Store Wars!
A short time ago, in an upscale retail world not so far away, Neiman Marcus reigned supreme—especially in Texas. Now Saks Fifth Avenue is coming to the Houston Galleria to challenge Neiman’s on its own turf. How will the empire strike back?
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But in 1990 Saks was bought for a reported $1.6 billion by Investcorp International, a Middle Eastern company that had helped turn around luxury retailers like Tiffany and Gucci. When Investcorp named Miller vice chairman, Millstein says, “Tansky clearly saw the handwriting on the wall about who would become the next chief executive officer. So Tansky said good-bye and went to Bergdorf’s for the same money and certainly for much less prestige. He went from running forty stores to one store.” (Tansky declined to talk to me about his days at Saks.)
Meanwhile, Miller brought in a new president, Rose Marie Bravo, a former I. Magnin chairman and CEO known for her warm relationships with the world’s top designers. Together with chief operating officer Brian Kendrick, they hatched a plan to restructure Saks. They had the company’s logo redesigned; dumped clothing lines that could be found almost anywhere, including Tommy Hilfiger and Liz Claiborne; and began building new stores and expanding old ones, including a 115,000-square-foot addition in Beverly Hills (which now brings in $90 million in sales a year). Their Holy Grail, however, was Texas, the second-largest retail market in the U.S. and one dominated at the upper end by Neiman’s. (The six Neiman’s stores in Texas make up about 25 percent of the company’s sales.) Miller was not shy about his ambitions, telling a reporter in 1996, “We are going to take on Neiman Marcus in a direct way. Texas will be our primary focus as a company in 1997 and 1998.” When I asked Miller if he had any personal reasons for challenging Neiman’s, he roared with laughter and said, “Oh, please.”
For his part, Tansky joined the Neiman’s team from Bergdorf’s (a store also owned by Neiman’s parent, Harcourt General), after two consecutive CEOs were hired away by the rival retail conglomerate Federated. “Neiman’s was already a great piece of gold, and the board figured that Tansky was the perfect man to keep it polished,” says Millstein. But Tansky did much more than that. No doubt recalling the mistakes Saks made in the eighties—and certainly aware of what the new Saks team was doing—he ordered that Neiman’s store managers devote less space on the floor to bridge apparel and start bringing in even more higher-priced merchandise. He demanded more $5,000 Badgley Mischka evening gowns as well as a larger assortment of the most expensive St. John designs for women. He had $1,000 cashmere coats replaced with $3,000 coats. Although his demanding style made some Neiman’s employees nervous—“Burt will never be known as Mr. Warm and Fuzzy,” an associate remarks—other employees praised him for his drive to find the best luxury products. “My goal has been to bring back the glamour and mystique that customers know so well,” Tansky told me with a steely look. “And in the process we’re leaving our competitors in the dust.”
Clearly this is Tansky’s chance to show the specialty retail world what he can do—and he is not going to let Miller interfere. Both men say there is no personal animosity involved in this fight, but according to New York retail consultant Howard Davidowitz, “They are totally focused on beating each other. Every day they come to work consumed with winning.”
FOR THE GLITTERATI OF HOUSTON, IT IS going to be a busy September. After its opening gala, Saks will be bringing in an array of designers, including Isaac Mizrahi and Calvin Klein, for special in-store appearances. “We are capturing all the sophistication and grandeur that has made our flagship New York store so great,” says Miller. “Our store will have a significantly different feeling than Neiman’s.” Meanwhile, for its ninetieth anniversary, Neiman’s plans three weeks of special events that will remind longtime customers of the old Fortnight celebrations. Neiman’s is unabashedly playing up its Texas heritage: The columns of its Houston Galleria store and downtown Dallas store will be turned into oil derricks, store windows will show models with big hair, and there will even be a chili bar on the main floor. “We are celebrating old Texas, gaudy Texas,” says Tansky. “Why not? That was one of the great eras in all of history.”
