Personalized Style

by Jim Amidon '87

January 12, 2005

Fred Wilson '69 took the helm of Saks Fifth Avenue in January 2004 and has already transformed the chain's stores and working environment. Profits are up and people are happy.

WM spent the day with Wilson to see how he does it . . .

Fred Wilson is back in his office for the first time after three weeks away. It’s a typical back-to-work day for Wilson, the 58-year-old chairman and CEO of Saks Fifth Avenue Enterprises, assuming there is such a thing as a "typical" day for Wabash’s fashion industry leader. He’s taking 15-minute meetings with a range of people, returning phone calls, and lining up his fall calendar, starting with a fast and furious "Fashion Week" schedule in New York, a couple of domestic store openings, and one in Dubai. He may try to squeeze in a trip to Moscow.

Although he does travel a lot, when he is in his 19th floor office that overlooks Madison Avenue on one side and St. Patrick’s Cathedral on the other, he makes it a point to connect with the people who make Saks’ flagship Fifth Avenue store the American icon that it is.

I walk through the New York store every single day when I’m in the city—even Saturdays and Sundays," he says as he shoots out of his office.

"Store," he yells to his assistant, Donna Dupuy.

Before he can get down the hallway to the elevator, though, Dupuy yells back, "You need to take this call."

Fred returns, takes the call, and spends the next 10 minutes of a jam-packed day talking to Ira Goldhersh, a longtime, previously unknown but very satisfied Saks customer. The caller is so excited to be talking to the boss that Fred barely gets a word in edgewise: "That’s so nice to hear." "I feel like you’re part of the family." "Yes, we’re focusing on expertly delivering personalized style." "Thanks so much for your call." "Really, thanks so much for your call." "I must go now."

Wilson hangs up and heads for the hallway.

"Store," he bellows halfway down the hall. In the elevator he tells me that in this line of work, "you gotta get comfortable with chaos."

Hitting his stride

He throws open the mammoth glass and iron doors of Saks with such gusto the door bounces back at him. His eyes take in every detail, scanning one side of the store to another. The sales associates, assistant managers, department managers, even janitors know Wilson and recognize him by both his personality and stride.

Everyone calls him Fred. Every-one knows he’s just back from vacation. Everyone knows he’s just become a grandfather for the first time (Mason Fish, born to his daughter, Jennifer).

"Must be nice to be so loved," I say.

"It’s nice to be so well connected," he counters, striding through the next department.

Wilson and his team have transformed Saks in just eight months. During that time they have reconfigured the Fifth Avenue store, opened up massive amounts of "negative space," and brought a strong sense of community. In time the changes will include all 63 Saks stores and 52 Off Saks outlet stores under his management.

He’s also added enough mannequins to create a small army of occasionally headless but stunningly dressed creatures that greet customers at every turn of the 10-story complex.

"This store was sloppy," he tells me as we dart in and around racks of clothes and mannequins. "It was dreary, overly packed with product, and the employees were depressed. Everyone in the store—and our customers—knew that there was always another sale coming soon. Saks had become a place to shop the sales racks."

"What we are doing now is creating a memorable luxury shopping experience."

And he knows that even if he doesn’t move as much merchandise, he’s doing it for his price and on his terms. The net result is profit and a commitment to the Saks brand.

Wilson takes the escalator—he likes to view the store this way, and he walks every floor all the way to the top. His pace is quick, but he stops to engage each employee we pass.

In the women’s shoe department there is a problem of some sort, and Wilson steps in. There’s too much inventory and not enough shelf space in the stock room. He listens to the stock room guys.

"I don’t know how to solve your problem," he says, "but I’ll get someone on it today." And he does.

He’s stopped again by a New Yorker in her 60s who says she has shopped at Saks for 40 years. She is upset about the increasing number of "perfume squirters" in cosmetics; Fred refers to them as dive-bombers and says he’ll talk to the manager.

Many customers spend hundreds of thousands of dollars in the store. Some look like the typical Saks customer—Italian shoes, French suits, luxury handbags—and others wear sweat pants and T-shirts. Fred takes time for the one-timers and the long-timers, a philosophy he’s passing along through the chain.

