Proposed New Strategic Initiative Created by Brynn McKinstry, Ashley Lo & Angela Kastrunes for Non-Traditional Retailing
TABLE OF 2.0
4.0
COMPANY SUMMARY
1.0
EXECUTIVE SUMMARY
6.0
VISUALS
3.0
THE NEW STRATEGIC INITIATIVE
8.0
FINANCIAL PLAN
TARGET CONSUMER
5.0
MARKET ANALYSIS
10.0
7.0
COMM. & PROMO PLANS
APPENDIX
9.0
CONCLUSION
CONTENTS
EXECUTIVE
1.0
Angela, Ashley & Brynn Saks is a high-end retailer who has become
RFID microchips, augmented reality, and GPS tracking
synonymous with fashionable style and elegance. However,
technology to intensify the customer experience. To measure
in recent years they have fallen behind amongst their own
the success of all three initiates, we will be tracking number
sister brand, Off 5th Saks, and the high level of competition
of new accounts, increase in sales, return on inventory, loss
within department stores. We strive to improve their
prevention, use of new initiatives via the app, magazine
current standing by drawing in customers, and resonating
subscribers, and conversion of app users to sales.
with loyal customers through enhancing the current mobile application
This initiative exists to capture the millennial
consumer by increasing the use of technology in the mobile app therefore enhancing the customer experience both in stores and digitally.
This proposal includes three sub-initiatives that tie
into the Saks Fifth Avenue mobile app to incorporate both new and existing technology to strength the customer’s experience and resonate with the millennial generation.
SUMMARY
Technologies implemented in these initiatives include
COMPANY
Saks Today
After only a 15 month tenure with the company, McKee stepped
down and Marc Metrick was appointed as President in April 2015. He
Saks Fifth Avenue first opened on September 15th
has over a 15 year history with Saks leading all the way back to the start
1924 by Horace Saks and Bernard Gimbel in the residential
of his career in 1995 in their Executive Trainee Program. Mr. Metrick
Upper East Fifth Avenue Blocks. Saks was the first specialized retailer to offer the finest quality of men and women’s fashion (Bloomberg). Hudson Bay Company bought out the company for $2.4 billion in late 2013, which added to their portfolio of companies including Lord & Taylor. Former President, Marigay McKee, recently resigned, but her plans included attracting a younger, trendier customer; adding new contemporary designers for her younger target market; and renovating the
2.0
flagship store.
SUMMARY
played an instrumental role in the acquisition of Saks Fifth Avenue and has since focused on developing the strategic plan that it is now successfully pursuing to revitalize the business. That strategy includes elevating the brand experience, substantially building SaksFifthAvenue. com as part of a seamless all-channel offering, strategically expanding the Saks Fifth Avenue store base in both the U.S. and into Canada and the integration of Saks Fifth Avenue into the HBC business to realize over $100 million in synergies. Currently, there are more than 50 Saks Fifth Avenue stores, 50 Saks Off 5th, and saks.com.
Mission Statement To inspire customer confidence and style with every Saks shopping experience in stores, as well as online.
Current Revenue
Ownership
Sales = $3,000
On November 4, 2013, Saks Fifth Avenue incorporated was acquired by
Canada’s Hudson’s Bay Company (HBC), joining a portfolio of iconic brands including department store Lord & Taylor. Richard Baker currently presides as Governor and CEO of Hudson’s Bay Company. The company’s stock is traded on the Toronto Stock Exchange under the symbol “HBC”. Saks Fifth Avenue today is renowned for its superlative selling services and merchandise offerings. The best of European and American designers for men and women are sold throughout its 39 stores, servicing customers in 22 states, five licensed stores in international locations, and saks.com (Saks.com). They also have superstores in about 70 US locations and two in Canada.
Source: Reference USA
In the early 2000’s Saks sales were nearly $6,000 million with a steady consistency until the recession in 2007. Not only the consumers purchasing behavior, but the emergence of fast fashion retailers also effected their business. After the recession sales plateaued, and have been steadily consistent at around $3,000 million since. The Corporate sales volume of Saks Inc., which includes Saks and Off 5th, totals 3,013,593,000.
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Corporate S a l e s . . . $ 3 , 0 1 3 , 59 3 , 0 0 0
Future
Strengths • Well-known/highly respected name
Saks Fifth Avenue is undergoing a three-year, $250 million
• High level of customer loyalty
dollar renovation that will enhance and expand the environments
• Strong multi-channel platform
and services in its flagship New York store (Bobila). The renovation will begin in late 2015 and is anticipated to be complete by mid-2018
Weaknesses
(WGSN). Saks Fifth Avenue President Marc Metrick said, “Today, flagship, we are returning to our heritage of giving our customer unparalleled experiences that place Saks at the intersection of fashion and culture.” (PR Newswire) Saks is also set to open its first shoe-only store format in Greenwich, Connecticut, in autumn 2016. It will be modeled after the Manhattan flagship store that earned its own zip code, and will encompass 14,000 square feet. Across the country, Saks is opening seven stores, including new
Growth
as we re-imagine and redevelop our renowned New York City
• Online customer service is impaired • App is a bit outdated • “Magalogues” could be condensed into one issue
Opportunities • International expansion • Product collaborations • Technological advances
locations in Miami, Houston and Hawaii. Saks is also set to open new locations in Canada and HBC CEO, Jerry Storch, foresees an opportunity in Canada for 7 full price Saks and 25 off-price stores (Wahba). With HBC’s recent acquisition of Germany’s
Threats
Kaufhof an area of opportunity for expansion into Europe (Ho).