Just about everyone in Houston society has an opinion about which store will win. Some wags snipe that Saks’s move to the Galleria is as smart as Neiman’s thinking it could set up a store on Fifth Avenue and take away Saks’s business. Besides Neiman’s, the Galleria is already packed with top designer-owned boutiques, including Max Mara, Dolce and Gabbana, Emporio Armani, Gianni Versace, and Gucci. Just down the road is the nationally acclaimed specialty women’s boutique Tootsies, which is renovating in preparation for the opening of Saks, repainting its walls and adding a hair salon and a gift department. Neiman’s, too, plans to remodel parts of its store for the fall. “Everyone is going all-out to keep its customers,” says one Houston retailer. “So where does Saks think it’s going to find all these extra women to shop at its big new store?”
Others say, however, that Saks is not taking that huge of a risk because it will be able to build from a base of already loyal customers who frequent its existing store. One of those is Linda Brown, an attractive blonde in her early thirties who is surely destined for the Chronicle’s best-dressed list. (When I met her, she apologized for what she was wearing—silky Donna Karan pants and a white Lacroix blouse—exclaiming, “You caught me in my car-pool clothes!”) The very picky Brown shops almost exclusively at Saks because of the personal service. “The moment I walk in, someone is there to wait on me,” she says. “At Neiman’s I’ll be there for five to ten minutes before a salesperson even comes up to say hello to me.”
Saks executives also believe they will be able to lure an emerging new group of wealthy people: Baby boomers who are reaching their peak earning years (ages 45 to 54) and are more willing to buy luxury goods. But that’s not going to be enough. “We’re going to need to get some customers out of Neiman’s,” admits Saks’s chief operating officer Brian Kendrick. To that end, Saks has been making some bold moves. If the stories going around the second floor of Neiman’s are to be believed, Saks’s general manager, Ed Bodde, has made overtures to Sylvia Goldstein and other sales associates. Goldstein does not deny that Bodde has asked her to switch sides, but she insists that she would not leave Neiman’s. Of course, if she did switch it would be an enormous coup, just as it would be a smart preemptive strike for Neiman’s to lure one of Saks’s top sales associates. Fearing that very scenario, Saks would not reveal to me the names of its top Houston sales associates, presumably to keep Neiman’s from knowing who they are.
Just as fierce is the competition to land the exclusive rights to showcase the apparel of certain top designers. “It’s the most cutthroat part of the business,” says one retailer, “because if one store has the rights to the season’s hottest designer and the other store doesn’t, then every fashion-conscious woman in town is going to come by that first store to take a look. And while she’s there, there’s no telling what else she might buy.” While Neiman’s has locked up Chanel and Armani Borgonuovo—two of the most prominent names in designer clothing—Rose Marie Bravo has wrangled some exclusive deals of her own. When women step off the escalator onto the second floor of the new Saks, they will see the top lines from designers who cannot be found at the Galleria Neiman’s: Calvin Klein, Zoran, Gucci, and of course, Versace, with his little green dress.
Ever aggressive, Bravo is also plotting to lure the Chanel boutique to Saks when its contract with Neiman’s expires in 1998. According to insiders, the fight for Chanel is going to be fierce—a $3,500 Chanel suit, after all, is the uniform of choice for rich Houston wives—and Kopelman, Chanel’s president, admits he will not be hesitant about playing one retailer against the other. “We are going to want to be in the store with the most high-end customers,” he says. “If it’s clear that store is Neiman’s or that store is Saks, then that’s where we want to be.”
In the end, of course, the winner of the Neiman’s-Saks brawl will be the store with the best merchandise. “What we’re going to see in Houston is a test of tastes,” says Stanley Marcus. “Who’s got the most appealing merchandise? Who’s got the right colors and sizes? Who presents it in the most appealing way?” Many designers are selling to both stores—including Bill Blass, Escada, Donna Karan, and Ralph Lauren—and in those cases, says Marcus, “the question is which store will pick the right pieces to capture the women’s attention.”
Houston socialites have never before found themselves in this kind of position. “It’s like there are these two great knights, Saks and Neiman’s, jousting for the ladies,” says Carolyn Farb. Some aren’t anxious to talk about it. When I asked Lynn Wyatt whether she would be shopping more at Saks or Neiman’s, she said, “I’m not going to tell you, and don’t you dare misquote me!” But then there is Bobbie-Vee Cooney, who has already discovered the advantages of such a battle. “Well, I can’t tell you which store is going to win,” she says, “but I expect they’ll be inviting us all to a lot more parties. And as much as I hate for my husband to hear this, that means we’re going to need more things to wear.”
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