Saks Deploys 2,000 iPads in Stores, to Launch OFF 5th Website in Fall

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Saks Deploys 2,000 iPads in Stores, to Launch OFF 5th Website in Fall

By Adam Blair - 06/07/2013
Saks Fifth Avenue is over halfway through a multi-year, multi-front, multi-million-dollar transformation into an omnichannel enterprise. The retailer has already deployed approximately 2,000 iPad tablets in its stores to facilitate associates' communication and engagement with customers, and will be launching an e-commerce site for its OFF 5TH outlet banner this fall.

Behind the scenes, Saks has begun taking a channel-agnostic approach to merchandising, according to CEO Stephen Sadove. "We're now going to the vendor community as a single entity between the stores and the dot-com, and we're looking at our business on an omnichannel basis and managing the inventory in that manner," said Sadove at the retailer's shareholder meeting June 5. The retailer is also adding more items to its online inventory.

All these moves toward omnichannel retailing constitute "a major undertaking, in which we're spending well north of $100 million over a several year period to get that capability," said Sadove. "The transformation in omnichannel is pervasive across the organization." By the end of this year, he estimates the retailer will be 60% to 70% of the way through these capital expenditures.

"But it goes well beyond just dollar spending," he added. "It's a cultural change, it's an organizational realignment, changing roles and responsibilities of our merchants, our planners and getting people to be tied much more closely so that we can move inventory around. We're feeling that there's enormous opportunity going forward."

Some of that opportunity will be realized as Saks converts more customers into multi-channel shoppers, since members of this group spend three to four times what single-channel shoppers spend, he noted.

"We think that over time omnichannel will drive higher sales, inventory productivity, as well as gross margin," said Sadove. "And it really starts with the consumer who is converging the store and the digital space. They want the advantages of the stores, they want the advantages of digital. They want to be communicated with differently."

Continued blurring of the lines between channels is one reason Saks no longer breaks out Internet sales in its reporting. The omnichannel ethos has also affected the retailer's compensation and incentive structures. "The cultural change that we talk about is moving from separate silos between the stores and the Internet towards a matrix store organization, where people are linked together across the organization," said Sadove. "If you're a buyer in shoes, full line or Internet, your compensation is shared, you're looking at the inventory together. So there are common objectives and goals so that your performance is based on the omni result, a very good and important change for the organization."

In the physical realm, Saks has made major renovations in several of its full line branded stores, and will be closing two of them for a projected total of 40 brick-and-mortar locations by the beginning of next year. The trend is going in the opposite direction for the 66 OFF 5TH stores: "We're opening [them] to the tune of six to seven stores a year," said Sadove.

For related content: Saks Connects to Shoppers with In-Store WiFi

Saks Project Evolution: IT Transformation

Saks Fifth Avenue Pilots Mobile POS Prior to Wider Q2 Rollout