How Saks OFF 5TH is crafting customer-centric experiences

Episode transcript, edited for clarity

Bill Thorne:  Welcome to Retail Gets Real, where we hear from retail’s most fascinating leaders about the industry that impacts everyone everywhere, every day. I’m Bill Thorne from the National Retail Federation, and on today’s episode we’re talking to Rob Brooks, CEO of Saks Off Fifth.

We’re going to talk to Rob about the off-price luxury landscape, what he loves about his job, and what’s next for Saks Off Fifth. Rob Brooks, welcome to Retail. Gets Real.

Rob Brooks: Nice meeting you, Bill, and thanks for having me today.

Thorne: I’m glad that you were able to take the time. We’re in Washington, D.C. The cherry blossoms are blooming. It has been really, really, really nice weather, and I woke up this morning to hear the news that we’re going into the thirties and the forties for the next four days with high winds and if you haven’t seen the cherry blossoms, you better get to them real quick.

And you’re in New York, right?

Brooks: I am and we’re waking up to the same weather today. Little chilly, but maybe that’s a last-minute run on some outerwear that people need to get for the weekend so we’ll take the cold snap, if that’s OK.

Thorne: Yeah, that’s fine. Well, you’re going to get it. I have a feeling. So, you’ve had a great career in retail and it’s certainly not over, but tell us about your background and your experience.

Brooks: Sure. Look, I’ve had a very fortunate career, I think. I spent 20 years in human resources before I made the switch over the business side the last the four or so years. I’ve been blessed to work for some amazing organizations. I’ve worked for L’Oreal. I’ve worked for, at the time, a really small startup company called Legends Hospitality, which is now really blossomed and turned into a huge organization, international organization. And then from there I moved on to Macy’s, and the last eight years I’ve been here at Saks and Saks Off Fifth, and really part of the parent, Hudson’s Bay Company.  

You know, it’s been a wonderful ride, and very fascinating for me to kind of make this transition here over the last four years (about four years ago) I had the opportunity to become the Chief Customer Officer at Saks Off Fifth where I really ran the stores business, and some of the back-of-house functions, and legal and finance, and human resources. Did that for about 18 months, and then I moved (for about an 18-to-24-month timeframe), I became the president of stores, and I ran our stores business. And, as you know, we’ve separated our digital business. I had the opportunity to build out a leadership team, and really grow our stores business.

And I really do say this: I really do see myself as being very blessed and very fortunate for the last year to have the opportunity to be, you know, CEO of Saks Off Fifth. It’s a wonderful brand. I’m surrounded by amazing people. I have an amazing leadership team. I’m very fortunate every day to get to come to work with that.

Thorne: You know, it’s really interesting — the Chief Customer Officer. The first time I ever saw that was in the executive of offices at Macy’s and it was outside of Terry Lundgren’s door and I was like, “That is really cool. I mean, he’s the CEO, the president and CEO, and yet he considers himself the Chief Customer Officer,” and I think that’s really cool.

So, but what drew you to retail? I mean, was it something that you’d always wanted to do? Was it something that you went to school and said, uh, I’ve got to do these courses in order to be a good retailer?

Brooks: No, no, quite the opposite. I had the opportunity to work, like I said, for some amazing companies, right? I worked for L’Oreal, specifically Maybelline Garnier when I was in Human Resources. Then I had this awesome opportunity to move over to Legends.

I may be, and this little anecdote for everybody — I may be the only retail executive that got to ride in a float in the 2009 World Series Parade for the Yankees. So, so little facts for everybody, right?

Thorne: I am very jealous about that. That is so cool.

Brooks: Right? So here I am, living my dream. Working for a company that is part owned by the Yankees, and I’m enjoying everything. And then I got a phone call. I have a really good friend that works at Macy’s. Their head of stores, Marc Mastronardi is a childhood friend of mine. And he called, and said, “Hey, why don’t you come over here? We just went through this one Macy’s transition back in 2008, 2009.’ And, you know, I joined Macy’s in 2010, and sort of the rest was history.

