Keynote presentations on the first day of NRF 2023: Retail’s Big Show included a conversation between Paige Thomas, president and CEO of Saks OFF 5TH, and CNBC reporter Melissa Repko. The session, “Off-price luxury writes path to success in uncertain times,” explored the importance of two vital retail capabilities: understanding the customer and understanding your own business.
“It’s been a wild ride these past few years and we’ve been devoting a lot of energy to monitoring our customers,” Thomas said. “At Saks OFF 5TH, our value proposition is our winning agenda. As we saw in the holiday season, and as we’ve seen on an ongoing basis, it really is about great brands at incredible prices.”
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“What are your main takeaways from the holiday season,” Repko asked, “and what do you think that tells us about 2023?”
“As we came into the holiday season,” Thomas said, “we realized that the events of the early part of the year, and the drop-off, were very real. And that the customer’s wallet was definitely facing some pressure, so the need to stay focused on the value equation in the market was also very real.”
Noting the unusually large amount of total inventory retailers carried into the end of the year, Thomas said, “Over the last goodly number of end-of-the-year seasons, 2022 was the most promotional I have ever seen. That was directly attributable to the amount of inventory, and it created opportunity for traditional full-price retailers. And that was right in our sandbox, and it played very well for us.
“We buy the best of the best, and we don’t have to over-commit. So, rather than having to base what we do on possible consumer behavior 10 months in advance, we can monitor consumer behavior and respond to it in a much more agile, in-season way.”
Asked how her company predicts consumer demand, Thomas said, “From a digital-first perspective, the consumer gives us an incredible amount of data through search. But the greatest strength and differentiation we have is really our buying model, where we can see what’s happening and make a decision for next month or next quarter.”
The luggage business is an example of this sort of agility. Early in the pandemic, Thomas pointed out, when Zoom meetings started replacing both business travel and going to the office, the luggage business all but stopped. “You talk about a crashing category,” she said. “Nobody was going anywhere. And as quickly as it dropped, it came back.”
Thomas joined Saks OFF 5TH in February of 2020, essentially one month before the world was upended by the pandemic. “It gave us a chance to make some bold changes and actually adjust the way we were thinking,” she said. “The first thing that we focused on was the customer. We did some research that had not been done in nearly three years.”
"The customer really loves the online business. While our store business is growing as well, we have a line of sight that our e-business will be larger."
As the team researched, it discovered a previously undifferentiated — and quickly growing — segment within the customer base. “She’s a high earner, very fashion-driven, who shops everywhere,” Thomas said. “It really gave us a bull’s eye, to say, how do we think about our merchandising strategy, how do we think about our customer experience and our competitive set?”
Noting Saks OFF 5TH’s identification with bricks-and-mortar retailing, Repko asked, “How does ecommerce fit into the world of your offering?”
“There has been about a decade of growth, including 2022, in our online business,” Thomas said. “The customer really loves the online business. While our store business is growing as well, we have a line of sight that our e-business will be larger.”
Asked for any final advice for her audience, she said, “The answer always lies with the customer. One part of it is engagement — customer acquisition. The other is the customer experience, the customer journey. Do everything you can to smooth the path.”
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