• Many strong competitors in desired target market
Plans
• Demand is based off economic state • Competitors are better off in the technology area
Current Positioning
SWOT Saks Fifth Avenue has many strengths and weaknesses
“magalogs” 4 times a year (one for each season). Currently,
as a company. They also have much room to grow. The
they are split up by category. If Saks decided to make their
biggest strength of Saks is being a well known/high-end
“magalogs” interactive, and one powerful book bi-yearly, it
brand. Since they have been a part of the fashion industry
would have a bigger impact within their customer base.
Perceptual Map
quadrant of the perceptual map amongst its top competitors in the high-end department store segment. Since they have roughly 100 stores,
for over 100 years, consumers have continued to purchase from them through brick and mortar stores, as well as
online.
their real estate venture) and open up a wider international
including Off 5th, and are priced on the moderately
Saks has the ability to expand internationally (through
high side they have been placed exclusively in the top right-side of the chart. Bergdorf, Barneys, and
customer base. Since their products sold are parts of
Though Saks has a strong following, they have
fallen a bit behind in regards to technology. Their online
Harrods all only have a handful of distribution
designer collections, they should question collaborating
channels; while Macy’s and Nordstrom have over
with brands, to offer products only sold through Saks.
200 outlets of distribution.
customer service is in need of revamping. On average, it takes a representative about 10 minutes to connect with
you on the customer chat. In the fast-paced world we live in
it harder to excel within their target market. Depending
today, customers are going to become impatient, and shop
on the economic state, customers may or may not have the
elsewhere. Their mobile app is also pretty generic. For a
ability to frivolously shop within a higher-end market.
Saks Fifth Avenue is positioned in the first
Currently, Saks has many competitors, which makes
There is an opportunity for Saks Fifth
Avenue to meet their competitors in terms of promotional activities and the integration of technology to enhance the customer’s overall
brand making over 60% of their retail purchases through
experience both inside and outside the physical
their website, they need to keep their tech-savvy customer
store, which would further set them apart from
interested in their online/mobile shopping. Saks offers
See Appendix
ANALYSIS
their competitors.
in the Market
Top Three
Barneys New York is a luxury specialty retailer well-known
for having the most items from the world’s top designers, including women’s and men’s ready-to-wear, accessories, shoes, jewelry, cosmetics, fragrances, and gifts for the home. Founded in 1923 by Barney Pressman, he opened his first 500-square-foot men’s discount clothing store on Seventh Avenue and 17th Street. Barney’s personal slogan was “No Bunk, No Junk, No Imitations”, which is still used today. Currently Barneys New York has 33 brick and mortar stores in the US in cities including Las Vegas, Boston, Los Angeles, Dallas, and many more. Along with these stores they also handle several CoOp and outlet stores around the States. They take pride in their ad campaigns by hiring the “best of the best” in fashion photography including Juergen Teller, Mario Sorrenti, Bruce Weber, Inez van Lamsweerde and Vinoodh Matadin (Barneys New York Is). Their
Competitors
latest collaboration was a reinterpretation of Santa’s fabled workshop as seen through the eyes of the mega-star, Lady Gaga, her vision takes up the entire fifth floor of the Madison Avenue men’s shop.
Neiman Marcus opened its doors in 1907 in Dallas, TX. The
Bergdorf Goodman is a luxury goods department store based on
company was founded by Herbert Marcus, his sister, Carrie Marcus
Fifth Avenue in Midtown Manhattan in New York City. The company
Neiman, and his brother-in-law, Al Neiman. With over 42 retail stores,
was founded in 1899 by Herman Bergdorf and was later owned and
the company which also owns Bergdorf Goodman offers purchasing
managed by Edwin Goodman, and later his son Andrew Goodman.
option in store, online, and through their catalogue. The Neiman Marcus
Today, Bergdorf operates from two stores situated across the street from
Group direct marketing division, Neiman Marcus Direct, operates
each other at Fifth Avenue between 57th and 58th streets. Bergdorf
catalogue and online operations under the Horchow, Neiman Marcus
Goodman’s main store, which opened at its current location in 1928,
and Bergdorf Goodman names. The Neiman Marcus world famous
is located on the west side of Fifth Avenue. A separate men’s store,
“Christmas Book” first appeared in 1926. Fantasy gifts offered through
established in 1990, is located on the east side of Fifth Avenue, directly
the mail order catalog have included Texas stadium artificial end zone
across the street. They strive to bring their customers the best in style,
turf, a zeppelin, a personalized jetliner, and his-and-hers adult-size robots
service, and modern luxury. Bergdorf Goodman is now owned by the
(Neimanmarcus.com). Through the Neiman Marcus app many enhanced
Neiman Marcus Group and have been considered “sister stores” since
features elevate the users experience such as being able to Facetime an
1972. Providing customers with the most popular name in fashion,
associate or snapping a photo of a pair of shoes you see on the street and
the 190,000 sq ft store is broken up into 7 floors giving individuals
the image recognition will detect a similar shoe or handbag within their
the chance to shop anywhere from sneakers to couture (About Bg at
Neiman Marcus database.
