Two traditional giants of US luxury retail go under the data spotlight this week. Our analysis of Saks Fifth Avenue and Bloomingdale’s reveals new data pointing to each retailer’s strategy. This analysis is presented in two parts: Part One assesses the department stores’ tactics around product, pricing and rate of newness.
Since the arrival of new president, Marigay McKee, Saks Fifth Avenue have invested with the aim to become America’s foremost luxury retailer. Under McKee, who is former chief merchant at Harrods, Saks have added 20 new designers to their roster, including Victoria Beckham and Roland Mouret, and will open six new stores in the next five years. The key question: how does Saks, with the vision of “shaking up the New York retail scene,” compare with key competitor Bloomingdale’s?
Bloomingdale’s has recently hit headlines for sluggish sales in the first quarter. The retailer’s recent move to stock premium British brand Whistles may signal a strategy to differentiate themselves from traditional high-end rival Saks. We have explored our commercial data to unpick the two retailers’ apparel, footwear and accessories strategies. By breaking the data down into assortment, newness, replenishment, discounting, product and communications, we can gain insight into both retailers’ assortment and newness strategies.
Saks’ current online offering is 46% larger than Bloomingdale’s. This is a notable gap given that Bloomingdale’s appears to target less affluent customers: Bloomingdale’s average price point is $198.58 while Saks’s is $633.77. The two retailers have similar proportion of womenswear assortments – womenswear comprises 69.8% of Bloomingdale’s apparel offering and 71% of Saks’s offering. However, each retailer’s approach to men’s and childrenswear differs, with Bloomingdale’s placing more emphasis on their menswear than childrenswear and Saks giving fairly even weighting to the two.
Saks’s most stocked brands are Gucci, Ralph Lauren, David Yurman, Burberry Prorsum, Marc by Marc Jacobs and Prada – a clear tendency towards luxury brands. In comparison, Bloomingdale’s most stocked brands are Ralph Lauren (and diffusion, Lauren Ralph Lauren), AQUA, Pandora, Marc by Marc Jacobs, Kate Spade, Free People and Theory, indicating a weighting towards premium brands. Interestingly, so far this year Saks have increased their offering of premium brands Kate Spade, Theory and Splendid. In comparison, Bloomingdale’s have not only increased their offering of Free People and Ted Baker, the retailer has also increased Saks favourite David Yurman. The two retailers appear to be watching each other closely.
Price architecture at the two retailers is another key insight into their differences and also sheds light on areas of competition. Bloomingdale’s heavily stock at the under-$100 price range, outstripping Saks’s offering here, despite their smaller overall offering. In the $100-$200 price range, the two retailers compare fairly evenly. It is above this price point that Saks differentiates itself as the choice for the luxury customer: in the $500-$800 price range, Bloomingdale’s barely competes with Saks’s assortment. Saks balances their offering neatly – there are no ‘surprise price points’ standing out in the options chart as being over-invested.
The planning and cadence of an assortment is indicated by the rate of newness: a large offering that is not evenly dropped into store throughout a season will generally result in stagnation with consumers losing interest in the assortment. 10.8% of Saks’s current offering arrived on the market in the last month, which is well-balanced within the 29.6% which arrived in the last three months overall Saks’s womenswear is the most balanced rate of newness in the last month in comparison to the last three months with no obvious spikes in new drops. However, childrenswear may struggle to hold consumer interest, with 33.5% of their current offering arriving in the last three months but only 6.3% arriving in the last month alone.
Bloomingdale’s ratio for their full assortment is a little less balanced than that of Saks, with 13.8% arriving in the last month, and 45.4% arriving in the last three months. This imbalance is highlighted by the cadence of childrenswear newness with 53.4% of current childrenswear stock arriving in the last three months, but only 14.8% in the last month. Bloomingdale’s may need to even out that rate of newness to entice consumers back into store regularly, but also to have visibility on what is selling best so that they may replenish effectively. Bloomingdale’s menswear shows an even rate of drops.
Plotting the number of drops of each retailer over the past seven months show clear peaks and troughs that, ideally, a retailer would look to avoid. Predictably, there is a lull of new assortment drops in the January post-sale season, which may have been compounded by freezing weather conditions that delayed the introduction of SS14 collections. However, with many designers now including trans-seasonal layers in their collections, clever buying can redress the balance. This strategy is advisable for both retailers so that their consumers can experience continuity of newness throughout the year, with an even rate of new drops and discounting.
Our concluding piece analyses Bloomingdale’s & Saks discounting, replenishment, sell through and communications. Read it here.
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