Saks Fifth Avenue’s CEO Marc Metrick says shopping for luxury products has become the equivalent of “comfort food” for consumers that are stuck at home and devoid of any social life.
“People were buying things in the height of the pandemic that there was no absolute functional end-use for, but they love the fashion,” Metrick said during a virtual presentation at the National Retail Federation’s Big Show event on Thursday. “I think what we learned is [consumers] view luxury as the comfort food of retail. … It was their way to feel — it was something so much more and so much deeper than a pair of shoes.”
“Why else would you buy 110-millimeter pumps … from a luxury brand, when you’re working at home and on Zoom all day?” he said. “You do it because you love fashion, and it’s your Oreo cookie. It’s your — something that’s going to make you feel better.”
This trend, according to Metrick, has been a bellwether for Saks Fifth Avenue. After all, it indicates a future where demand for luxury retail is going to remain steady even though a full economic recovery will take a long time.
Other players in the luxury retail space have also significantly benefited from this trend. In August last year, luxury eCommerce platform Farfetch reported record-breaking sales. The company’s gross merchandise volume in Q2 increased by 48 percent year-over-year to $721 million, which ultimately translated to $365 million in revenue for the company. Farfetch also saw the size of its customer base increase to 500,000.
As consumers’ new homebound lifestyles are preventing many from spending on dining and traveling, they are instead investing in luxury products that make them feel good. Recent auctions have seen the bored and the rich spending as much as $500,000 on exquisite jewelry pieces.
It is worth noting, however, that while a growing share of consumers are now buying luxury products online, physical stores are continuing to play an important role as consumers crave an elevated experience, which is often lacking when buying online.
“Stores are still important,” Metrick said. “For luxury especially, it’s the theater.”
In light of this demand, Saks has been doubling down on improving its in-store experiences. The store has seen an increase in demand for personal shoppers. It also recently opened a 54,000 square feet Barneys stores inside its Manhattan store location.