Retail

Can Saks Win Back The Erstwhile Luxury Shopper With New Boutiques?

That luxury goods take a hit during a recession is not much of a surprise. But luxury goods struggling during a recovery? That is perhaps more unexpected.

And yet, clearly, it is the situation luxury retailers have been battling for at least the last year. Sales across luxury items — shoes, clothes, handbags, watches, cars — have all seen market drops in growth.

The “whys” for the situation are myriad and non-mutually exclusive.

The Chinese economy has slowed down markedly in the last 18 months and, with it, Chinese consumers’ heretofore insatiable desire to purchase American and European luxury goods, particularly in Hong Kong.

“The market right now is very, very quiet,” said Alain Lam, executive director of Oriental Watch Holdings Ltd., one of the largest luxury watch dealers in Hong Kong. “The more expensive and the shinier the watch, the slower it moves.”

Then, there the stability issues outside Southeast Asia. Uncertainty on a global scale got turned up to “11” with the surprise “yes” vote on the Brexit. Worldwide watchers suddenly realized they had absolutely no idea what’s next for the U.K. or the EU, both in terms of the technical separation details and what the long-term consequences of the move will shape up to be. The United States — for those who’ve spent the last few months in a sensory deprivation chamber — is in the middle of a presidential election that has managed to illicit … stronger-than-normal opinions.

All of those complicating factors in the mix — particularly at the same time — might be making customers feel a bit less inclined to make big splashy purchases — no matter what the balance in their bank account is.

“It is not a real impact on the wealth of the consumer but more on their trust in the future,” said Claudia D’Arpizio, lead author on a recent Bain report. “It’s a psychological impact [that is] very, very important in luxury.”

And then, there is the hard-to-quantify — but increasingly observed — idea that luxury goods, particularly those that are ostentatiously so, may simply be out of step with modern trends. In a post-Great Recession world and in the era of the sleek and simply designed Apple product, the luxury of the past may simply be not meshing with consumer trends.

“Before the recession … they bought into the status and having a status symbol,” said Pam Danziger, founder of Unity Marketing. “Today, the culture’s just completely turned … I just think it’s a losing business proposition the way it is today.”

Luxury retailers could throw in the towel and decide that consumers should just be left to the yoga pants and Crocs their taste has evolved toward, but that seems unlikely since consumers haven’t wholesale abandoned luxury items, so much as they’ve simply scaled back their consumption of them.

So, how to bring those shoppers back to the fold?

The team at Saks is trying out the custom boutique for the specific luxury good.

In the affluent suburb of Greenwich, Connecticut, a short hop from the Saks main store, there is 10022-SHOE, a 14,000-square-foot space dedicated to one thing and one thing only — women’s shoes.

The focus of the new locus of shoe shopping is emerging and advanced designers. Designed by the Saks Store Planning & Design team in collaboration with FRCH, the design style is mixed-use country industrial, with a lot of stainless steel, sleek lines, lots of bright natural light and a delicate color palette. A large-scale, glass ceiling sculpture anchors the space and is complemented by white finishes, exposed brick and oak wood flooring.

And shoe salons are just the start. Saks has other visions for a jewelry boutique (The Vault) and for modern fashion (The Collective).

When all that is said and done, it will renovate the full store in the second half of next year.

“10022-SHOE Greenwich marks a new visionary concept for the brand,” stated Marc Metrick, president of Saks Fifth Avenue. “Moving key categories — shoes, jewelry, contemporary ready-to-wear — to their own specialty shops brings the luxury boutique experience to the next level.”

So, will the little boutique be the answer luxury needs? Probably not, given the structural issues are bigger than any one store or brand can fix.

But the luxury shopper is changing, and if the numbers aren’t growing as rapidly as brands would like, then Saks is likely ahead of the curve in making sure it is creating the curated environment the luxury shopper likely wants.

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