This is the Wei: you start at Saks.

The conversation around the Hudson’s Bay Company’s – owner of Lord & Taylor in the United States – acquisition of Saks Fifth Avenue has focused on the real estate value that Saks represents and the opportunity for the Hudson’s Bay Company to move into the fine apparel and specialty retail markets in North America through the Saks brand. Walking through Saks’ flagship store in New York City, it becomes clear that for all its brand value, the storied retailer faces specific challenges that need to be overcome if HBC is to use Saks as its luxury-end anchor. To wit, Saks’ merchandising strategy in its full-line stores as seen in the flagship and its use of private labels.

To begin with, Saks is a fine and better apparel specialty retailer that seems to have preserved remnants of a department-store outlook. A large assortment of designers is featured at every price point between contemporary and couture. To an outside observer, Saks appears to have taken on significant inventory and real estate maintenance costs. This might be in response to the sheer size of the flagship store or an attempt to maintain its reputation for offering the largest fashion offerings.

Unfortunately, this undermines its claim to discrimination in taste and sacrifices the store’s visual clarity. The store is replete with replicated styles and needless options. This suggests that its buyers do not have the benefit of a merchandiser who might be able to show them where their buys fit into the retail plan as a whole. Given the breadth of its offerings, it should have been easy for Saks to merchandise its flagship store such that each corner tells its own trend story. For example, a section on the contemporary floor could be given over to featuring three new designers that Saks is particularly proud to champion for the season or part of the menswear floor could be given over to showcasing plaid for the fall. As one of the largest retailers of fine apparel, Saks should make use of its clout when working with designers to ensure that the retailer, not the brands, dictates its merchandising strategy and message.

While Saks has a reputation for quality, the retailer fails its clients when it comes to its private label collections. With a luxury retailer like Saks, private label collections should be at the same price points and quality standard as designer offerings on display. By offering basic complementary pieces geared towards clients’ needs, buyers have greater opportunity to invest in fashion-forward pieces. At the flagship store, pieces from the private label collection were neither at the same price points nor of the same quality as its designer offerings. In addition, because it had already invested so broadly in its buying decisions, much of its private label collection seemed in competition with its designer pieces. Saks could take a leaf out of the Barney’s handbook by ensuring that every garment bearing the Saks name meets the quality standards of its designer apparel and that only staples be produced under its private label.

In taking on Saks Fifth Avenue, the Hudson’s Bay Company now has a new set of clients to satisfy and to delight. Notwithstanding its cachet and brand position, the competitive retail landscape will mean a clearer understanding of what the Saks client wants and what it takes to deliver a truly upscale retail experience.