The Wall Street Journal Goes Shopping
July 17, 2006
This weekend, The Wall Street Journal decided to turn its analytical eyes to the world of luxury, and sent Vanessa O'Connell to take a big survey on the shopping habits of the aging and increasingly free-spending Generation X. (Ugh, are we aging?) Having spent nearly 15 years working in several of the stores she investigated, The Shophound had more than a passing interest in what O'Connell had to say, and we can sum up her premise by paraphrasing Woody Allen in "Annie Hall." Essentially, department stores are like sharks; either they move forward or they die. In her big graph chart comparing Barney's, Bergdorf Goodman, Neiman Marcus, Nordstrom and Saks Fifth Avenue, she got a lot of things right, but may have missed a few important points.
More after the jump
Bergdorf's, still the city's most intimidating store, won her survey, but you have to keep in mind that Bergdorf's has exactly zero branch stores. All the executives and buyers have only one location to worry about, as opposed to 60 or 70. That's a lot of focus and attention on a single (though highly profitable) store. At a Saks or Neiman's branch, a visit from the CEO is a big deal. Even regional management visits cause a flurry of panic. At Bergdorf's (and any New York department store, really) a visit from the CEO can and does happen at any moment. Keeps you on your toes. O'Connell makes a big deal about the DJ at Bergdorf's Men's Store who will customize iPods for customers. The Shophound was there when that store first opened, and no reporter missed noting the resident Golf Pro and putting green. As it turned out, the press was more interested in the Pro than customers were, and a year later, after sufficient publicity had been reaped, he was gone, and the putting green's space was put to much more profitable use as an outerwear department. We also saw the much-vaunted concierge sit idle and eventually vanish.
Beleaguered Saks' identity crisis is nothing new as it continues to battle Neiman Marcus in nearly every major market. The New York store is now so immense that while floor space is always at a premium, they can typically find a few square feet to try out any wild concept they dream up, but whether it makes it through to the much smaller branches is another question. Saks' dirty (not so) secret is that out of over 50 locations, a whopping 25% of their sales come from the Fifth Avenue flagship, meaning there are a lot of underperforming and neglected branches out there. Even though they lavish attention on the behemoth Midtown showplace, some floors in that location haven't been renovated in over 20 years...and they show it. Direction changes so often that they contunually change their minds about what to do, so nothing gets done. Another issue for them is that Bergdorf's and Barney's have a lot of the top designers locked up which is why Saks carries Manolo Blahnik shoes, Jil Sander, Prada, and Chanel apparel in other branches, but they are not permitted to sell them in their own flagship.
O'Connell completely ignores hometown favorite Bloomingdale's, which carries exclusive labels like Chanel, Giorgio Armani and Marc Jacobs. Many of their branches don't carry designer collections, but neither do nearly half of Nordstrom's 99 locations. In fact, Nordstrom corresponds more to Bloomingdale's that it does to Saks or Neiman's. Of course, those GenXers still have a variety of choices, while thanks to recent mergers, a tier below offers Macy's and, uh...more Macy's.
While O'Connell calls the article "Reinventing The Luxury Store", the stores are not so much reinventing themselves as competing in a mad race to get the shiniest things to attract their customers. Bars, 'fragrance chambers', DJs, and flashy events don"t really mean anything if they can't keep the registers ringing.