I was sucked in right away. I loved it. And, you know, I supported the field, so I was in stores literally every single day, five days a week, if not seven days a week. I loved every minute of it, and from there I just … the business side of me moving from HR into the business has really just been sort of a natural progression for me. And having an opportunity then — you know, five, six, seven years later — to join Saks. And, again, still on the HR side, but joining Saks, another iconic brand, right? I mean when you say Saks, everybody knows who you are talking about. Everybody understands Saks, and everybody knows what it stands for.

You know, I think Macy’s has that too. And the Yankees had that. L’Oreal has it. So, I’ve been very fortunate to work for some wonderful, wonderful organizations. But, you know, I can’t sit here and tell you that retail was in my blood and something I wanted to do through college and where I thought I was going to end up. But what I have learned over time is: Spending time in stores is infectious. And I was just in stores yesterday, and if you want to just immerse yourself in understanding the customer and spending time, and getting immediate feedback on how you’re doing, go walk stores. Go spend time. Talk to a customer. And I just, quite frankly, I couldn’t get enough of it. I wanted to do it more and more.

Thorne: I had the opportunity … . I was at Walmart for a period of time and I had the opportunity to travel with some of the executives — one time Bill Simon — and we would do these drop-ins at stores and it was it was by far the favorite part of my job. To be with the team. To go into the stores. To talk with the managers. To talk with the associates. To talk with the customers. To look at the layout. To make some, you know, to get some thoughts, some ideas, be creative. It was absolutely fantastic. So, I totally understand that it is — if you have the opportunity to do it, and you do it — you kind of get hooked into it. It’s a lot of fun and it’s a great way to see retail and through your own eyes, the way that others see it through theirs.

Brooks: I don’t know if I could imagine myself doing something different with my life now, and I’ve been doing it for 15 years. And I hope to do it for another 15, and it’ll be a wonderful journey for myself. And I’ve enjoyed every minute of it. There’s nothing more satisfying for me than spending time in stores, and really, really helping bring to life the digital, you know, landscape for our customer, too. It’s been a wonderful journey.

Thorne: I definitely want to talk a little bit about that. But I … you know, you say you get it. It’s in your blood, and so whether you retire in 15 years or 20, you’ll still walk into stores. You’ll still be talking to customers. You’ll still be talking to managers. You’ll still be asking the questions. I don’t think you ever stop. I really don’t.

Brooks: No, I don’t think you do, and I think … You know when you have it in your blood, right? You go on vacation. You get to a hotel, and you start looking at things differently. You go to a restaurant. You see what the service is like, and that’s different. And you go to a different customer, and I try to learn, right? I try to learn a little bit everywhere I go. My daughter loves lululemon, and I love their in-store experience, so I try to try to learn a little bit from everybody in every store you go to. You just can’t get enough of them.

Thorne: Heck yeah. So, describe for our listeners today’s off price, luxury landscape, and where does Saks Off Fifth play in that space.

Brooks: Yeah. I think when you look at off price, and then you look at off-price luxury, they’re almost two separate buckets as you look at the off-price world. And I really do think that we are sitting very well positioned in the off-price luxury world. Specifically, the way we bring value to our customers is perhaps …

Everyone talks about value. And you may hear me talk about value a hundred times before we’re done with this chat today. But I think our value that we bring to our customers is slightly different. We have a customer that is very fashion-forward. They do earn a pretty good living, and we have a customer base that really lives in that millennial kind of grouping.

But we’re starting to skew a little younger and I think as you think about where we sit, it’s that fashion. It’s the treasure hunt that the customer can still get. But more importantly, it’s the value. There are a few people that can talk to 60%, 70%, 80% off and still talk about the name brands and vendors that we’re able to offer. And we just sit in a very unique space, I believe, within the off-price sector. Quite frankly, I’m not sure anybody else sits there with us as we think about that. So, I think that we are very, very well positioned.

Our desire is really to make modern luxury affordable for everyone, right? So, we believe that having fashion and modern luxury affordable for everyone is very attainable and very doable. If you were to walk the floor here in our offices, people would be talking about that. People would be talking about what we’re bringing to our customer.

