Saks Inc (SKS): Investment in E-Commerce Is Working for This Retailer

Saks Inc (NYSE:SKS) has been on a nice run recently–it’s up 42% versus only 16% for the greater market.  The luxury retailer is implementing different strategies to increase its customer base and to attract investors.  Its working to develop not only its online market but also supporting channels to increase sales. Omni-channel retailing is extremely popular and its a growing trend.  It has also re-launched its loyalty program in an effort to reach all its customers.  Add it all up and Saks Inc (NYSE:SKS) looks like a nice buy.

Omni-channel

In this system, all Saks Inc (NYSE:SKS) Fifth Avenue stores become distribution centers.  The customer buys online and the item is packed and shipped in the stores.  So instead of establishing separate inventory storage warehouses and distribution centers, Saks uses its in-house resources.  So when it puts up a new store, its really putting up a new warehouse.

By investing in information technology, Saks Inc (NYSE:SKS) is able to better reach and gain new insights on its customer.  It’s also investing in e-commerce by adding iPad stores with different customization options.  Between its Omni-channel and investments in e-commerce, Saks should enjoy strong online sales and better inventory management.

E-commerce and loyalty

It has also enhanced its online shopping experience at Saks.com.  With more product offerings, better website development, and  more appealing digital marketing, Saks.com is starting to gain some traction. The company has also developed a robotic fulfillment center in Tennessee for developing and maintaining the operational efficiency of its website.  All these e-commerce enhancements will only improve the efficiency of its Omni-channel initiatives.

Saks Inc (NYSE:SKS) re-launched its ‘SAKSFIRST’ loyalty program in January.  It now includes more benefits and no longer requires customers to spend $1000 on merchandise to participate.  These steps have been taken to increase customer engagement and appeal to a different kind of shopper.  These changes have tripled the number of members and have been driving sales.

Competitors

Macy’s, Inc. (NYSE:M) and Nordstrom, Inc. (NYSE:JWN) are direct competitors to Saks Inc (NYSE:SKS). Currently, Macy’s appears to be focused on a particular age group and following its MOM strategy, where Nordstrom, Inc. (NYSE:JWN) is targeting online growth and unit expansion.

Macy’s, Inc. (NYSE:M) is focusing on customers aged 13 – 30, as this is a large, free-spending demographic.  The company has launched new brands and announced expansion of some existing brands to attract these shoppers.