San Diego: Fashion Valley Saks Fifth Avenue Closing

The San Diego Union-Tribune

 

 

Come July, we’ll be Saks-less in San Diego.

Saks Inc., the luxury retail chain, is shuttering its store at Fashion Valley as it pares down underperforming locations to boost its bottom line.

“The planned closing of our San Diego store is consistent with our strategy of focusing our resources on our most productive stores,” said Steve Sadove, chief executive of Saks.

In March, Saks said it would close its store in Portland, Ore., by July as well.

The closing of Saks Fifth Avenue, which occupies about 81,000 square feet, leaves a big hole in Fashion Valley’s luxury aspirations. The mall was one of the few shopping centers in the country to house four of the most notable high-end department stores — Nordstrom, Bloomingdale’s, Neiman Marcus and Saks Fifth Avenue.

Les Morris, spokesman for Simon Property Group, which operates Fashion Valley, said Saks’ decision to leave was not unexpected. The company plans to divide the space and lease it to a number of smaller retailers, he said. While he said they’re was plenty of demand for the space, he could not yet disclose who would take it or how it would be divvied up.

He did say that Fashion Valley would continue to focus on high-end retailers that do not already have stores in the San Diego market.

“This gives us the opportunity to redeploy that space,” he said. It is not the first time that Saks Fifth Avenue, which occupied the Fashion Valley location since 1995, has closed a store in the San Diego market. In 2004, it closed its underperforming stand-alone La Jolla store.

The question is: why couldn’t Saks Fifth Avenue make it here?

The answer is simple, said George Whalin, president of Retail Management Consultants in Carlsbad.

“We just don’t dress the way people in New York, Chicago and San Francisco dress,” he said.

Whalin said too often retailers assume San Diego is like the rest of the Southern California market. But San Diegans are much more casual than our counterparts. He attributed that to the weather and the region’s top industries — tourism, defense and technology — which are not necessarily known for their emphasis on sartorial splendor.

“We just don’t dress like they do in L.A.,” he said. “We just don’t dress like they do in Orange County.”

Barbara Wyckoff, an analyst for Jesup & Lamont, wrote in a research note, that Saks’ San Diego location probably generated less than $10 million a year in revenue.

Whalin said for a store of that size to break even, it would need to pull in double, even triple, that amount.

The Fashion Valley store has about 70 employees, and the company said they will be offered a transfer or receive a severance package.

Saks has 53 Saks Fifth Avenue stores and 55 of its outlets stores called Off 5th, including one on Camino de la Reina in Mission Valley. Saks said it had no plans to close its San Diego Off 5th store. California is home to six Saks Fifth Avenue stores, with the closest locations being in Mission Viejo, Costa Mesa and Palm Desert.

From The Runway To Your Laptop

Story from the Wall Street Journal

At the D&G runway show in Milan last week, the chief executives of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman were relegated to second-row and third-row seats. In front of them, sitting primly in the first row, was Federico Marchetti, chief executive of online retailer Yoox.com .

The moment—coming as the super-sexy women's styles for next spring pranced down Milan's runways—marked a shake-up in an ultra-hierarchical world. The privileged treatment of a digital-media figure showed that luxury fashion is ready to introduce styles to the public in new ways—new, at least, to this old-fashioned industry.

Front rows are reserved for those most important to a brand's success—celebrities, important retailers and magazine editors. In past years, Mr. Marchetti sometimes borrowed tickets to shows from other guests. But in the past year, Yoox has expanded its business of creating online stores for luxury brands such as D&G, the casual ready-to-wear line from Dolce & Gabbana, and for Jil Sander—whose site launched just today. And this season, Mr. Marchetti has actually been invited to too many shows. "I don't have time anymore," he said at a party thrown by Versace in Milan.

