Retail Category Consultants recently visited Saks Fifth Avenue’s first Canadian Store at the Eaton Center in Toronto. The luxury goods retailer, owned by Hudson’s Bay Co., is located inside the Hudson’s Bay flagship store at Queen and Yonge, and promised to dazzle Canadian customers with a vast selection of designer brands and exceptional service. We visited the store on a busy Saturday afternoon a few days after its grand opening to see whether Saks Fifth Avenue was living up to expectations or if it was doomed to follow the path of other failed U.S. expansions such as Target.
First Impressions: Bright, Impressive, but Nothing New
The first thing we noticed was the sheer size of the store. At 170,000 square feet, the store had three levels of bright and open shopping space, allowing the many customers and associates to move and browse freely. Navigation was intuitive. The aisles were broad enough to accommodate families and small crowds, and signage advertising the many different brands was visible and eye-catching. The first level featured handbags and jewellery from brands like Givenchy, Louis Vuitton, and David Yurman.
An impressive tower of products greeted us when we turned the corner to the beauty and cosmetics section, accompanied by a strong cloud of scents from customers who were trying out aromatherapy products and perfumes. In the beauty and skincare section, we found a breadth of products: from up-market brands like La Mer and Valmont, to brands you would find in Shoppers Drug Mart’s Beauty Boutique, such as Laura Mercier.
If we thought the first level was busy, the second level, which was mainly accessories and shoes, was buzzing with activity. The women’s shoes section was filled with shoppers and traffic from the Hudson’s Bay store that spilled into Saks from a connected entranceway. Sales associates raced in all directions to tend to the customers’ appetite for Jimmy Choo, Sergio Rossi, and Giuseppe Zanotti. Families parked on the benches and seats, some browsing on their smartphones or tending to their children, and others trying on merchandise.
On the other side of the store, customers crowded in front of display cases filled with a wide variety of men’s accessories including cufflinks, wallets, and bracelets from the likes of John Hardy and David Donahue.
In contrast, the nearby men’s suiting and clothing section was quiet. Smartly dressed personal shoppers engaged passing shoppers in conversation, but few stuck around.
A similar trend was found on the quiet third floor, which houses the women’s clothing section. From the denim wall to the racks of La Fayette, Saks Fifth Avenue Collection, and other clothing brands like Stella McCartney, Saint Laurent, and Marc Jacobs, customers appeared more in the mood to browse than buy.
This is understandable given the current state of the Canadian economy and the challenges that many apparel retailers face. As consumers gravitate towards fast fashion, high-end apparel retailers must do more to stand out. While Saks Fifth Avenue’s store opening weekend discounts were welcome and undoubtedly increased purchases, the discounts not clearly communicated and we wonder how the retailer will perform in the long-term.
The SaksFirst credit card was heavily marketed throughout the store. According to a sales associate, the card can be used to collect points in any Canadian or U.S. store. All the loyalty offers and perks, such as the 10% discount on first day purchases, were the same as in the U.S.
Overall, compared to competitors such as Holt Renfrew and Nordstrom, Saks Fifth Avenue offered little in the way of differentiation. Retail Category Consultants’ Consumer Shopping Lens identifies five need states that retailers must satisfy in order to deliver a great shopping experience: Convenience, Value, Discovery, Connection, and Transparency. Saks Fifth Avenue failed to deliver a few of these need states:
- The store format, especially the handbags in the first level and the clothing section in the third level, was akin to a more cluttered version of Holt Renfrew. This did not aid Discovery.
- Signage throughout the store was not particularly informative; we saw signs advertising an upcoming Pusateri’s food hall, the SaksFirst Credit Card, and one-liners about offering great service, but all marketing materials required us to speak to a sales associate to learn more. This did not aid Convenience or Discovery.
- The beauty section was similar to Hudson’s Bay’s, though with less signage and in-store technology to inspire, engage, or inform. There was a lack of Transparency (little product information) and Connection with customers.
- Abstract art lined the walls and animal statues accented merchandise displayed on the tables, but they were generic and were not tied to any theme or promotion. While they were nice to look at, they did not add much Value.
Who’s Shopping at Saks Fifth Avenue Canada?
Customers were mainly couples and families pushing strollers or with small children. The demographic skew younger, with many Millennials browsing or shopping by themselves or with groups of friends. There were plenty of customers carrying Forever 21, Aritzia, and Hudson’s Bay bags, likely having come from Eaton Center or the neighbouring HBC store to check out Saks.
It is too early to tell how Saks Fifth Avenue will perform among different demographics, but based on our visit, Saks Fifth Avenue is resonating with a younger and trendier crowd. The shoppers who left with Saks Fifth Avenue bags were a mix between Millennials and Gen X.
How Well Did Saks Fifth Avenue Execute Its Strategy?
Saks Fifth Avenue promised its customers two things: exceptional customer service and the right edit of products.
Service was hit and miss.
While sales associates were friendly and approachable, they lacked specific product and service knowledge. We wanted to learn more about the home delivery service, and had to speak with multiple sales associates before we were sent to speak with the brand representative in the area we were purchasing product. We had a similar experience when we asked about whether personal shopping was a free service. A sales associate had to refer us to a SaksFirst information section near the escalators, where our question was answered.
Meanwhile, in beauty, we wanted to learn what the “A Beautiful Discovery” message meant. Like our previous inquiries, we were told to wait while the associate asked around and located a colleague who could answer our question. Even then, there was some confusion about whether we were asking about a tote bag promotion (spend $170, get a free tote bag), before the associate understood the question and then told us that we should speak to the brand representatives to learn more.
Despite the many butler statues around advertising great service, we did not have a good experience. We had to speak to too many associates and move from section to section in order to get basic questions answered.
Selection was similar to what you would find at other high-end retail stores.
While Canada’s luxury market is underserved compared to the U.S., we did not see anything at Saks Fifth Avenue Canada that was uniquely targeted to Canadian shoppers. Brands were similar to what you would find at Holt Renfrew or Nordstrom, and prices were comparable. Brand names were listed in simple silver font on the walls where the products were found, and in a large store, it was tiresome to have to walk all the way to the end of the hall to read what was located there.
The cluttered format of the clothing sections also led to browsing fatigue. Many brands did not have a designated section and instead were found on racks that were placed throughout the store. Again, due to the lack of signage, unless you walked all the way to where the rack was, you didn’t know what the brand was.
Even though Saks Fifth Avenue is positioned for the top 1%, inspiring and informative signage could also foster Connection with other customer segments and make the products and brands aspirational. Unfortunately, aside from the Canada Goose and Moose Knuckles sections, there was little to suggest Saks Fifth Avenue edited its selection for the local market.
Will Saks Fifth Avenue Succeed in Canada?
According to Marc Metrick, Saks Fifth Avenue President, the store opening at Eaton Center was successful. More Saks Fifth Avenue locations, such as the location at Sherway Gardens, are set to open in the coming months. In a retail landscape where customers are either moving up or down, Saks Fifth Avenue has potential to succeed in the luxury market.
However, to sustain interest beyond the initial store openings and associated discounts, the retailer must offer more customized offerings for the Canadian shopper and ensure that sales associates live up to their customer service promise. According to the sales associate at the SaksFirst booth, Saks Fifth Avenue aimed to duplicate the U.S. experience in Canada. But as we have said for years, the Canadian consumer is different and that won’t be enough.