"If you really believe in the concept of ‘expertly delivering personalized style,’ then you deliver that no matter who your customer is or what she looks like," says the former CEO of the LVMH Fashion Group of the Americas and Donna Karan. "Our customers know they can get the fashions we sell in other places, so we have to deliver on our promise of service and integrating products specifically suited for each individual customer. I want us to become a high-performance retailer."

After the whirlwind walk-through, Wilson heads for the door, aware that he’s running exactly on time for his next appointment. Still, he accepts congratulations on becoming a grandfather from another half-dozen sales associates before hitting the street. Once there he notices a group of young women headed for the store. He waits and holds open the door for every one of them.

"Good morning, ladies," he says. "Welcome to Saks."

 

"We want them to figure it out"

Wilson is excited about what’s happening at Saks’ Buckhead (Atlanta) store. It’s undergoing a total makeover, physically and in terms of how it will be run. He and the Atlanta store manager are discussing "town hall" style meetings during which Fred, managers, and invited speakers deliver the brand message. A significant component of the transformation in New York and throughout the chain is Fred’s latest good read: Becoming a Category of One. He’s a voracious reader, but says that book best captures the makeover of Saks Fifth Avenue.

"The opening lines explain what we’re trying to do at Saks," he says. "In essence, don’t try to be number one in an existing category; create your own category and be the only one in it."

The category into which Saks now falls is a hybrid of Wilson’s 35 years in retail and the iconic heritage of the store. It takes the best of the old reputation of quality, style, and luxury and blends it with Wilson’s energy, vision, and concept of service.

When he was hired, Saks was in a downward spiral. Neiman-Marcus was getting more and more market share. Saks’ stores were overcrowded with inventory because of bad buys and poor service. "When you’re afraid, you tend to hunker down, run sale events, and retreat to old times. I thought that was simply adding to the problem."

Wilson has taken some risks. Sales events have been cut back drastically. He’s pumped enthusiasm into the management team. And he’s shown a personal commitment to service through his interactions with employees not only in New York, but also in the 60-plus stores he’s visited. Sales through the end of July were up over $200 million—profits were reported over 300 percent ahead. Inventory was good. Predictions are excellent.

"We won’t hit our original sales plan for the month of August," Wilson says, "But we will make more money because we are making smarter buys we reduced sales on markdown merchandise by about $20 million versus last year."

"When you release people to be free, they often discover that they really don’t know how to be free," Wilson warns. "If you have a culture in which people have been told what to do at every step for years and years that is their comfort zone.

"But that’s not what we want for Saks. We want our associates to expertly deliver personalized style. I want them to be empowered. And I’m beginning to see employees figuring things out on their own."

The next morning at a town hall meeting of the flagship store’s employees, store manager Rob Wallstrom tells of a wealthy woman who was on her way to a black-tie affair with her husband when she fell on the curb, tore her suit, and cut her knee. Wallstrom describes how a sales associate met the woman at the door, helped her assemble a number of possible wardrobe options, ran upstairs to get a pair of hose, got a bandage for the wounded customer, and even offered to ship the damaged suit back to the customer’s home.

When the employee who "figured it out" is introduced, thunderous applause erupts from the 300 or so associates gathered.

"That’s authoritative, energetic, personalized, and high-performance," says Wilson. "Service does matter; personalized service adds value."

 

"Well done is better than well said"

New York Post fashion business reporter Suzanne Kapner walks into Fred Wilson’s corporate office precisely at 8 a.m. Fred isn’t in love with the press; his mantra is "well done is better than well said." Still, he’s at the office plenty early, much to the chagrin of Debbie, his wife of 28 years who had hoped he would stay home a little later on his 58th birthday.

Wilson offers breakfast and the two catch up on fashion gossip. When he asks that the conversation be off the record, Kapner is annoyed. The last time they had an off the record conversation, she insists, much of the information later ended up in the New York Times. Fred insists that Kapner will leave with a scoop that she can print.

The hour-long meeting is equal parts on and off the record. The scoop for Kapner is that she will be able to announce that Wilson and Frank Gehry have a handshake agreement for the architect to redesign the flagship store.

Wilson shies away from discussing strategy with Kapner, who mentions that the competitive landscape of luxury retail has changed under Wilson’s leadership of Saks.

"Saks is back," she offers.