The warm welcome extends to bloggers. While the New York shows have been inviting some bloggers for a few seasons now, many of Europe's luxury houses have been slower to allow bloggers into the shows. But two days after the D&G event, at a show for the high-end Dolce & Gabbana line, four surprised bloggers found themselves seated in coveted spots near the queen of fashion, Vogue editor Anna Wintour. One of them, Tommy Ton of JakandJil.com, could hardly believe he'd made it into one of Milan's hottest shows. "A season ago I had to wait patiently outside for arrivals and exits, and now I'm sitting here," he blogged from his seat, on a laptop provided by Dolce & Gabbana.

Luxury brands have long been leery of the pedestrian Internet, a place where consumers coldly compare prices while forgoing attentive service. This was OK for Lands' End, maybe, but not for Lanvin. After all, what woman would buy a $2,600 dress without first trying it on? But online luxury sites like Net-a-Porter.com proved that many women would do just that. Now, Yoox—which says it plans to take itself public on Italy's stock exchange in coming months—is running online stores for brands including Bally, Valentino, Pucci, and Marni.

This season, Twitter and Facebook are littered with fashion brands—including Louis Vuitton and Burberry—testing how social-media sites might benefit them. At the shows in Europe, audience members can be seen typing the digital messages known as tweets into their iPhones and BlackBerries as the models sashay down the runway. A number of brands—including Dolce & Gabbana and Burberry—have tried streaming their shows live on the Internet. Alexander McQueen will live-stream his show from Paris next week.

Of course, many brands remain leery. Etro, for instance, hasn't yet pursued blogging or social-media outlets, preferring to dress celebrities and sell its vividly colorful designs in bricks-and-mortar stores, according to a person familiar with the brand's strategy. But the person added, "Perhaps in the near future it will be inevitable." Other Etro staffers couldn't be reached for comment.

With 30 employees working on new media, Dolce & Gabbana is wholehearted. Stefano Gabbana—the tall, dark, 46-year-old half of the design duo—believes the Internet is the only way to reach people in their 20s. "It's the future. How many young customers don't read newspapers—they read blogs!" he says in his Milan office, whose walls are lined with leopard wallpaper. (The print matches the leopard print of his Vespa, which is parked on the sidewalk outside.)

Mr. Gabbana concedes that he and his partner, Domenico Dolce, are feeling their way along. "Domenico doesn't have a computer—just his mobile phone," he says. "But Domenico has—how you call them?" He wiggles his index fingers above his head like antennae, indicating Mr. Dolce's sensitivity to new ideas. It was Mr. Dolce who told his partner about Yoox.

What's more, Mr. Gabbana feels the Internet offers the possibility of talking directly to customers. "You are a filter," Mr. Gabbana tells me sternly. His experience with several recent scandals—such as an ad campaign banned in several countries—has increased his appreciation of this opportunity.

In December, he asked Kerry Olsen to edit a new online magazine for the company. The magazine, called "Swide"—a made-up word meaning, sort of, wider than wide—is mostly self-promotional now, but Mr. Gabbana has a short list of rival designers he wants to write about, including Peter Som, Graeme Black and Rodarte. Ms. Olsen says she is now receiving offers from other designers to create similar online magazines.

Dolce & Gabbana decided to go beyond live-streaming their runway last weekend and videotaped the entire scene from multiple angles. Cameras were everywhere—on the street, on the runway recording guests taking their seats, and backstage, showing Mr. Dolce inspecting each model head to toe in the line-up. In addition to the Web, all this activity was blasted onto 28 video screens in the theater where the show was held.

Backstage after the show, blogger Bryan Boy, who resides in Manila, savored his access. "Dolce & Gabbana is really pushing the limits," he said, noting that he's attending other shows this season, but rarely in the front row. "Marni gave me standing," he said, referring to an invitation that requires a guest to stand at the back of the room.

Some retailers downplay the significance of the seating arrangements. "In reality, the configuration of the space allows all to see well and in my opinion, other than people's egos, it is not a big deal," says Gerald Barnes, CEO of Neiman Marcus Direct.

But deciding whose ego to boost is a key signifier at the shows. If not, why give space to bloggers, who are, after all, just online filters?

Mr. Gabbana says he would "love" to start tweeting himself. But an adviser has said it's "too dangerous. He never knows what I might say."