Saks Not Discounting; Neiman Gives in a Little

(MoneyWatch)  Luxury retailers are certainly taking a hit this year, and two of the biggest names in the space are looking differently at how they will do business during the holiday season. Saks Inc. refuses to discount items this year, while Neiman Marcus might be a little more flexible, as evidenced by the toning down of its famously high-priced Christmas Book.

Either way, both brands need to do something different right now, as does nearly every other chain in the luxury sector. According to International Council of Shopping Centers data, same-store sales were down in luxury 8.5 percent year over year in September. Year-to-date comparable sales are plunging 16.3 percent, and late 2008 was just as bleak.

For its part, Saks saw an 11.6-percent drop in September. Management will try to turn business around by focusing on gross margins instead of the deep discounts it put into place to drive traffic during last year's holidays. Said Stephen Sadove, chairman and chief executive officer, during Saks' most recent quarterly conference call: "We have no intent to repeat [the] last four quarters' promotional initiatives. We've worked very hard on getting key price points floating in."

In the case of Neiman's holiday catalog this year, there are no million-dollar gifts as seen in the past, and now about 50 percent of the items sold are $250 or less, a sizable decline from previous years. "I haven't been laying awake at night thinking about how the million-dollar gift got away," the Associated Press quoted Ginger Reeder, a Neiman employee who helped put together the catalog, which does still does offer a $250,000 sports airplane.

Neiman needs help with its sales as well. Same-store sales fell 17.6 percent in September. But in its most recent conference call, chairman and chief executive Burton Tansky stressed value while emphasizing that his chain is still a luxury destination.

Neither chain is going to be considered a discounter any time soon, but January will tell if either a more exclusive strategy or slightly discounted approach can help these flagships of a beleagured sector, if anything can.