Hudson's Bay Company
- Saks Fifth Avenue is rolling out its appointment-only system at its San Francisco location.
- The luxury retailer has opened a dozen other "Club" concepts across the US in the past year.
- Retail analyst Neil Saunders told BI that requiring appointments will likely help prevent shoplifting.
Saks Fifth Avenue shoppers visiting the brand's San Francisco store may need something they previously haven't: a reservation.
The retailer said last week it will convert its Union Square location from a traditional department store format to an appointment-only concept, beginning on August 28.
Saks has opened roughly a dozen similar — but much smaller — "Club" concepts across the US in the past year, usually on-site at hotels and resorts. Saks currently has two such Clubs near San Francisco: one in Napa, and one in Palo Alto.
"We're always looking for innovative ways to optimize our store experience to match luxury consumers' evolving expectations, including by meeting our customers where and how they want to shop with us," a company spokesperson said in an email to Business Insider about the change.
Saks President Larry Bruce previously touted the success of the new concept in an announcement last month about the expansion of new locations.
"The success of our standalone Fifth Avenue Club suites illustrates that luxury clients are increasingly seeking one-on-one fashion expertise tailored just for them," he said. "We are proud to have cultivated a new, engaged client base and a skilled stylist team that delivers one-of-a-kind personal shopping and styling tailored to the unique lifestyles of our customers within each community."
Saks is by no means the first high-end retailer to focus on more personalized service, especially for wealthy clients.
"Certain luxury department-store locations like the Neiman Marcus in Las Vegas operate by appointment only," Amanda Lai, a director at consultant McMillanDoolittle, told CoStar. "Appointment-only stores have become a growing trend among luxury fashion houses, and locations like the Gucci Salon in L.A. and Brunello Cucinelli store in New York have opened up to serve ultra-high-net-worth clientele in a discrete, upscale setting."
These appointment-only stores also require fewer staff, and the San Francisco Chronicle reported that the company will lay off an unspecified number of workers.
Still, a full-size department store is far larger than a suite in a hotel, but there are a few likely reasons why Saks would be interested in trying to scale up the boutique concept.
Just as Union Square is a major center of retail in San Francisco, it has also been a statistical epicenter of retail crime.
The company did not address BI's question about whether retail crime factored into the decision to convert the store, but retail analyst Neil Saunders said requiring appointments will likely prevent shoplifting.
"This move is essentially about Saks trying to make the San Francisco store work better," Saunders told BI. "A store that operates by appointment only can get away with far fewer staff. It is also a way of preventing theft."
In addition, one unnamed source told the Chronicle the shift was probably due to the area's "challenging" environment for retailers.
Even as crime rates fall, foot traffic in the area has fallen too, creating additional headaches for brands such as Macy's and Nordstrom, both of whom left the area.
"This only works because Saks likely has customers that spend very high amounts in a single transaction," Saunders told BI. "This kind of model would not work for mass market retailers."
Meanwhile, ultra-luxury brands are maintaining a presence near Union Square, with watchmaker Breitling spending some $1 million to renovate a space that situates it near shops for A. Lange & Söhne, Patek Philippe, and Rolex.
The San Francisco Standard spoke with several shoppers in the area who expressed disappointment at Saks becoming less accessible to regular people.
"Some shopping should feel like it has a bit of spontaneity," Natali Bagamyan, a tourist from Switzerland, told the Standard. "If I need to have an appointment, I won't do it. It's a bit of a buzzkill."
But that may not be much of a concern for luxury consumers who, as BI's Emily Stewart writes, are still showing a strong preference for in-person retail experiences: "They don't just want to buy something special — they want to be treated special while they do it."