Bergdorf Goodman).
Current Placement High-end retailer
Current Communication & Promotional activities
Many upscale brands are no longer exclusive to the
excessively wealthy, and management consulting firm Bain and Co. estimates that spending on personal luxury goods in the U.S. rose a steady
5% last year to about $73 billion.
(THE LUXURY RETAIL LANDSCAPE REPORT)
Distribution # of POS: 40 full pricr, 50 Saks Off 5th, Saks.com, and catalog
and United Arab Emirates through licensed stores. Saks also operates two leased distribution centers, located in Maryland
Sales volume distribution by channel: Corporate
and California. The Maryland distribution center covers a floor
Sales Volume of 3,013,593,000 for Saks Inc (including
space of 471,000 square feet and serves the operations of SFA,
Off 5th) 72% of HBC’s overall e-commerce sales are done by
OFF 5th and Saks Direct. The other distribution center, located
Saks, which equates to $660 million of the $900 million sales).
at California covers a floor space of 120,000 square feet and
Through their retail stores, however, they only comprised 36%
serves SFA and OFF 5th operations. Hudson Bay (the parent
of Hudson’s Bay Company sales.
company of Saks) is currently taking part in a joint venture with a real estate company in the US (Simon Property Group) and
Distribution models if applicable (licenses, franchises,
one in Canada (RioCan REIT). This joint venture will allow
joint ventures etc.): Saks operates in the US through
Saks to build a strong retail business, as well as gain a strong
company-owned stores and operates in Mexico, Saudi Arabia
real estate portfolio
Currently, Saks spends over 250,000 separately
for telecommunications and advertising alone. This large budget allows for them to create a great deal of well curated promotional activities across multiple channels. Online, print, social media, and mobile are all outlets that Saks Fifth Avenue uses to both advertise and inspire conversation between them and their customers. Through e-commerce and m-commerce platforms you are able to view their current “magalogs.” They recently teamed up with the Fox series, Empire, to bring clothing worn on broadcast TV’s top drama to stores and online. They also encourage their customers to share their #SaksStyle by posting the hash-tag on an image of them in their Saks duds. A sense of community is created through this content hub that streamlines social media interactions with consumers. The hub is updated daily, filtered by product category, and looks are directly shoppable through product links.
#SaksStyle
Current CRM Activities
Saks Fifth Avenue is committed to
accelerators built into each graduated
serving their customers 24/7. Whether
tier. This program is composed of four
you choose to reach them via telephone,
tiers: Premier, Elite, Platinum, and
email, chat, or through one of their
Diamond. You are able to earn points
personal stylists Saks cares about their
at the Saks Fifth Avenue, Off Fifth Saks,
customers, and wants them to be able
Saks.com, and Saksoff5th.com. SaksFirst
to reach them at their convenience.
members also have the added benefit of
However, Saks could improve their
special SaksFirst Consultants which are
current means of communication by
exclusively to these loyal customers. With
improving the response time on a question
a dedicated Customer Service team on
or concern from the customer. They also
staff 24/7 any consumer interested is able
could rise to meet their competitors by
to contact a sales associate at any point
making their chat live with the option
in time through the chat service provided
to video call a sales associate directly, or
through the website. A complimentary
simply contact a representative through
Personal Stylist service is also available
their app.
to any customer in the store or online,
which can be contacted via email or
phone, to meet your specific needs (Saks.
To reinforce their loyalty Saks
offers a program, SaksFirst, which is
com).
an exclusive rewards program with
multiple tiers of earning, with earning
THE NEW
3.0 INITIATIVE
INITIATIVE A RFID Chips in Garments
The key objective of our first initiative is to enhance the post purchase experience
of buying a valuable, expensive item from Saks by giving customers the service of always being able to readily keep track of their item. This will build brand loyalty and strengthen the relationship between the brand and these high end consumers who expect a certain level of service. An RFID microchip will be the technology that is integrated into the inside tag of the garment to allow not only allow Saks greater inventory visibility, but to enhance and improve the shoppers experience. RFID tags are made up of an antennae, database, and microchip. They contain all the standard information that would be found on a bar-code, as well as a number to identify the manufacturer and a number to give the garment its unique ID. Most new RFID tags even utilize Bluetooth technology. The customer can fully rely on Saks to take care of them if items are stolen or misplaced. It gives an extra layer of customer service in a way to enhance their brand experience/relationship and retain customers continuously. It requires an extensive database of information to retain all of this information from customer’s accounts to their products they purchased and the GPS microchip information. All can be accessed and edited by the customer on their Saks account where they can personally track their items at the convenience of the customer via an app and online account.
