Saks CEO Marc Metrick on the evolving luxury consumer

Episode transcript, edited for clarity

Bill Thorne: I am Bill Thorne from the National Retail Federation, coming to you from NRF 2024: Retail’s Big Show in New York City. And on today’s episode, we’re talking to Saks CEO Mark Metrick. We’re going to talk to Marc about the luxury retail market, Saks’ effort to build lasting and meaningful customer relationships, and the company’s strategy to evolve the luxury experience for today’s online luxury shopper.

Marc Metrick. Welcome to Retail Gets Real.

Marc Metrick: Glad to be here. Thanks for having me.

Bill Thorne: I hope you’re having a good time here at Retail’s Big Show.

Metrick: Oh yeah. It’s wild.

Thorne: It is wild, isn’t it?

Metrick: It is. It’s, it’s packed. It’s exciting to see this much energy around the industry.

Thorne: You know, it’s interesting because we were talking before we started recording about … well, there is so much energy and enthusiasm here and it starts on day one. I remember after the pandemic when we first got back, I mean, just the people, the interactions on the escalator were like, “heeeey,” because they hadn’t seen each other in two years because we hadn’t done a show in two years. And that just continues. It’s people really looking forward to having the opportunity to be together and celebrate retail.

Metrick: Absolutely. 

Thorne: So, you have an extensive background, professionally. How did you get into retail? Was it the first thing that you thought of when you said, I’m going to be a …

Metrick: Actually, no. I think it was … retail’s always been known, or at least when I graduated college in 1995, it was always known as a, as having great trading programs, the different companies. And my goal actually was to spend a few years after undergrad, before going to business school. What better to do — if you’re going to come out, and either do banking or equity research or something like that — come out of business school, spend it a few years, in a training program. Learn how to be an adult. Learn how to have responsibility. Learn how to tie a tie, whatever it was.

Thorne: (chuckling) What did I do wrong?

Metrick: Yeah, no. And I’m still learning, but uh … and then, you know, I fell in love with it, so it was definitely not the dot on the wall for me. It’s just a business and an industry that can really pull you in fast.

Thorne: It does. I had the opportunity to spend a couple days at the student program — and talk about enthusiasm and unbridled enthusiasm — but it was so interesting to me the number of majors that have expanded in terms of interest in going into retail. When we started that program with 100 students, like about 10 years ago, it was all fashion and merchandising and some marketing. And now you’ve got everything from supply chain to data analytics to all of these different majors that are focused on getting into retail.

Metrick: No, it’s, it’s a one stop shop for a lot of different disciplines.

Thorne: For sure. So, what does the luxury market landscape look like today? I don’t want to say post-pandemic, but it’s really as it’s evolved, over a longer period of time. How does it look to you as a Saks CEO and somebody that’s been in the business for a long time — its relative health and growth?

Metrick: Yeah, I think it’s a really exciting time. I think when you go back — and I’ve been doing this … 30 years or so, almost 30 years — and we’re probably the second inflection point that I’ve seen. The first one being sort of in the late 1990s for luxury with ecommerce starting to really take hold, right? So that was 24 years ago, maybe even more — it was, 1998, 1999. And I think now we’re sitting there again with the consumer saying, ‘OK, how do we introduce a higher touch, more personalized experience through the use of data?’

And I think that is sort of the frontier that we’re all kind of staring at as the leaders in this industry, the same as the folks that were before us were staring at this ecommerce wave that was coming in the late 1990s. So, it’s exciting, and the luxury consumer is growing. This is a much more vibrant continuum of consumers. It’s not just for the very few, and I think that’s great, and it’s great for us because it really talks about growth, but a very sustainable, healthy relationship. Kind of like you want to be sticky with that consumer type of growth. So, it’s exciting.

Thorne: Who is the Saks consumer?

Metrick: The dangerous answer would be: It’s a consumer that loves luxury. That has luxury coursing through their veins. That shops and wears luxury. That travels a certain way, that eats in certain restaurants, that has certain hobbies. And that is a great … that’s a great customer. And it’s, look, it’s a high concentration — 2% of our customers across the ecosystem — that includes the SFA stores and the website — 2% of the customers represent 40% of the volume. So that’s there.

But what I like is at Saks we have this full continuum of luxury consumers. Everyone from folks that just want to touch luxury every once in a while, that have it in and out of their lives. They like it, you know, how they dress. Or they like it how they travel, and they’ll come in and taste.

And then you have this emerging luxury consumer that’s really not there yet from a lifestyle standpoint or even an income standpoint to really enjoy luxury fully. But they like to go in and out, and treat themselves, and reward themselves. So, we have a couple of different cohorts of consumer. The good thing about them is that they’re all interested in the product, and as they grow, you can grow with them. So, it’s symbiotic for sure.

Thorne: How are you leveraging new technologies, and data, to elevate the digital experience and in-store experience for the consumer?

