Nordstrom Rack vet to lead Saks Off 5th

Dive Brief:

HBC on Tuesday said that former Nordstrom Rack executive Paige Thomas has arrived as president of its Saks Off 5th off-price business, effective immediately.
Thomas most recently was general merchandise manager of men’s and kids at Nordstrom’s full-price business, but was general merchandise manager at its off-price Nordstrom Rack operation for more than five years. There she oversaw growth in both e-commerce and physical retail, including the opening of more than 100 stores, the launch of the Rack website, and the integration of Rack and the company’s HauteLook flash sales site.
With her appointment, Marc Metrick, who assumed leadership of Saks Off 5th in January 2018, "will fully focus on his role as President of Saks Fifth Avenue," according to a company press release.

Dive Insight:

Off-price retailers have eaten department stores' lunch for several years now, gobbling traffic and market share. Major players TJX, Ross and Burlington have enjoyed a pipeline of leftover inventory from department stores themselves, increasingly developed their own apparel labels and most recently appear to be bringing in goods from online pure-plays.

Department stores have reacted by creating or growing off-price businesses of their own, with Macy's the latest to do so. Nordstrom has been operating its Rack business since the 1970s and has grown in recent years. Saks opened Off 5th in 1990 as a merchandise clearinghouse, but has also expanded since then, now running more than 100 locations in the U.S. and Canada, according to its LinkedIn page.

The business was the target of downsizing last year, however, as HBC scrambled to cut costs amid falling sales, and planned to shutter as many as 20 Saks Off 5th locations in the U.S. Other recent changes noted by HBC CEO Helena Foulkes in a statement Monday have included "strategic shifts in Saks Off 5th’s buying, marketing and service" and strength in digital sales.

In addition to grappling with falling revenues and comps and widening losses, HBC has been beset by a tense take-private undertaking that finally settled late in the year. Foulkes in December called the company's Hudson's Bay and Saks Fifth Avenue department store chains its "greatest opportunities," and on Monday appeared to add its off-price one as a third. "With strong presidents at the helm of HBC’s three distinct retail businesses, each is empowered to execute on their strategies and deliver unique experiences for their customers," she said in a statement.

In tapping Thomas, Saks Off 5th is regrouping under the direction of an executive who once helped lead a powerhouse in the segment. Foulkes hinted that the company has plans to expand with an off-price veteran at the helm. "Paige has a proven track record of achieving aggressive growth within off-price retail through superior cross-channel customer experiences," she said. "With her deep merchandising background and instinct to quickly capitalize on digital opportunities, I believe Paige is the right leader to further evolve Saks Off 5th and unleash its potential as a true off-price retailer."

The play is a tricky one for department stores, however, because they risk cannibalizing their full-line stores by enticing customers with an adjacent brand offering lower prices. In January, co-president Erik Nordstrom told a National Retail Federation audience that the retailer's customers freely shop both channels, and there's some evidence for that. But there's also evidence that off-price stores compete not just with full price, but also increasingly with each other.