A similar pilot program at American Apparel Inc. in 2007 found that stores with RFID technology saw sales rise 14.3%
compared to stores without the technology, according to Avery Dennison Corp., a maker of RFID equipment. Avery Dennison is involved in 80% of the pilots and roll-outs of RFID, and when retailers trial the system, they’re often very surprised at just how inaccurate their existing data is. Just 2.5% of products are currently tagged at retail, but retailers are reporting positive ROI on their investments to date. This, along with a lower cost of entry, is prompting higher adoption across the industry. Industry experts expect that 90-95% of product will be RFID-tagged within five years.
The textile brand label is sewn onto the garment, bag or accessory early on and stays with it throughout its life cycle.
With RFID built-in the label will provide added value from garment manufacturing through logistics to sales and after-sales management. Since it is sewn-on, the RFID label cannot fall off and deters unauthorized removal. RFID in the brand label allows for cost reductions along the entire value chain, incremental sales and higher margins as well as increased customer satisfaction. The physically attached active RFID tag also makes it possible to use the location-aware Cisco UWN to track assets with integrated WiFi client radios when those radios are powered off. Real-time traceability delivers more accurate and timely billing, and enhances customer satisfaction. The patented design securely positions the inner chip relative to the antenna, which guarantees consistent performance over the life of the tag. Encased in highly durable cotton-polyester fabric, LinTag units allow inconspicuous RFID tag placement into textiles.
In addition to tag and reader costs, Saks might need to purchase middle-ware to filter the RFID data. They will likely need
to hire a systems integrator and upgrade enterprise applications, such as warehouse management systems. They might also need to upgrade networks within facilities, and they will need to pay for the installation of the readers. Not only do the readers need to be mounted, they need electrical power and to be connected to the corporate network. All of these factors are different for each deployment, depending on the application, the environment and so on.
INITIATIVE B Magazine re-vamp
Our second initiative will enhance the existing Saks Magazine to push it to
the forefront of technology in the retail space. To interact with the customer in a new and technologically advanced way, the customer is engaging on a new level. By bringing back the magazine with printed content that integrates augmented reality, exclusive content is shown to the loyal members who subscribe to the magazine. Augmented reality (AR) is a live direct or indirect view of a physical, real-world environment whose elements are supplemented by computer-generated sensory input such as sound, video, graphics or GPS data. Augment is the leading innovator in augmented reality print integration. Currently, the company charges $1000 per ad campaign. We will be including one interactive spread per product category, which will feature 5 product categories. With this being said, we will be paying $5000 per issue/$10,000 per year since we will only be creating 2 issues per year. The Augment brand transforms any 2D print material with 3D models that any consumer can scan using the free Saks app, which will bring up exclusive content about the item. Tracking analytics are also provided free of charge to view the progress/sales made from each Augmented reality campaign. This will allow for Saks to then track the success of the interactive content, assess the usage, and then decide whether or not it is worth their investment to continue with this style of marketing.
This further strengthens the brand loyalty and
relationship between Saks and the customer. It also creates a way to promote the subscription of the physical catalog on the web and app and gives loyal customers who are subscribers the exclusive opportunity to connect with the brand in a higher level. The app allows you to keep a basket/ cart and check out straight from the magazine. Instead of being a free magalog (like it currently is marketed), we are proposing a new quarterly magazine that is digitally enhanced and interacts with the customer (for a fee = profit). We will also be centralizing the magazine down into one cohesive magazine that showcases all of the items into one physical publication, instead of multiple separate entities.
INITIATIVE C Enhanced Shopping Experience
Initiative C will consist of innovative SPREO technology into the NYC flagship
store in order to create an enhanced in-store experience by directing clients straight to their destination department, introducing Saks Fifth Avenue as a lifestyle brand by incorporating audio into the shopping experience, and enhancing the ease of transaction by being able to call sales associates to help and check out clients in their exact location. These features are intended to enhance the brick and mortar store in a new and digital way that creates an easy, entertaining, and direct shopping experience.
The objective of this initiative is to enhance the customer experience in stores to
drive sales, establish a closer relationship with the customer, and to create a stronger bond between the brand and its loyal customers. This will benefit the company’s image, the relationship with their customers, the experience within their stores, and their future sales. The two technologies implemented in this initiative are SPREO technology and a collaboration with Pandora. These will both be introduced as new features in the Saks mobile app.
The retail industry has been working hard to amp the brick and mortar shopping
experience compete with online sales. Building on this, the enhanced experience in stores will enable the Saks Fifth Avenue flagship store to compete with the easy transitions of our digital competitors.
Incorporating music to develop a lifestyle brand image is a trend that goes
deep into psychological studies of consumer behavior. With the additional feature of audio on the Saks mobile app, the customer can listen to music while shopping in the store and see suggested playlists catering to the department that the customer is in.
The modern day shopper wants to connect with the brand in a physical
setting that goes beyond traditional shopping. They want to know the brand, have the brand tell them a story and have values and a personality. Incorporating audio to connect with the consumer would do just that. A collaboration with Pandora would suggest brand aligned playlists depending on the department they are going to. If the customer desires otherwise, they can use the app to pick their own desired station. The modern day shopper also does not have the time to waste in large department stores. They don’t have time to get lost or spend time looking for sales associates to service them. They have a desired department and want to get to it as easy and quick as possible. Department stores used to be a day long trip. With SPREO technology in this app to direct the customer to his/her desired location, there will be little time wasted. To have the sales associate know the coordinates of the customer, the experience caters more directly to the customer. This way, he/she will be able to go directly to the department, call associates when needing assistance, and can check out at the convenience of his/her location.
