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Hudson’s Bay Co. (HBC) recently announced that it will split the e-commerce and store businesses of Saks Fifth Avenue to develop a digital-first approach. This decision was made as part of HBC’s recent strategic initiative to revitalise the Saks Fifth Avenue business.
As part of this plan, the e-commerce business will be rebranded as a stand-alone business under the Saks Fifth Avenue brand. Look at HBC’s new strategy for Saks Fifth Avenue’s e-commerce business.
HBC splits e-commerce, store businesses of Saks Fifth Avenue
Hudson’s Bay Company (HBC) is a well-known Canadian multinational retail company. The company owns various department store chains, including Saks Fifth Avenue, in the US. In 2013, HBC acquired the luxury department store chain Saks Fifth Avenue and its business operations.
Since the acquisition of Saks Fifth Avenue by HBC in 2013, the retailer has adopted a strategy to transform its business into a leading omni-channel retailer. As part of this strategy, HBC announced it would be splitting the e-commerce and in-store retail businesses of Saks Fifth Avenue into two distinct entities. The e-commerce division was placed under the direction of former eBay executive Sachin Kamdar, who was appointed as president of ‘Saks Off 5th’ – an online offshoot from the original brand.
The newly created division aims to increase sales through strategic marketing initiatives and partnership with third party vendors. As part of this transformation process, Saks focuses on improving customer experience through technology such as new mobile applications and RFID tags that enable more accurate inventory management. In addition, it is investing heavily in advertising sponsorships with celebrities and publications as well as leveraging its strong relationships with existing customers to drive growth across both digital channels such as desktop and mobile website, social media etc., and physical stores such as outlet locations within outlet malls across the United States.
Overview of HBC’s strategy for Saks Fifth Avenue’s e-commerce business
Hudson’s Bay Company (HBC) announced in February 2017 a strategy to transform Saks Fifth Avenue’s e-commerce business, splitting it from its store business. The move aims to increase profitability and improve the customer experience on Saks’ digital channels, which have been lagging since 2013. The company also stated that it intends to use data-driven insights to drive product selection and merchandising decisions.
Under this new structure, Saks’ store arm will be led by President Marc Metrick and supported by a separate organisation for its e-commerce business led by Chief Executive Officer of HBC Karl Nonnenmacher. This contrasts the past model where both businesses were included in the same organisation headed by former CEO Steven Sadove.
With this split, the previously separate marketing, merchandising and technology divisions within Saks Fifth Avenue are now unified and report directly to Nonnenmacher. This will allow HBC to invest more heavily in its digital channels and help increase profits through cost savings and improved efficiencies. In addition, this will strengthen Saks’ competitive position against other department stores such as Nordstroms while continuing to remain competitive online against companies like Amazon. Finally, by separating the businesses into two distinct entities there is less chance of data being misused or shared with other parts of the company without consideration for customer consent or privacy regulations.
It remains to be seen whether or not this new strategy will be successful for HBC but its clear that they are trying something different to increase efficiency and improve their overall performance. There may be some challenges along the way but if done correctly there are many opportunities for success for Saks Fifth Avenue using this new structure going forward.
HBC’s Plan
Hudson’s Bay Company (HBC) recently announced its plans to split the e-commerce and store businesses of Saks Fifth Avenue. This sudden move has caused speculation about what this will mean for the company.
In this article, we will review HBC’s plan and examine how it will affect their e-commerce business.
Separating the e-commerce and store businesses
Hudson’s Bay Company, the owners of Saks Fifth Avenue, recently announced their plans to separate the e-commerce and store businesses of Saks Fifth Avenue. This will result in two focused and agile businesses that can better serve customers and capitalise on growth opportunities.
The separated companies will enable stronger customer targeting for both. Sending into e-commerce and store operations, Saks Fifth Avenue can reduce costs and complexity while optimising performance. The online strategy is expected to grow faster than stores by focusing on virtual services over physical locations. The new strategy is also expected to have significant cost savings due to reduced real estate cost associated with storefronts.
Additionally, this move marks an important step towards improving customer experience as it allows Saks Fifth Avenue to focus more deeply on specific types of shoppers rather than having one larger entity handle both types of customers simultaneously. Separating the two business units makes it easier for them to tailor each component without conflicting interests or priorities taking precedence over another.