Metrick: I think, focusing on the online piece for a minute — 90% of our offsite communication is personalized through data analytics. Every email you get, every ad that’s with you, everything that you see is informed by data and programmatic marketing, right. So that’s there.

And I think the next frontier and what we’re focusing on really starting now is, how do we bring that same level, now on-site is somewhat personalized, but by no means, uh, where it needs to be. And I think that’s going to be the next frontier for us in, in building that relationship with the on-site experience.

Thorne: If you’ve walked around the Big Show, the one thing that you see over and over and over again is, basically, technology, talking about AI. So, AI is, if there was a theme for 2024, it would be AI. How do you see that playing for Saks? Not just for Saks, really for retail in general.

Metrick: Yeah. I think, look, I’d be crazy to think it’s just a fad. It’s going to be big. By the way, a version of AI has been part of what people do — the search on the site is AI. The email, marketing and customer communication that I just said was personalized is AI. It’s not the level of which we’re seeing at the Big Show and some of the exciting things that could happen, but it’s been there and it’s permeating.

I think for us at Saks, it’s going to be two stages. I think AI is going to really help us with our personalization efforts online. So, Bill comes to the site, and, five years ago, Bill and Marc were going to see the same thing.

Thorne: Sure. Right.

Metrick: And then with data now and the way we were able to mine it and work with it, I want Bill and Marc to have different experiences on the site. The technology can handle it.

Thorne: Right. Right.

Metrick: The data analytics can handle it. So, we’ve come foundationally far at Saks and as an industry. The issue then became, well, gee, how do we create the different creative assets for Marc and Bill? How do we show this image versus that image? How do we — Bill likes red, not blue. So how do we put the, make the sweater red when we show it to him? How do we write editorial that Bill’s interested in about watches or traveling to Europe, when Marc wants to have editorial about beaches and, you know, sports? So now you can use AI to create that personalized experience on-site.

It’s not as exciting as maybe what we’re seeing right now at the Big Show, but it’s foundationally getting there because for us, I’m looking at the first sort of horizon of AI as an enabler. It’s an efficiency tool for us to be able to really do a lot more with the same amount of people and the same amount of assets.

Thorne: Yeah. It’s interesting to me because the search engines, and things of that sort, the internet, 20 years ago, nascent, how does that play out? How is it going to impact the consumer? How is it going to impact the business? And yet it just continued to grow as people became more comfortable with it, and it became more ubiquitous to everybody’s experience. And I think AI is kind of the same thing, yet people aren’t really seeing it or they don’t really know that they are participating in AI.

So there’s … I think, a lot less concern in terms of what information we’re getting, how we’re getting it, when we’re getting it, and the fact that it is being so personalized to us. I think the bigger concern, of course, is how it can be abused. And I think a lot of people are really looking into the steps that can be taken to avoid that as much as possible.

Metrick: Yeah. And I think, I think that’s why, Bill, it’s so important for us to be really careful with how, how we’re using it. And that’s why when you look at the horizons of use, pretty much back of house for me right now. I’m not putting people’s — we’re being very protective and very careful and deliberate about what we do with customer data.

And then even as we move forward with it, the beautiful thing about Saks is I’m not some, I’m not a DTC that’s starting up and going and trying to harness different data. I have one P-data pretty rich and deep that I’m able to mine and use for myself, which is obviously safer for the consumer as well.

Thorne: Yeah, for sure. So, Mark, you’re a leader, and you’re a good leader. What makes a good leader?

Metrick: I think the first thing you have to have is, you have to have humility, but I think you have to be very, you have to be very comfortable surrounding yourself with people who are going to tell you when you’re wrong, and I’ve, I think I’ve done too good of a job of that. I don’t think I’ve been right in six years.

But, you know, you see it both ways and it’s the right way to run it. And I’ve been part of the, I’ve been part of a company where Steve Sadove, who was our CEO, he ran it the same way and it has been a lot of fun.

Thorne: Yeah. So, when you’re looking to hire at Saks, what are you looking for? What are the qualities of a really good candidate?

Metrick: Yeah, I think somebody that comes in has got to have high energy. They have to love the consumer. We’re in the fashion business, but we don’t just hire people from the fashion business. So, as long as you have a customer obsession, and as long as you love solving problems, those are the first two checks. That’s what we’re in. Retail is a problem-solving business.

Thorne: For sure.

Metrick: He wakes up, he needs a suit. We want to solve that problem.

Thorne: Right, right.

Metrick: From a characteristic standpoint, I do look for that humility. I look for people who are wanting to open their minds and work with other people and be part of a team.

Thorne: Yeah. You’ve got — having been to your flagship store here in New York — you’ve got great people. I mean, make no mistake about it. The trends that you’re keeping an eye on for 2024, setting AI aside. Everybody’s talking about AI, there’s other things going on in the industry. What are you looking at for Saks?

Metrick: No, of course. Look, we do have to look at, at innovation, forget AI. You’re right. You have to look at even merchandise and the assortment and how people want to shop. I think it’s also important to think about personalization. Retail, big space, lots of competition. Luxury, sort of, owned that high-touch for a long time.

