Saks Bucks Store Brand Trend

Discussion
Jul 13, 2005
George Anderson

By George Anderson


Many retailers are putting greater emphasis on store and/or proprietary brands as a means to differentiate themselves from competitors.


Management at Saks Inc., however, has taken the position that to differentiate it needs to de-emphasize its private labels.


According to a company release, Ronald Frasch, vice chairman and chief merchant of Saks Fifth Avenue Enterprises, said, “The discontinuation of our private label brand is consistent with our merchandising strategy, permitting us to focus our resources on unique, upscale merchandise from our most productive designers.”


“In the future,” he added, “our private label initiatives will be more aligned with this overall vision of the company and will be developed by our internal merchant team in conjunction with our existing trading partners.”


According to a report in the Cincinnati Business Courier, Saks is looking to push name designer fashions such as Chanel, Roberto Cavalli and Valentino to more effectively and directly compete with the likes of Neiman Marcus and Bergdorf Goodman.


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8 Comments on "Saks Bucks Store Brand Trend"


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Ed Dennis
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Ed Dennis
15 years 7 months ago

Saks is merely returning to its roots after a fling at the bar!
Saks’ customers never asked for PL. Some executive hired away from Penneys or Sears put this in place. While quality was good, it wasn’t designer and lacked a certain chic! Saks customers want their experience to be unique. They don’t want to have to rub elbows with commoners when they shop. While these customers are a bit more demanding, they are also fun! Spend you time on the top 5% and let others worry about the hoy-paloy!

David Harter
Guest
David Harter
15 years 7 months ago

Wow. That is definitely different. They have the “luxury” to do this at their high margins. I doubt this will become a trend, it sounds like they are just redefining their PL strategy.

Mark Lilien
Guest
15 years 7 months ago

If dropping the private label gives them greater profitability, why not? I assume they’ve studied the ROI of private label versus name brands. Perhaps their private label offerings just weren’t compelling enough to result in a superior ROI.

Len Lewis
Guest
Len Lewis
15 years 7 months ago

There’s a difference here between private labels and proprietary labels that should be explored. Retailers may be cutting back on products that use their name but not on products available only in their stores. Sears doesn’t sell Sears label clothing but labels like Apostrophe and Essentials which are exclusive to their stores. Along the same lines, Target uses Michael Graves and other designers or strikes a deal with Boots in the UK to sell their cosmetics exclusively at Target stores in the U.S.

Santiago Vega
Guest
Santiago Vega
15 years 7 months ago

This move is actually not too surprising. Saks Fifth Avenue has been seriously falling behind Neiman Marcus and Bergdorf Goodman for years for not adequately transmitting the luxury store environment feel and experience that upper-end customers expect and get at those competing stores.

Saks Fifth Avenue needs to focus its attention on getting those designer-fashion-hungry customers back and the way to do it is by creating unique, and ideally exclusive, alliances with top line designers, not by continuing to push its lower cost private label brand(s) (even if they get higher margins from it).

Art Turock
Guest
Art Turock
15 years 7 months ago

Picking up on points by Len and Santiago… the core issue is creating unique relevance. That is, making your offering relevant to your target customer and unique among competitors… and preferably hard to copy. Private label is only one route to that strategic objective. Proprietary products that are uniquely relevant to a target customer are preferable to a private label that may provide better margins but confuse the Saks brand promise.

Differentiation comes not only from what’s in stock but from what retailers choose not to stock.

Stephan Kouzomis
Guest
Stephan Kouzomis
15 years 7 months ago

As Saks understands its competitive arena. and its value to their many consumers. This strategy is perfect!!!!!!!

Saks took the needed marketing steps to verify its position in the marketplace, and, therefore, protect its brand equity. A lesson for many different retailers.

Warren Thayer
Guest
15 years 7 months ago

To me, it just says that Saks doesn’t understand the potential of a good upscale private label. Sounds like their idea of private label was confined to having a lower-price knock-off of the national brand. Pity. (Full disclosure: my wife shops at Saks.)

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