Yesterday, in part one of this US luxury department store special, we looked at the assortment, pricing and newness strategies of Bloomingdale’s and Saks. We noted that Saks have a smooth rate of newness in the past three months, although their dip in new product between season needs addressing. We also looked at the ways in which the price architecture shows entirely different focus for Bloomingdale’s. You can read about that here, and today we’ll shift our focus to the two retailers’ discounting, replenishment, sell through and communications.
Best Practice: replenishment and sell through
Healthy levels of sell through and replenishment show that a retailer is not only backing trends, but has the foresight and reaction to bring popular stock back into store. For Saks, the categories with the highest rate of sell through are in women’s underwear at 26.6% of current stock having sold out, and for men’s sleep with 19.4% of stock selling fast. At Bloomingdale’s, men’s footwear sees a 12.5% sell through rate, however the highest sell through rate in the women’s segment is in beauty with a rate of 18.8%, which is not a positive: without the restriction of sizes, consumer brand loyalty and slower moving trends, the beauty segment should not see sell outs – stock should be replenished seamlessly before sell out occurs. Saks, in contrast, has a low beauty sell out rate of 3.9% of current stock.
Meanwhile, general replenishment rates at Saks and Bloomingdale’s are fairly even, with 15.1% of current offering at Saks having been brought back into stock, and 14% of Bloomingdale’s offering. Drilling down into categories reveals more detail: Saks have a high rate of replenishment on menswear, with Gucci, Salvatore Ferragamo and Paul Smith being the most restocked brands. Bloomingdale’s however may have issues with their menswear assortment, with only 9.7% of stock being re-bought. Their most restocked labels in menswear are Ralph Lauren, Hugo Boss and Calvin Klein – with only 140 Calvin Klein options retailing, they may want to consider increasing their offering here.
Childrenswear could be an area of struggle for Bloomingdale’s too – though the replenishment rate is a healthy 12.8% currently, they only have a sell through rate of 1.9% and a high discounting rate of 42.8%. Given the uneven rate of newness already discussed in childrenswear, it seems like Bloomingdale’s need to take the plunge and stock some more trend-led lines, introduced throughout the season, and ease back on their core which is not selling well full-price.
Best Practice: Discounting & Communications
Unlike newness, an even rate of discounting through the year would be worrying – consumers react well to the hype of a discounting calendar, and retailers need the clearance that a sales drive creates. The two retailers show quite different strategies to discounting. You can see an enormous spike in discounts in November for Saks – they reduced the price on 12,972 products in the month. That was echoed by their communications strategy for November, when they sent out ten sales promoting emails, in comparison to Bloomingdale’s five.
Meanwhile, Bloomingdale’s discounted most-heavily in December, though their discounting varies less notably through the calendar. The impact of this can be felt in their discount rates: for example, Bloomingdale’s currently have 32% of their offering discounted, compared to 12.5% of Saks’s. More concerning perhaps is the high rate of discounting of more than 50% – it currently sits at 8.7% of products at Bloomingdale’s compared to 3.8% at Saks. Bloomingdale’s need strategically shift their consumers’ expectations that stock will be discounted – and they could focus on their email newsletters as a tool for this. Currently they under-promote new season and full-priced stock. Saks use clever devices like newsletters featuring “most rated” products and their bestsellers – consumers love validation. They also created a nicely seasonal theme in December with plenty of holiday visuals, compared to Bloomingdale’s who just communicated their discounting in the festive month with bold graphics. Bloomingdale’s build into their consumers’ sale expectations with panic-inducing language in their newsletters like “16 hours only!” and “Tick Tock” headers – ease back on these, break away from their formulaic 7-11 emails a month in order to become more reactive and Bloomingdale’s could restore faith in the skills of their full-price product buying. Saks’s communications team is more in sync, reflecting the rates of newness and discounting well – the low rate of discounting in October was reflected with 32 variations of newsletters promoting full-priced product and only 4 were promoting discounts.
It seems that Saks’s strategic overhaul is paying off – as they move further away from the offering and price point of their competitor. They may need to hone in on their trans-seasonal buying in order to maintain pace in unpredictable weather however. Bloomingdale’s have some work to do on restoring their consumers’ faith in full-priced stock. Careful attention needs to be paid to their childrenswear buying and their merchandising calendar.
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