trends, technology can help you there as well. But if you want to take these trends to create NEW retail opportunities, then you have to mix the insight from technology (base) with the instincts of a buyer to unleash these ideas. Somewhere in between is where most of the buying happens, a mix of both data and instinct.
Being conservative (or risk-taking) in buying is not restricted to heavy reliance on data, it’s the type of decisions you take given the data and how much weight you give data in that process that define risky business. And by the way, just as they say “no pain, no gain,” there’s also “no risk, no gain.” You just need to understand and be comfortable with your exposure. In the case of Ms. McKee, she clearly is!
In the luxury segment, the rule is not 80/20, it’s more like 95/5 regarding the percentage from which one derives profits. Winning back some of that segment with a strategy that brings in something totally different is a great business strategy.
This move may also be part of the bifurcation of the market around conspicuous consumers and thrifty consumers (think: the recent Cadillac advertisement and Ford’s response) with the swing voters on the Internet (perhaps).
So her philosophy is good business – she could have said “I have asked my buyers to source more locally and become the curators of amazing stuff…” but she said $20K, N’est-ce pas?
I applaud her efforts and think there is room for more buyer creativity. I also know that at the end of each season the sales and clearance racks of high-end fashion stores such as hers are almost always dominated by “imaginative” “risk taking” and “unique” merchandise that missed the boat with customers — not the conservative classics. She needs to proceed with some caution.
Relying on your gut goes against the high tech philosophy that many depend on for decision making. However, sometimes you just have to go with experience, and instinct to make something special happen.
My friend owns a Bridal store, and they go to shows across the country. One year they bought 1,000 prom dresses from a designer that wanted to move out some excess lines, and they ran a great sale, with an event that had food, and extra staff for fitting the dresses, not to mention they were 50% off. In a week they sold out, and saved the young ladies the extra expense of trying to buy a new dress for the prom. I know that this isn’t what the article is about, but it still took some guts to make this deal, and it paid off.
I know absolutely nothing about $20K dresses and coats, but instinct along with technology can work hand in hand to grow your business.
I will return to blogging after a week in Florida. YEAH! Have great weekend!
If this were an exclusive high-end retailer with one of a kind merchandise then I would say go for the gut. Saks is not that! SFA has an entire chain to think about and that demands analysis, to start with.
Yes, I said, to start with. A good merchant will know her customer, but she will also know the numbers. Gut becomes the tie breaker, so to speak.
I think Ms McKee has a great head for merchandising, but I would caution her about thinking that her customer “already has everything they need.” This is SFA we’re talking about and it has long since moved away from the extremely high end. Perhaps certain stores more so than others, but a $20,000 coat? It better be hand made, exclusive and sold in a private room.
That’s my 2 cents.
“We really have to offer rarer, more unique things.” Gee, why didn’t someone think of that before? Oh wait , they already did….countless times. The problem, of course, is to be able to guess correctly, since you’re catering to a fussy demographic that – I imagine – is unforgiving of mistakes. And the people on the other side of the counter – shareholders – who can be even harder to please, need to be forgiving too. Whether or not Ms. McKee’s freewheeling philosophy will stay in favor if Saks ends up with 2 years of unsold $25,000 handbags is perhaps something we’ll find out; I wish her well… that she doesn’t have to.
For Saks, they have to take chances because the luxury market has changed. Instead of chasing LV or Dior, luxury buyers are building their own identity from social and mass media and mixing matching. Here in SF you see quite a bit of the Chanel Bag with H&M dress and Louboutin shoes set. For Saks to stay relevant, they need to find the “take your breath away” luxury from traditional and emerging designers, curate them, and draw the audience in. If they just stick with best selling name-brand items, they are competing against the brand boutiques that are cropping up.
What sells in New York isn’t necessarily what sells in San Francisco. Buyers should
have the latitude to trust their instincts when it comes to appealing to regional customers. However, all purchases should maintain loyalty to the brand.
I think it really comes down to the category and the brand. I don’t think that buying on gut would work very well at Amazon, or most businesses that could rely on data to make better decisions. That said, Saks and Harrod’s serve a clientele that typically is affluent enough to seek out more personalized and extraordinary finds and experiences. Yes, I believe the leeway should be greater in luxury fashion and any high-priced discretionary purchase in which consumers are buying based on want rather than need.
Mrs.McKee is for me, the most representative woman in international fashion business. And her unbelievable and spontaneous charm as per her fantastic and unique capacity and sensibility to manage everything with class and authority. She is the best !
I really think that she is an important manager in contemporary fashion business and a very important support for all the companies that wish to maintain or catch new opportunities in the fashion business of the future!
I wish to Ms. McKee my personal and warmest regards and success!