If you look at our store experience, if you look at our online experience — quite frankly, it’s a bit more elevated, right? We are very close to our sister company in Saks, but we’re also very, very different. And I think as you think about that, our customers have an expectation of a level of service. Do we get it right every time? Probably not. We try and we’re learning and we’re doing better every day. You’re going to get a really well merchandised store. You’re going to get really, really great value. You’re going to get a frictionless experience online, which again, is a differentiator for us versus a lot of the off-pricers. We’re able to get the product online as well, and then I think the brand access is quite significant for us that others just don’t have. We really do sit in a very, very unique, and I think, desirable location in the off-price market.

Thorne: You were one of the … I mean, Saks Off Fifth – it wasn’t called Saks Off Fifth, as I recall. But I mean, you’ve been in this space, or Saks has been in this space for quite some time, I mean, like a forerunner of the off-price luxury landscape.

Brooks: Yeah, like the mid-nineties … the early nineties. It’s been an exhaust valve when it first started. And now we have a really robust merchant and marketing team that, you know, are out procuring. And the office is a little quiet today because it’s market and everyone’s out in market today. So, we’re chasing down those open buys and those opportunity buys for us, and that’s a really, really important way for us to operate. You know, we allow ourselves to stay liquid so that we can go get those great deals for our customers.

Thorne: I pass a Saks Off Fifth every day on my way into work, so I think of you every day, Rob. I just want you to know that.

Brooks: We’re happy for you to think about us, and you can hop in and go shopping. We’ll make sure we give you a great experience.

Thorne: I’ve been in there. So, you know, you say since the mid-nineties. I mean, you think about … how has the target customer of Saks Off Fifth evolved? I think you mentioned something … it’s getting younger?

Brooks: It is getting younger and what we’re finding is our customers earn rather well. I mean they’re capable of buying product that is perhaps a little bit more on the expensive side. AOV and AUR are a little higher.

But where we play and where our customers really respond is the value we’re able to offer, right? You can’t get some of our brands at the price that we’re able to provide, and the customer is really responding to that. Again, whether it’s online or in store, they still want a little taste of that luxury.

One of the things that we’ve just launched is a clientelling tool in our stores. I am not aware of anybody else in the off-price sector that is running with a clientelling program. We’re able to know more about our customer today, not just because of clientele — and I could talk a little bit more about our loyalty program in a second, which I think is really one of the differentiators for us.

But when you think about clientelling, being able to communicate with that customer, real time, of helping them with the treasure hunt, right? So, not having to come into the store. I’d like to. But my time is valuable. And if I can have the store communicate to me, “Hey, X, Y, Z brand is coming in on my truck on Thursday, and I know you were looking for it, would you like to buy it?”

Now my conversion is much higher. We’re seeing great uplift in AOV. We’re seeing great uplift in AUR. So, there are some real positives for us that I think is really bringing that service level to another level for our customers that they’re requiring, and quite frankly, they’re telling us they want.

On the loyalty side, I think it’s also very important. Again, that speaks to the true value that our customers are looking for, right? We have a three-tiered loyalty program — Star, Icon and Official is sort of being our top level — and what we’ve really found is our customers are really resonating. We’ve had over two years. This spring will be two years that we’ve had the loyalty program. We’ve enrolled just shy of 4 million people in the program. And, you know, 75% of all of our sales are through the loyalty program. So, it’s great. We’re very happy with where we’re at the first two years, and you would say, “Well, that’s great. What do I get as a customer?”

And I would say, “What do I get as a retailer and as a business?” I get to know you [the customer] really, really well. I can make your journey very personalized. I can make it almost a one-to-one journey, whether it be online or in store, and the in-store piece is now enhanced because we have the clientelling program. We’ve really been able to unlock quite a bit here through both loyalty and clientelling for our customer. And the customer is evolving now.

Thorne: You mentioned that, you know, you were early on in positioning Saks online. What has surprised you most about how that has evolved over the years — the online experience.

Brooks: The online experience has, and as everybody knows, it has grown to be a hyper-personalization play for our customers, right? I don’t want to have to go through all of your pages, all of your inventory to see what I want. I want you to tell me what I want. And our customers are telling us that’s what they want.

We have spent time building out in the last 12 months a very robust data and analytics team that’s really able to get down and … we’re in the process right now of deeply building out our segmentation work, and that is allowing us to have this hyper-personalized experience online.