By improving customer experience through better product selection and delivery options, the online store is expected to benefit from increased average order values. In contrast, both sides will benefit from streamlined operations across departments such as product development, marketing campaigns and analytics initiatives that focus solely on either side regardless of size or scale — enabling more rapid execution and potential expansion into new global markets. Ultimately, these changes will strengthen Saks Fifth Avenue’s positioning as a top luxury retail destination for years.
Investing in e-commerce and digital capabilities
HBC’s strategy for Saks Fifth Avenue’s e-commerce business has two components: investing in e-commerce and digital capabilities, and separating the e-commerce business from the brick-and-mortar stores.
To strengthen its e-commerce system, HBC is readapting the Saks Fifth Avenue website to ensure a seamless experience throughout all its devices. The company has also implemented enhanced data integration with sales channels to improve customer service through better pricing functionality and quicker order delivery. It also utilises artificial intelligence technologies to create more efficient operations to maximise customer satisfaction.
HBC also plans to separate its e-commerce from its traditional retail stores, leveraging economies of scale and synergy benefits across both business areas. It is investing in additional warehouses, expanding human resources with individuals knowledgeable about digital commerce, and introducing new technologies such as automated systems for inventory control, fulfilment processes and customer analytics. Moreover, HBC will build an omni-channel approach such that customers can seamlessly switch between browsing on desktop or mobile devices and their purchases processed quickly regardless of whether they shop in physical stores or online.
Leveraging HBC’s expertise in luxury retail
Hudson’s Bay Company (HBC) is leveraging its expertise in luxury retail to drive the continued development of the e-commerce business of Saks Fifth Avenue. By splitting the business into two distinct segments – stores and e-commerce – HBC is looking to optimise operations and customer experiences in each respective stream, while focusing resources on where customer demand drives growth.
HBC’s plans include: investing in Saks’ e-commerce offering; expanding the number of customer touchpoints through store initiatives; devoting resources towards digital shopping initiatives; launching global websites; and optimising inventory to reduce carrying costs. The company believes they can grow online sales through website upgrades, strategic global expansion, increased partnership opportunities and more efficient use of analytics to target customers more effectively. To That end, HBC will relocate their Calgary, Alberta Store Fixtures division that currently produces POS systems and other hardware to a larger manufacturing facility near Toronto. This move will allow them operate more efficiently while providing better support for their customers worldwide.
From stronger services, digital integration and nearby manufacturing capabilities, HBC aims to unlock greater value for customers and consumers by merging both sides of its retail offerings—stores and e-commerce—while becoming a leader in omnichannel luxury retail.
Benefits of HSBC’s Strategy
In the summer of 2019, HBC announced its plan to separate Saks Fifth Avenue’s store business from its e-commerce business. This strategy has resulted in several positive outcomes that have aided the company in their efforts to stay competitive in the ever-evolving digital space.
In this article, we’ll look at the benefits of HSBC’s strategy and why it has been beneficial.
Increased reach and customer base
HBC’s strategy of splitting its e-commerce and store businesses for Saks Fifth Avenue has provided several potential benefits. Primarily, using a dedicated, digital-only brand for e-commerce gives the business increased reach to customers by providing access to more people than simply operating through brick-and-mortar stores could offer.
By creating an e-commerce arm separate from its traditional in-store platforms, HBC can focus on creating and leveraging marketing initiatives that appeal directly to customers because it only deals with digital commerce. In this way, HBC’s strategy has enabled it to expand its customer base by tapping markets that would have been difficult or impossible to service.
Improved customer experience
The separation of HBC’s e-commerce and store businesses of Saks Fifth Avenue will allow HBC to better understand the needs of their different customers and develop tailored initiatives that support their individual needs. In addition, this approach accelerates customer loyalty by providing improved customer experiences across channels, reducing delays, improving service quality and increasing customer satisfaction.
By establishing separate teams dedicated solely to the e-commerce business, Saks can focus on meeting the unique desires of online shoppers. In contrast, store teams can provide tailored services according to in-store traffic patterns. In addition, HBC’s commitment to invest in people, technology and analytics is expected to enable them to create an even better shopping experience for customers across both channels.
Through personalised marketing campaigns based on a thorough understanding of customer buying behaviours, HBC can deliver highly advanced automation within integrated customer experience platforms. Additionally, through access to detailed consumer data insights and advanced technology capabilities such as AI, the company intends to inform product placement optimization efforts at both physical stores and online channels.
