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In stores, Saks Fifth Avenue is a high-end retailer that sells the most expensive designer brands in fashion. Online, it offers the “Fashion Fix,” a 36-hour pop-up sale that features a small selection of 50 percent off merchandise, available only to its e-mail subscribers.

By differentiating its sales approach across channels, Saks can respond to the many online private sale sites, such as Hautelook, RueLaLa, and Gilt, that sell luxury brands at deep discounts, while still maintaining its own in-store sense of luxury. Most online sales last for a day, after which the offer is gone, replaced by a new brand sale. Designers love the opportunity to get rid of their overstock or irregular merchandise in a high-class setting that seems exclusive; only members of the site may participate, though membership is free and automatically granted if a friend invites you. The online option offers a much better alternative than selling designer goods to an off-price retailer, a fate almost a bad as selling to Walmart, according to the designers.

Saks Fifth Avenue is not the only retailer to take over its own rack-clearing sales; Neiman Marcus offers the NM Mid-day Dash and the NM Evening Dash. The sense of excitement creates buzz about the featured brands, but it also causes consumers to focus on price. When luxury customers become accustomed to discounts, they may refuse to pay full price in the future, especially if that full price tag hangs from a luxury, not a necessity. It becomes hard to argue that a shopper actually cannot live without a coin purse for $600.

But as luxury department stores suffer double-digit sales declines, online private sales are growing exponentially. The market for discounted luxury products is definitely attractive, which may leave department stores with no choice but to give it a try.

Discussion Questions:

1.What is an online private sale?

2.Will this sales channel tarnish Saks’ image? Is it a good move for Saks?

Vanessa O’Connell, “Saks Challenges Discount Web Sites,” The Wall Street Journal, October 29, 2009.