Long term benefits of these new aspects of the mobile app would be an
increase in sales, increase in foot traffic, increase of returning customers, and an increase in loyal customers.
OPERATIONAL TASKS
January
INITIATIVE A 06/15-06/16
February
March
launch
April
May
June
July
August
September
post-launch
October
November
December
pre-launch
Buy RFID tags Send to manufacturers Develop portion in app
The vendor that holds the locator technology is SPREO.
sales associate call button, all sales associates will need to have
Set up database
SPREO uses Bluetooth Low Energy Beacons, Wi-Fi, GPS and
a mobile device which they can receive calls from customers
Receive tagged products
other technologies to successfully track and monitor customers
and have the means of checking customers out at the customer’s
Data Analysis/Post Behavior
within a venue. For the music playing feature, Saks will have a
location. Training for this new operation will need to take place.
Obtain AR software
collaboration powered by Pandora. Pandora analyzes musical
The music playing technology powered by Pandora has to be
structures within a song to identify key traits and indicators that
added as a new feature to the existing mobile app.
then play similar songs that present the same musical traits.
Link chips to products Put on sales floor Purchase
prelaunch
INITIATIVE B 01/16-12/16
launch
post launch
Meet w/ saks editorial team Propose content for magazine Create content for magazine Send to printers Create AR shopping tab to app Headquarter receives magazines Send magazines to subscribers Track number of subscribers
The installation of SPREO’s technology into the NYC
flagship store is one of the operational considerations of this feature for the app. Mapping out the store, content management and the implementation into the existing mobile app are other steps needed to take place to implement this initiative. With the
INITIATIVE C 10/15-09/16
prelaunch
launch
post launch
pre launch
Order devices for associates Distribute them Train sales associates Contract Pandora Develop music tab on app Select playlists for each department Map out all stores and their departments Develop software to keep active location information Launch initiative Analyze account member sign ups Collect feedback from sales associates Launch a questionnaire to get feedback from customers
PLAN
Initiative A RFID Chip
Embedded into
4.0 VISUALIZATIONS
tag
After bar-code is scanned and purchased SaksFirst customers are able to track their garments online immediately and remotely in real-time
Initiative A
Initiative B
Initiative B
Initiative B
Initiative C
MARKET
7.0 ANALYSIS
In the last five years, department stores as a whole made
RFID Chips in other brands:
about $164 billion a year in sales. This is a 4.5% decrease
Walmart: Walmart introduced the use of RFID chips into
from 2005-2010. This has to do with the accelerated growth
their highest selling cosmetic line Origins. These chips were
of e-commerce retailers. Currently, there are 68 department
inserted to decrease the amount of theft within their stores.
stores within the United States. With our proposed initiatives,
Platinum Pets: This pet accessory brand has invented
we hope to bring the customers back into our store, while
an RFID chipped collar for cats and dogs. Though micro-
getting to experience advanced technology.
chipping your pet is an option, this collar allows you to track the whereabouts of your furry friend on the brand’s
Other retailers already employing this type of initiative...
exclusive app.
Augmented reality in other brands:
introduced RFID chipped school ids to all of their student.
Absolut Vodka: When scanning a label through their
This enables the school officials to track students when
exclusive app, it takes you on a virtual trip to Sweden. This
missing/late for class.
trip includes all of the most popular destinations, as well as
SPREO technology: (Currently not being used since it is
facts about the country. The technology allows for a 360
so new)
degree view just by tilting your app. Starbucks: Last year, Starbucks introduced a holiday red cup app. This app allowed customers to view animated characters sledding and dancing around the cup. Nivea: In 2012, Nivea crème purchasers were able to log onto the website, scan their jar, and receive an exclusive performance of a Rihanna music video.
RFID School Ids: Two public schools in San Antonio, TX
Our top three competitors (Barneys, Neiman, and
Macy’s stores offer a “page for assistance” button, but the
Bergdorf) could essentially incorporate these initiatives into
main problem is actually finding it or a sales associate. Initiative
their business. However, if Saks were the first to implement
C incorporates a virtual button within the app to give directions
these proposals to their retail experience, we believe the
to certain departments, which will eliminate that issue for good.
customer would continue to purchase from our store. We gained inspiration for the RFID chipped garments from the Tiffany and Co. campaign ‘Please Return to Tiffany and Co.’ These pieces of jewelry included an engraved number so if lost, essentially someone would return the piece to their local Tiffany store, and the sales associates could reunite the customer with their beloved piece.
Catalogs were the second most popular way to shop about
20 years ago. Though many retailers still offer this feature, not many take advantage of it. We were inspired how the Neiman Marcus customer still buzzes over one of their yearly catalogs. Every year, Neiman Marcus publishes the Christmas Book. This catalog includes elaborate gifts ranging from $50-$500,000. Basically, we want to bring the love for catalogue shopping back into the customer’s lives, without being a boring printed book.