Increased profitability
The strategy that Hudson’s Bay Company (HBC) implemented to split Saks Fifth Avenue’s e-commerce and store businesses will result in increased profitability for the company. HBC plans to retain ownership of Saks’ e-commerce assets, allowing them to generate higher profits from the online sales channel.
Additionally, having dedicated teams to focus on each business segment (e-commerce and retail) will allow both entities to develop more innovative and cost-efficient strategies. This strategic step also shows HBC’s commitment to capitalise on the current growth of digital retailing by developing a futureproof platform that meets customer expectations while driving long-term returns for shareholders.
Furthermore, this separation will make it easier for Saks’ senior management team to hone their strategic directions and optimise operations in their respective businesses.
Challenges
HBC’s strategy of splitting the e-commerce and store businesses of Saks Fifth Avenue has raised some important questions, with the most important being whether this strategy will succeed.
This strategy presents many challenges, which include finding a balance between the two divisions, optimising customer experience, and managing the new organisational structure.
Let’s look at these challenges in more detail.
Integrating technology and operations
HBC is committed to integrating its technology, analytics and operations investments to deliver a seamless and differentiated customer experience. This involves developing a comprehensive Digital Roadmap Strategy that identifies the digital capabilities required to improve the customer experience across channels, products and services, creating an optimal CX-driven organisation structure, offering customers personalised services at scale and developing agile organisational capabilities to launch digital initiatives.
Integrating technology is essential for HBC’s efforts to create a holistic e-commerce strategy for Saks Fifth Avenue. This includes leveraging existing technologies such as machine learning, artificial intelligence (AI), natural language processing (NLP), robotic process automation (RPA) and application programming interfaces (APIs) to gain real-time visibility into customer interactions within stores, websites and mobile platforms. HBC also plans on modernising its backend systems to become more efficient using automation tools, predictive analytics capabilities and advanced data science techniques. Integrating these new technologies and processes will ensure that Saks Fifth Avenue provides an engaging customer experience at every point of contact with customers.
Balancing online and offline customer experience
To maintain a consistent customer experience, HBC faces the challenge of balancing online and offline experiences. As a result, the company has split its e-commerce and store businesses off Saks Fifth Avenue to create two specialty (store and online) teams devoted to managing the individual functions. This shift in strategy allows the company to focus on the needs of online shoppers while continuing to provide exceptional service in their physical stores.
With this new strategy, HBC must consider how they can tailor an online experience that will drive sales and ensure that their physical stores remain attractive and engaging for customers who prefer an offline shopping experience. Implementing technologies such as digital signage, interactive kiosks, RFID inventory tagging, and beacon technology are some initiatives HBC is considering to offer a comprehensive online and offline customer experience. Additionally, bridging the gap between operational data collected from consumers’ purchase histories within stores versus those from e-commerce will help create a holistic view of the customer’s journey that can help better inform their decisions about future campaigns or product launches.
Managing costs
Managing costs while running an efficient and profitable e-commerce business is one of the main challenges that HBC faces in operating Saks Fifth Avenue’s e-commerce business. Certain fixed costs are involved in running an online store, such as hosting fees, operational staff and technological infrastructure. Moreover, the rapidly changing nature of online marketing has made it increasingly difficult to forecast expenses and budget accordingly. As a result, balancing these costs with maximising sales has become a major challenge for HBC.
In addition to managing costs, another issue arising from the company’s division is ensuring that both e-commerce and retail operations complement each other strategically. For example, to attract new customers both operations must be properly integrated to avoid duplicating costs or introducing additional complexities into the existing process. In this regard, HBC must prioritise customer satisfaction while keeping expenses lean with increasing competition from digital rivals such as Amazon and Walmart.
With tighter control over resources as well as innovative solutions devised based on market insights and data analytic capabilities, HBC will be able to effectively manage cost structure and maximise profits while maintaining customer experience in its products’ promotion, delivery, return policy and more across multiple channels (physical stores & digital).
tags = HBC, e-commerce, Saks Fifth Avenue, Insight Partners, SFA, hbc saks avenue insight partners 2bthomascnbc, Marc Metrick, Morgan Stanley & Co
