A luxury retailer is branching out from its traditional department stores to offer tourists and locals a taste of its VIP shopping experiences at upscale hotels and resorts across the country.
Saks Fifth Avenue has unveiled its latest Fifth Avenue Club private stand-alone suite at The London, a trendy hotel in West Hollywood.
VIP luxury shopping experiences, including appointment-only venues, are increasingly helping luxury retailers wring more money out of their ultrawealthy clients as mid-market shoppers cut back due to inflation, according to Carine Mamann, a vice chairman in Cushman & Wakefield's Los Angeles office who helps retailers find space in Beverly Hills and other upscale districts.
The West Hollywood suite, with shoppable fine art and beauty products in addition to custom-curated apparel and jewelry, is Saks Fifth Avenue's latest attempt to redefine “the luxury shopping experience by combining our expertly curated assortment with personalization in an innovative way,” said Larry Bruce, president of stores at Saks Fifth Avenue and Neiman Marcus, in a statement.
The London hotel, meanwhile, is a local hot spot with a private screening room for film premieres, junkets and events throughout the year. The 226-key, all-suite luxury property at 1020 N. San Vicente Blvd. is owned by Northwood Hospitality.
"Having this offering on property will greatly appeal to those within the entertainment industry as well as to our hotel guests and locals," General Manager Terry Buchholz said in a statement.
VIP connections
The Fifth Avenue Club Suites, first launched in 2023, are an extension of the brand's existing Fifth Avenue Club personal shopping hubs, historically located inside traditional Saks Fifth Avenue department stores to give VIP customers private space to lounge while personal shoppers fetch products, provide refreshments and offer styling advice on clothing, beauty supplies and jewelry.
In recent years, the retailer has partnered with resort operators like Marriott International and its portfolio of luxury brands including The Ritz-Carlton and St. Regis Hotels & Resorts, to open 20 such suites in hotels across the country.
Some of the suites — like those at the St. Regis Deer Valley Resort in Utah, and at Stanly Ranch in Napa Valley, California — help the retailer reach tourists where suitable real estate space is scarce. Suites vary in size but average about 10,000 square feet.
Operating by appointment only is a growing trend among upscale retailers, especially in urban areas like downtown San Francisco, where concerns about theft have been in the forefront in recent years. The Saks full-size store on Union Square said last year that it would switch to scheduled shopping, the company's first Saks department store to do so.
Global luxury sales declined 2% year over year in 2024, according to research from Bain & Co. Global luxury consumers, grappling with macroeconomic uncertainty and sky-high pricing, cut back slightly on discretionary items, causing the luxury customer base to shrink by about 50 million people over the last two years.
Meanwhile, top customers continued to account for a larger share of luxury goods purchases, despite feeling that their luxury shopping experience has become less exceptional in 2024, according to Bain.
By contrast, the luxury hospitality market rose 4% in 2024, according to Bain. High-value bookings increased, as did the number of reservations made one to two years in advance, suggesting a heightened interest in securing priority access to exclusive experiences.
Saks Fifth Avenue has been making headlines recently for job cuts and late vendor payments associated with its merger with fellow luxury chain Neiman Marcus. Saks parent HBC acquired Neiman Marcus in a deal that closed in late December, creating a $7 billion real estate portfolio that left analysts wondering about the future of Neiman Marcus.
U.S. department stores have been losing ground against online competitors and more niche physical shopping formats. The percent of annual sales done at traditional department stores has declined from 14% in 1993 to 2.6% in 2024, according to consumer research firm GlobalData.
Saks isn't the only department store chain going through a transition, with Nordstrom announcing plans to go private and Macy's closing poorly performing stores to focus on a smaller, more profitable format.