TARGET
It is increasingly difficult to know who the Saks shopper is.
Saks’ wealthy clientele seems to be prospering, as wealth becomes increasingly concentrated at the top and foreign money pours into major American cities. But the luxury consumer is changing. The typical shopper today is rarely loyal to any particular store
7.0
and hunts for value on favorite name brands, often mixing “high” and “low” labels. Harried consumers also look for efficiency. And both e-commerce and m-commerce is altering the way these customers actually shop. The consulting firm McKinsey & Company estimates that e-commerce already accounts for about 4 percent of luxury sales, and is growing more than three times as fast as the wider luxury industry.
About 92% of Millennials own a smartphone, compared
with 76% of Baby Boomers. Because technology is an integral part of their lives, it’s a key component of their shopping experience. Roughly 19% of Millennials and 31% of upscale Millennials spent over $1,000 online in the past year.
CONSUMER
Gina Miller Age: 64 Location: Bal Harbour, Florida Education: Graduate Occupation: Retired Status: Married Household Income: $220,000 VALS Profile: Believer Social Group: Conservative Classics Lifestage Group: Affluent Empty Nest Favorite Brands: Ralph Lauren, Calvin Klein, Donna Karen, & Eileen Fischer. Hobbies: Chairing Junior League events, tea outings with friends, spending time playing tennis/golf at the local country club. Believes in: Investing money into timeless pieces. Has been a loyal Saks customer for over 40 years. Views on Technology: Loves impressing her children/grandchildren with the latest technology. She also loves being the first to show her friends new technological advances.
Lydia Loeffler Age: 45 Location: New York, NY Education: Graduate Plus Occupation: Senior Account Manager at a PR firm Status: Single Salary: $110,000 VALS Profile: Analyst Social Group: Elite Suburbs Lifestage Group: Midlife Success Favorite Brands: Monique Lhuillier, Celine, Lane Bryant, Saint Laurent & Cartier Hobbies: Reading the New York Times, Women’s Wear Daily, and Business of Fashion. She partakes in retail therapy and has a fetish for designer shoes. Lydia has brunch with her group of friends and grabs cocktails after a long day of work. Believes in: Time is money, Stresses her appearance Views on Technology: “Technology has provided us a platform to connect, inspire and present our lives to the public for others to see. Not only has it changed the fashion industry, but celebrities and fashion houses are now able to connect with their audience in an evermore personal manner.”
Age: 25 Location: Chicago, Illinois Education: Graduate Plus Occupation: Status: Single Salary: $85,000 VALS Profile: Thinker Social Group: Urban Uptown Lifestage Group: Young Achievers Favorite Brands: Rebecca Minkoff, Chloe, Valentino, Elizabeth & James, Altuzarra, & Chanel. Hobbies: Watching foreign films, Traveling to Asia on holiday, Frequenting the arts, Fitness Boot-camp classes Believes in: Quality over quantity, Invests in statement pieces, Mindful of her purchases, Researches before. Views on Technology: Tech-savvy, Early adopter who likes to have the latest among new devices and gadgets on the market.
7.0
COMM. & PROMO PLAN
Alessa Faverio
Saks Night Out
To promote the new features of the Saks mobile app and
the revamped magazine launching in September, Saks Fifth Avenue’s flagship store will be hosting a Saks Night Out event. During fashion week in NYC, this event will leverage itself on the hype of fashion during this time and invite all influential fashion figures and celebrities to partake in this event. It will serve as a fashion week after party where guests utilize the open bar and participate in a scavenger hunt using the mobile app’s new features. Top tier SaksFirst Diamond members are also invited to this party.
The department locating feature will direct the guests to
clues through the department store’s 10 floors. Clues can be products, framed pictures, posted quotes, etc. Once the guest finds the clue, he/she will over the app’s augmented reality feature over the clue and the next clue will appear on their screens. Guests who complete the entire challenge and collect all clues will be lead to a prize product that becomes their first RFID tagged purchase from Saks Fifth Avenue. The game will be fun, interactive, and explore the new features of the mobile app. Initiative A Pre-launch: The pre-launch will be from July 2015-January 2016, and consist of purchasing the RFID tags, and integrating
them into the products themselves. Sensors will also need to
team will entail laying out the magazine/catalog hybrid into
TRACK NUMBER OF SUBSCRIBERS: During the
associates via the locator so that associates know where to go
be set up throughout the store to read the information being
one cohesive editorial-styled layout.
three months of Post-launch, the analytic team from Augment
to assist customers. The pre-launch phase initiates the use of
transmitted by the chips. Sales associates will also recieve RFID
will sent statistics to the IT team of Saks to go over sales made
mobile technology for associates to receive the data of customers
scanners which will be able to scan in an entire order at once
editorial team will meet with the top executives of Saks to talk
from augmented reality tab in the app.
calling for help as well as the ability to check out clients on
or see what exactly needs to be replenished on the salesfloor.
about which products they think would do well if advertised
Launch: The launch will take place in September 2016. This
the floor. This requires the purchase of mobile devices for each
Also the portion within the app, which will use GPS capabilities
with augmented reality promotions.
is a strategic timeline that overlaps with Fashion Week.
sales associate that has the capability to complete purchases and
to track the garments after purchase will need to be developed
Post-launch: The post-launch phase will be from September
receive client locations. Training the sales associates to use this
along with the set-up of the comprehensive database that will
editorial team will create content for both spring and summer.
