Saks Fifth Avenue: Project Evolution Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Saks Fifth Avenue: Project Evolution Case Solution

Question # 2

Fashion retailers started to adopt new technological changes around early 2000. The technology was being introduced in every phase of life. Saks Fifth Avenue also wanted to adopt this change and to secure its position in the industry. By running a successful business of shoes on store site; the company now wanted to provide its customers with an online buying facility as well. Saks Fifth Avenue wanted to reach out to more customers and to increase their sales further.

Saks needed to develop its website with new cutting edge technology since all the competitors were also doing the same. The company wanted to use the technology to further strengthen its position as the primary online target for luxury shopping for its customers and to reach more people around the world. Saks needed to hire skilled engineers who were tech-savvy and knew how to work with the latest technology to help Saks in achieving its vision.

With thousands of fashion items on display in their stores and each pair of men or women shoes earning them around $400; Saks Fifth Avenue was already ruling the fashion retail industry. But now to provide a world-class online shopping experience the company decided to move online. The other reason to move online was that the existing manual process of finding the customers’ preferred fashion item from the thousands of products in the store was very time consuming or time-intensive. Saks Fifth Avenue wanted to provide excellent service to its customers without hindering the level of customer service its loyal buyers expect from it.

The situation of the online systems of Saks Fifth Avenue was very poor. The supply chain system of Saks Fifth Avenue was separated from the store and inventory system. Sales were not recorded or updated on the system. This impacted the company’s business negatively. When trying to purchase an item online, the customers would see that the item was listed as sold out, but in reality that item was still available in the shop. This caused the sales of Saks Fifth Avenue to decrease. The investment, time and resources that Saks Fifth Avenue needed to bring in all of its systems, in sync, were very expensive. The company’s employees were not skilled enough to manage this technology on their own. The system was not updated or maintained in years. Saks Fifth Avenue didn’t have enough earning to start a training program for its employees to teach them how to manage and update these modern era technological systems. The company did acknowledge the fact it relied heavily on these technologies to keep its business running and not maintaining or updating it, which had resulted in the business loss, cyber-attacks, or even customer dissatisfaction. These systems were responsible for managing Saks Fifth Avenue:

Human Resource.
Products, etc.

Changes that would be necessary to realize this initiative:

To operate its online business smoothly and to maintain its information systems; Saks Fifth Avenue needs to realize the changes that should be implemented. Saks Fifth Avenue needs to implement technologies to update its online inventory and it should provide an efficient online shopping experience to its customers.

The company needs to have a single policy for their store and their online business. The company needs to hire a professional developer who can design a responsive website or a mobile application for online ordering. Saks also needs to invest in hiring the experts who would be able to manage, maintain and update these systems on time. These initial investments are expensive but they have the potential to turn out to be fruitful for the company, in the near future. If the customers are unsatisfied with the company’s performance then they might shift to Saks competitors. Losing customers would mean losing reputation and losing money eventually.

Following tangible and intangible changes would be required:

Redesign its website and develop a responsive mobile application.
Hire professional developers to re-develop the systems as per the company’s policies.
Hire a human resource who is responsible for updating information systems and inventory and maintain the systems daily.
Information systems like: supply chain management systems and inventory management systems are required to be in sync.

Question # 3

The customer value shows that how important a particular customer is for the company. The value is not determined solely on the basis of purchases made by the customer, but it is determined across the whole level of the relationship. The customer value shows the total worth generated by a single customer during the relationship span with the company. It is a key aspect for the companies, because the cost for attracting new customers is very high as compared to the costs to retain the existing customers.

Similarly, both the traditional and the Omni channel customers are very important for the Saks Fifth Avenue Company. The average customer value of the traditional Saks customer is $995 as compared to the average customer value created by the multichannel or Omni channel customer, i.e. $3343. The value created by an Omni channel customer is very high and appealing as compared to the average value created by the tradition retail customer. (See Appendix 1).

The average customer value from the Omni-channels will provide more benefit than the costs incurred by the company, as mentioned in the Appendix 1. It is because the integration of the online and the traditional retail store would bring different sales, cost and operation synergies for the Saks Fifth Avenue Company. The company would be able to attract more customers by utilizing its online website and attracting them toward an integrated Omni channel platform. It will reduce the staffing and other administrative costs of the company, as it would be able to use the same staff from traditional stores for integrated business. Lastly, the company would be able to achieve a competitive advantage by providing an offline plus online experience to the customers, conversely to the industry players. This would ultimately bring higher sales, gross margin, cost reductions and high profitability towards the company. So, the value generated by each customers exceeds the cost incurred in the project's-evolution........................

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Saks Fifth Avenue: Project Evolution Harvard Case Solution & Analysis