And we’re not, by any means, best in class there, so we’ve got a lot of work to do. But that is taking a lot of energy from us and a lot of our time to go forward and build that for our customers, but that’s what they’re telling us they want. They want personalized online, but they also want it to be in-store. If you know me in one place, you should know me in all the places I shop. And we appreciate that.

Thorne: You’re singing my tune when you talk about the clientelling. I mean, to the extent that I’m not a shopper. I’m a buyer. So, if I need a blue shirt, I go into the store. I go to the shirts. I go to my size. I pick out what I want. I go to the counter. I pay. I leave. That’s my experience. And I told that … I was actually in a meeting one time, and I said, “Oh, I hate shopping.” And people are like, “Do you know who you work for?” But anyway, I think that knowing your customer, knowing if they are a shopper or they are a buyer, and I think you can do that online as well. And I think that’s the beauty of, you know, how we’ve evolved technologically, and the innovations that we’re doing to really identify that customer and make it easier for them to be loyal to the brand.

Brooks: I agree, and one of the things that … what I’m excited for in the future, is the natural progression (which I’m not quite sure we’re all ready for) and that is: The advancement of the technology. Because I don’t know that we have harnessed the use of the technology, the data, the AI, the ability to communicate much easier with our customers. I think we’re catching up a little bit. Not just us. I think the industry as whole is catching up. 

We’ve made a couple of partnerships lately with a couple of new vendors that are really going to enable us to take a step change here in the next 12-15 months that allows us to really be able to serve up to the customer the exact same way. The power of knowing what your next purchase may be and what price point you’re willing to pay for is an enormous unlock for us that I think everyone is trying to figure out what exactly that looks like and how that works in their world.

Thorne: Yup, and it’s coming. I think the challenge has always been doing what you need to do without scaring the customer. I mean, I think people have this natural propensity, if you go too far, then it’s kind of like, “Please unsubscribe, get me off your list. You’re scaring me.” But to make it something like, you know, talking to a neighbor about some yard product and you see them the next day, and they’re like, “Hey, I just saw blah.” And so, it’s not scary. It’s just natural.

You’ve got so many things that you all are doing at Saks Off Fifth. What are your priorities in 2024? We’ve just started this new year. What are — looking at some of your goals, some of your innovations — some of the things you want to accomplish?

Brooks: One of the key areas is what I just mentioned, right? The data and analytics team that we’ve built out is really doubling down on our investment on data and analytics. We’ve built out a very robust team that’s really come on board. Some of the smartest people I’ve come in contact with, and I’m excited on the journey that we’re going down there.

When we think about better understanding customer preferences — making sure we’re delivering the right product at the right value, making sure we’re capturing that customer’s — a share of that customer’s wallet — is really important. That is one of our main focuses, and it started last year. I already mentioned the loyalty program and rewards program that we built out a couple years ago. It’s now taking all of that data and building out on that as we move forward.

I think clientelling to me is another enormous unlock for us that I’ve mentioned already. Again, you’re hearing me home in on the personalization for our customer. That is number one, two and three in terms of customer experience.

Thorne: Sure.

Brooks: I also think we have an opportunity back-of-house for the merchants to harness some of the technology that’s out there today from a pricing promo, overall value proposition for our customers. I think we have an opportunity to be a lot sharper on that front as well. So, I think as you take and hear what I’m talking to here, it’s really the personalization, but giving ourselves the opportunity to leverage the tools that now exist to be able to do that in a much more real time, faster way for our customers.

Thorne: Those are some robust goals, but doable, and I have every reason to believe you’re going to achieve them. I want to know, because based off of your experience, and you’ve had a lot of experience over the years, you’ve done a lot of different things. All of those help to form a leadership style or a leadership perspective. What is your approach to leadership?

Brooks: Yeah, you know, I don’t know people fully appreciate that they’re creating a leadership style along the way as you’re going through the journey, because you’re in it.

Thorne: Right, right, right, for sure.

Brooks: Now as you get into this role that you’re in, where everyone is looking at you, you have to have and establish that leadership style. And right off the bat last year, I was going to ground myself in three things — communication, transparency and accountability to the team and to myself. And if we were going to do anything, we were going to do those three things really well because I think it really, truly builds a lot of trust with your immediate team. So, my executive leadership team, but then that starts to trickle down really quickly to the rest of the organization.