2016- December 2016. This three month phase will be a
new feature will also take place during this 7 month stage.
hold each SaksFirst customer’s buying history.
After that, they will meet with the team members at Augment
short term stage of reviews, collecting data and usage, and
Launch: All of the RFID tagged products will be placed on the
to show which products/pages they want to feature augmented
calculating the progress of increase of expected sales.
Fifth Avenue will have to contract a deal for the mobile app
floor in February 2016, along with the addition of that postion
reality.
of the app launching then as well.
Post-Launch: This is the most important part of the initiative since it is all about post-purchase behavior and interaction.
PROPOSE CONTENT FOR MAGAZINE: The
CREATE CONTENT FOR MAGAZINE: The
PANDORA COLLABORATION: Pandora and Saks
to play music powered by Pandora. The interface of this new Initiative C
feature needs to be developed and perfected before launching.
magazine will be sent to the printers. No special printing will
Pre-launch: The pre-launch phase will be from October
Departments will be assigned specific, Saks Fifth Avenue
have to take place since the augmented reality will be able to
2015-April 016. This 7 month phase will consist of all the
aesthetic playlists to recommend to customers in stores.
sense which images have exclusive content.
necessary preparation for the implementation of Initiative C’s
Launch: The launch phase will be from May 2016. This is a
new mobile app features.
strategic timeline where clients will be preparing to shop for
SEND TO PRINTERS: The final mock-ups of the
CREATE AR SHOPPING TAB TO APP: Working
Initiative B
Pre-launch: The pre-launch will begin in January 2016 and
closely with Augment, the Saks app developers will work with
ends in September 2016. This nine month phase will consist
Augment to create the specific augmented reality magazine tab
a contract to be signed between Saks Fifth Avenue and SPREO
wardrobe.
of all the necessary preparations
for the app.
to develop, install, and manage the store mapping and customer
Post-launch: The post-launch phase will be from June 2016-
MAGAZINES:
locating for the mobile app. The technology’s hardware has to be
September 2016. This four month phase will be a short term
Saks distribution centers will receive magazines. They will be
installed into the store and tested for accuracy before launching
stage of reviews, collecting data and usage, and calculating the
augmented reality company, we decided to work with Augment
responsible to check for defects in magazine.
this feature. SPREO will also provide the service of managing
progress of increase of expected sales.
since they are the leading innovator in augmented reality within
print ads.
magazines are approved to sending, the distribution centers will
Meet w/ Saks editorial team: The meeting with the editorial
send magazines to the subscribers.
feature to work, SPREO will connect customers in need and
for the implementation of
Initiative B’s new mobile app features.
OBTAIN AR SOFTWARE: After meeting with many
HEADQUARTER
RECEIVES
SEND MAGAZINES TO SUBSCRIBERS: When all
LOCATOR FEATURE: The prelaunch phase requires
the constantly changing departments and store visuals. ASSOCIATE CALL FEATURE: In order for this
the summer months, change in temperature, and vacation
FINANCIAL
With these new initiatives into the Saks mobile app,
we expect a 10% increase in sales one year after the launch
SPREO technology: $12,000+ including installation and
of each initiative. Increase customer loyalty, new customer
content management for 1 year.
acquisition, and a more seamless shopping experience in stores
Pandora Collaboration: $3,500 including initial setup free
will all contribute to the increase in sales and clients in brick and mortar stores. At the same time, the augmented reality magazine is directly shoppable so an increase in online/mobile
8.0
sales are also expected. Initiative A RFID Chips: about $1/ chip, integrated into all products within just the flagship store to roll out. This would be an estimate of about $10,000. Total costs to implement, including sensors used in stores and RFID scannners for associates would be about $200,000. Initiative B Augmented reality: about $1000 per campaign. Since our new Saks catalogue will include all 5 main product categories,
PLAN
Initiative C
we will do one for each, costing us $5000 per issue ($10000 per year).
CONCLUSION After a complete industry and market analysis, we have developed a plan to successfully redesign the Saks mobile app, to enhance the customer’s shopping experience. Through the use of Augmented Reality, RFID Chips, and SPREO technology. Saks unique app with be the first of its kind. The
9.0
fact that we are such a heavily penetrated market with many department store competitors, we believe the implementation of this technology will give Saks Fifth Avenue the competitive advantage we need in order to continue to be a top retailer.