Fred takes pride showing Kapner the latest Saks catalog, the new squared-format and logo, and he tells her about the store’s plan for the holiday season.

Kapner retreats to more questions about the competition, and peppers him about Neiman-Marcus, Barney’s, and Bloomingdale’s.

"We have the opportunity to grow our market share without regard to the competition; we don’t wish to wound anyone," he says in a grandfatherly tone. "I spend all of my energy trying to make Saks Fifth Avenue better. Nobody in this business wakes up in the morning plotting strategy to take down the competition. There’s plenty of room for all of us to do well.

"What I’m trying to do is to make Saks a more modern, high-performance, high energy operation."

 

"If a dog chases you down the street . . ."

Wilson’s style is cordial and charismatic. He starts plenty of meetings with the line "Let’s just chat" as a way of getting people to loosen up. In most meetings he makes only minor suggestions; he’s allowing his people to set their own course within the Saks brand filter.

At 58, Wilson is looking closely at retirement. Again. After more than 20 years with Duty Free Shops, the launch of eluxury.com, and running LVMH’s North American group, Wilson was ready to retire. When LVMH acquired the dwindling Donna Karan brand, Wilson stepped over to redirect the ship. Retirement loomed as a real possibility, especially now that he has grandchildren.

But the Saks opportunity came up, so he bid his old friend Bernard Arnault of LVMH adieu and took the plunge with Saks because "it was Saks Fifth Avenue, and it sounded like fun."

The excitement of being in New York City and putting his own mark on the luxury icon is evident in everything he does. He’s made Saks look younger in the store and in print. The models are young and glamorous, and there is motion and energy on every page of the catalog.

The older end of his market will continue to shop Saks if the service meets his vision; the younger demographic is what he’s after. To that end, he says the fifth floor of the Manhattan store is now the "hottest floor in the city"—neon lights, loud music, and hip fashions. And after work the floor is crowded with hip young people with the resources to buy the lifestyle (a dress in the "Trash Couture" department looks like an amalgamation of torn fabrics and retails for $3,850).

He’s just agreed with Bono, front man for the rock band U2, who has developed a line of clothing that will be released exclusively at Saks. Edun ("Nude" backwards), is a Bono original. He’ll develop factories in Third-World countries and run them with local people in an ethical operation.

"This line really follows Bono’s notion of ‘Give a man a fish, and you feed him for a day; teach a man to fish and you feed him for a lifetime,’" Wilson says. Bono believes completely in the latter, as do Wilson and his team.

He has also convinced Pamela Fiori, editor and chief of Town and Country magazine, to accept the Saks Fifth Avenue Fashion Oracle award. During the phone conversation when Fiori accepted, Wilson thanked her for suggesting that the old Saks catalogs were somber and boring.

"Not any more," says Wilson.

Neon light on the fifth floor, Bono, Trash Couture, and Fiori all seem like strange bedfellows to old Saks. But the eclectic mix is perfect for Wilson, who believes if Saks is grounded in service and personalized style, it can be anything it wants to be; anything its customers want it to be.

He may take the Saks chain to China and Russia. He may close unprofitable stores here in the U.S. He will not stand pat and hope Saks’ reputation generates profits.

"You gotta get comfortable with chaos," he says (again) to a couple of senior executives in charge of the brand filter. "This is all about evolution. Change is inevitable, so we will encourage change and empower people to evolve the business themselves."

Wilson has evolved, too. The son of an engineer and raised in Cincinnati, Wilson was married to his first wife while an undergraduate at Wabash. He took a job with Rikes (a subsidiary of Federated Dry Goods) after an excellent internship that prepared him for a career in retail. But shortly after his graduation, he lost his mother, sister, and brother-in-law. A few years later, he lost his father.

"Since I really had no family left, there were no geographical ties and I was in a good position to travel, so I signed on with Duty Free Shops."

The rest is history. He now leads Saks into the future, which is all that concerns him.

Wilson says he’s motivated by a desire to have an impact, being part of a winning team, and a healthy fear of failure. He will take what ever risks are necessary to evolve Saks into a unique luxury shopping experience all over again.

"If you live your life with the idea that there’s a dog chasing you down the street, you eventually learn to run pretty fast."

"Donna?" he shouts. "What’s next?"

 


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