Thorne: For sure.

Metrick: And then the internet was the great equalizer. You know, the people who we shop [with] for groceries online – they know what I like, they know what my birthday is. These were, we used to have this exclusive relationship with customers. So, I think in 2024 we’re going to watch that trend very carefully to make sure that we’re still keeping ahead of who we know our customer is, or how deep our relationships are with them. So that’s important.

The other thing we have to keep our eye on is actually, theft and fraud. And it’s just becoming — not as much of a problem for loss, because that’s a problem — but also, it’s going to create a lot of friction for the broader consumer that’s actually a good actor …

Thorne: For sure. Absolutely.

Metrick: That wants to just enjoy themselves. So, we’re going to have to watch that really carefully.

Thorne: So, when you look at your career — this is a two-part question. What was the best piece of career advice that you got, and what is the best career advice you could give somebody else?

Metrick: You know, and if it’s not the same, then I’m crazy, right? So, it’s, it’s a two-part question …

Thorne: Well, you could’ve gotten, that one piece of advice could’ve been getting you on the right track. Having gotten it on the track, you might have another piece of advice for somebody to get on the same track.

Metrick: We always, we have a saying, ‘Take my advice. I’m not using it.’ Uh, that’s, uh …

Thorne: That’s a good one. I like that.

Metrick: Really good at, at everybody else’s … Look, and I got it a long time ago, and it’s just keep moving. Don’t worry about what your next step is. Just keep learning, keep moving, and the people liken it to almost when you’re traveling. And I think I look outside today, and it’s snowing, and it hasn’t snowed in New York in a long time. And I bet there’s a bunch of people at the airport who are trying to get back to D.C., they’re trying to get back to Chicago or Florida, and they can’t. So, there’s two ways to do it. You can leave the airport and go back to the hotel and wait for the weather to clear. Or you can take a train instead to Washington, D.C. Or you could take, if you’re going to Florida, you could take a train to Chicago where the weather’s clear and fly from Chicago.

Just keep moving, keep learning, and don’t turn something down that’s an opportunity to develop even if you don’t think, that it’s there for the end goal. I tell you, if I didn’t follow that advice, I wouldn’t be here, because the jobs that I didn’t want the most in my 28 years working with Saks, are the probably two or three jobs that equipped me most for the one I’m in now.

Thorne: That’s fantastic. And that’s great. It’s a great perspective and I’ve heard that a lot. Some of the things that I heard at the student program, people talking about patience, and ending with, I’m not there where I want to be, but then add, comma yet. So, just be focused, be on a track, but don’t be frustrated by the fact that it’s going to take time, and during that time, learn. Just be accepting and willing to learn. So, Marc Metrick, who or what inspires you? Something that really gets you focused.

Metrick: If you’re in our business, and the answer to that question isn’t having the absolute best customer experience you can. I want people, I want people not to look at us at Saks and say, ‘Yeah, they, you know, they built a large platform or they had an incredibly successful activation with this brand.’

I want people to look at Saks over the next couple years and say, ‘They transformed the customer experience for luxury.’ And that’s what inspires me, and it’s not climbing a mountain because we’re never going to get there …

Thorne: Right. Right.

Metrick: Because the customer’s moving faster than we can innovate and evolve. That’s what makes this so — you’re not chasing your tail because you’re not going around and around. You’re moving forward, and you’re trying to keep up, so it’s a lot of fun, but I think it’s going to be about something great for the consumer.

Thorne: One of the things we always talk about too when it comes to retail is that — and especially for the folks just getting into it is — if you can’t accept and run with change, you need to go somewhere else. This is not the industry where you need to be, and it’s just, it happens all the time, every day is different, every challenge is new, and every opportunity is ripe, and that’s really something you have to have a mindset of. So, the future of retail, what excites you most?

Metrick: I think it’s, again, I think it’s that the way technology’s going to enable the consumer to have a very tailored and specific experience, whether it’s in store or online. And again, you’re walking around the Big Show and you can see it. It’s the beginnings of it. It’s not it. But that’s really what I think the future is. It’s going to be very interesting when we’re all a little bit older, and we remember what it was like to go to a store, and to find something, and to wait in line, and to check out, and to use a piece of plastic that somehow, depending on your age, had a chip in it or didn’t have a chip in it, but whatever. Wild. I think we’re at this point where … we’re going to cross over this horizon, and you and I and others, are going to see the future because it’s coming sooner than later.

Thorne: And it’s exciting. Marc Metrick. It has always been a pleasure to be with you, and it’s been a distinct pleasure to have you here on Retail Gets Real. Thank you for joining us.

And thank you all for listening to another episode of Retail Gets Real. You can find more information about this episode at retail gets real dot com. From Retail’s Big Show in New York City, in the Javits Center. I’m Bill Thorne. This is Retail Gets Real. Thanks for listening. Until next time.