APPENDIX
10.0
Table 1
Annual Spending Accounting
Over $25,000
Advertising
Over $250,000
Contract Labor
$100,000 to 250,000
Insurance
Over $100,000
Legal
Over $25,000
Management/ Admin
Over $100,000
Office Equipment
Over $25,000
Package/Container
Over $50,000
Payroll & Benefits
Over $10 million
Purchased Print
Over $25,000
Rent & Leasing
Over $500,000
Technology
Over $50,000
Telecommunications
Over $250,000
Utilities
Over $100,000
Nordstrom, Inc. is a leading fashion specialty retailer offering compelling clothing, shoes and accessories for men, women and children since 1901. Currently, Nordstrom has 323 stores in 39 states and Canada. There are 121 full-line stores in the U.S. and Canada, 194 Nordstrom Rack locations, five Trunk Club clubhouses (a personalized styling service) two Jeffrey boutiques and one clearance store. Nordstrom.com ships to customers in 96 different countries. Their products are also available through nordstromrack.com site, which operates in partnership with private sale site HauteLook, which gives customers access to offprice fashion at considerable savings (Nordstrom.com). Lord & Taylor is headquartered in New York City, and is the oldest luxury department store in North America opening in 1826. It is a subsidiary of the oldest commercial corporation in North America, the Hudson’s Bay Company, which also owns Saks Fifth Avenue. They were the first retailer with the vision to move to Fifth Avenue, and the first to install an elevator. Moreover, Lord & Taylor was the first to open a branch store, the first to develop the concept of offering personal shopping services and the first to create Christmas windows for pure delight rather than selling merchandise, a tradition that continues today (About Us). Lord & Taylor consists of 50 retail stores and 4 L&T outlets (Lordandtaylor.com). Starting out as a small, fancy dry goods store that opened on 14th street and 6th avenue in New York City in 1858, Macy’s has grown to be one of the largest department store retailers in the world. Macy’s offers clothing to fit any type of budget. Macy’s has become an essential part of American culture by hosting the annual Macy’s Thanksgiving Day Parade and the Macy’s 4th of July Fireworks display. Macy’s currently serves customers through approximately 800 stores in every geographic market in the U.S. as well as the macys.com website (Macy’s Milestones). An American chain of luxury department stores owned by Macy’s Inc. Brothers Joseph and Lyman G. Bloomingdale founded Bloomingdale’s in 1861, when they began selling hoop skirts in their Ladies Notions’ Shop on Manhattan’s Lower East Side. In 1872, the Bloomingdale brothers opened their first store at 938 Third Avenue, New York City. They currently operate 37 department stores across the nation (Bloomingdales.com).
Perceptual Map Analysis
Henri Willis Bendel moved to New York to work as a milliner opening his own shop in Greenwich Village in 1895. He soon became a beacon of luxury to the city’s elite members. In 1907, Henri made his mark both literally and figuratively by becoming the first retailer to brand themselves, and created the iconic brown and white striped shopping bag and hat box we recognize today. A true pioneer, Bendel was the first luxury retailer with an upper Fifth Avenue address, the first to hold a semi-annual sale, the first to offer in-store makeovers, and the first to stage a fashion show. He was also responsible for bringing Coco Chanel to the United States. The company recently stopped selling clothes (including third party merchandise) to focus solely on their in-house beauty and accessories lines which make up the core products of the brand. Bendel is currently owned by parent company Limited Brand (Henribendel.com). Harrods is an upmarket department store located in Chelsea, London. The landmark Knightsbridge one-million-square-foot store is one of London’s biggest attractions, with seven floors and more than 330 departments, including the famous Food Hall, about 30 restaurants and bars, a beauty salon, pet spa, and a bank. Harrods has leveraged its name worldwide, opening signature shops in airports and department stores in Asia and Europe. Group holdings include a bank, real estate sales, property management, and aviation companies. Founded in 1849 and formerly owned by Egyptian-born billionaire Mohamed alFayed, Harrods now belongs to Qatar Holdings (Harrods.com).
BERGDORF GOODMAN: 2 brick-and-mortar store in NYC, Bergdorfgoodman.com; Associated with the Upper East Side elite group BARNEYS NEW YORK: 33 stores, Barneys.com. Pricing is relatively expensive compared to their competitors. HARRODS: 1 physical store in London, Harrods.com. The price level of most products is quite high since the target market is the upper class. All the prices shown on the online stores are inclusive of Value Added Tax (V.A.T). SAKS FIFTH AVENUE: 40 full price stores, 50 Saks Off 5th, and Saks.com; Offer competitive pricing while still offering the most sought after designer products NEIMAN MARCUS: 41 full price stores; 36 Last Call stores, 12 Last Call Studios, and Neimanmarcus.com BLOOMINGDALE’S: 37 full price stores, 12 outlet stores, Operate under a lease agreement in Dubai, and Bloomingdales.com. They tend to be more expensive than their competitors when comparing identical products. HENRI BENDEL: 29 stores; Henribendel.com; Also sell through third party websites such as Lyst and Polyvore; No longer sell clothing. Offer a much more affordable price point when comparing similar products to competitors. LORD & TAYLOR: 50 stores; 4 of which are outlets, Lordandtaylor.com; Pricing is relatively low in comparison. NORDSTROM: 310 stores, Nordstrom.com. Not as high end as Saks, but nor are they a discount department store either. Their prices are mostly moderate with some higher end prices for their designer goods. MACY’S: 800 stores in every geographic market in the U.S. as well as the Macys.com website; Lowest pricing amongst the department stores
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Brynn McKinstry Ashley Lo Angela Kastrunes