And not that that wasn’t here. It was here, but just my touch on it. My way of doing it. You know, it’s a lot of communication with the team. It’s weekly meetings. It’s monthly meetings with our more junior team so that they’re hearing what’s happening. We’re small enough that I’m, I’m fortunate enough to be able to have those conversations. Try to be really genuine in who I am.

I am always going to be “people first.” That is just who I am. You know, if I do this for another 20 years, I’ll always be “people first. “And you know, to me, one of the biggest things I did in the last year was building out my executive leadership team and finding people that believed in the same values that I did and surrounding myself with those people.

The other important piece that maybe I didn’t announce to everybody like I did, you know, the other three is: Let my people go do their job. I’m here to help. I’m here to have an idea. I’m here to mend any fences that need any mending. But at the same point in time, I’m not going to tell the merchants how to go merchant. I’m not going to tell the marketing team how to go be a marketer. I’m not going to tell anybody how to go do their job. But I’m here to help them. And I think you have to realize at times where it’s really important to be a little hands-off and a little bit more hands-on to help your team through tough situations.

Thorne: Yeah, those are great, great leadership skills and I wish more people had them. The future of retail: It’s ever changing. What excites you most about the future of retail?

Brooks: Again, I come back to … I feel like we’re at this tipping point of starting to understand how to leverage technology that’s out there that just did not exist. When I come back to the data and analytics tools that we’re building. You had so many people, for so many years, pouring over spreadsheets that are as long as a conference room table, and trying to find this little nugget of information. Well, think about having that opportunity to have machine learning tell you that before you even know you needed to look for that, and understand that before you even knew it was a problem. I think, to me, what excites me the most is the ability to get there and get there quicker with that help. Just have to embrace it. If you don’t embrace it, I think it’s really going to be a challenging time for many organizations.

Thorne: You’re singing my tune because I always tell people that in retail — and I had the opportunity to work very closely with the Foundation, so I talked to a lot of interns, I would talk to a lot of new employees — but the one thing I would tell them is in this industry, you have two choices. You can either embrace change. You can make something out of it. You can bring people along with you. You can be successful as a result of it. Or you can get frustrated by it. You can get confused by it. You can rally people against it. And then if that is the case, then you just need to leave because this industry is all about change. And so embracing change will help you embrace and recognize success.

And speaking of success, what is the best career advice that you’ve ever received?

Brooks: If I go back to my days at Maybelline and Garnier, and I worked for L’Oreal, there was a great leader there. A gentleman by the name of Steve Lutz. Steve was in charge of Maybelline Garnier. He was in charge of the sales team. And I don’t know … maybe Steve saw something in me that I didn’t see. I’m not quite sure. But he just said, “You can be my HR partner. That’s fine.” And I took this as an HR comment, right? Like, he didn’t understand what I was there to do. I wasn’t there to help him, right? He didn’t understand how I could help him. And he just said, “You can be my HR partner, but I need you to understand the business in a deeper level than you even know you need to know.”

I would go CVS, Walmart, Target with the sales team on sales meetings, and understanding why we were pitching, how we were pitching, what we were doing. And I just … now taking that time, I sent him an email like six months ago, reflecting on that time with him. You really understand that he was taking a chance on me, and allowing me to go learn. And I, in turn. put my whole self into that, and I wasn’t going to let him down.

So, the best advice I could give anybody, or the best advice I’ve received is — put your whole self into what you’re doing, and conversely, if you’re a leader, take a chance on somebody. Let them stub a toe, let them fail, but be there to pick them up if in fact they do. And I think if you can remember those two things — whether you are a leader or whether you are someone more junior in your career trying to figure out how to do that — I just think it’s an invaluable lesson that you can learn and maybe even give to somebody as a leader.

Thorne: That is fantastic career advice, and for all of you students that are listening, replay that and take it to heart. Rob Brooks, it’s been a real pleasure talking with you. Thank you for joining us today.

Brooks: Thank you for having me. It was wonderful being here.

Thorne: Thank you all for listening to another episode of Retail Gets Real. You can learn more about this episode and other information at retail gets real dot com. I’m Bill Thorne. This is Retail Gets Real. Thanks again for listening. Until next time.