The Transformer of Fifth Avenue

RECENTLY, WHEN I was researching an article for VMSD, someone said to me:

“We used to say, about a venture capitalist buying his way into the retail business, ‘Unfortunately, he’s not a merchant.’

“Today, when we celebrate an e-commerce native breaking into physical retail, we say, ‘Fortunately, he’s not a merchant.’”

The implication is that merchants are stuffed into an old way of doing things, motivated by sales-per-square-foot, shelf heights and store layouts, fixture densities, maximizing productive space. You know: mundane. Whereas, those raised in the digital world are not restrained by those old notions. They’re adventurous, risk-taking, breaking the rules.

Certainly, the retail landscape has exploded. Main Street is now wherever your website exists. Still, it’s not quite fair to say that the merchants of old didn’t take risks and break rules. They were just governed by a different north star: the lady who walked through the door.

Who would have accused Mickey Drexler, Gordon Segal or Lennie Riggio of being boxed in by rules or traditions? Or Arnold Aronson?

Sometimes it takes an obituary to remind you of how much someone once accomplished. When Arnold Aronson died last month, the headlines referred to him as the one “who revitalized Saks in the ’80s.”

Today’s e-com ingénues aren’t revitalizing anything because they have no experience or background to turn a ship around. Their ships are sleek cigarette boats bounding out of the harbor at 150 miles-per-hour or more, a 1500-horsepower engine driving the bounce over the water in only one direction – straight ahead, and as fast as they can.

But rocks abound. They’ll be revitalizing, too, when someone else rocks their world with even greater innovation and they, too, have to face new rules and challenges. Or they’ll perish. Ask all the struggling retail leaders of the world according to Amazon.

It may be hard to remember that Saks Fifth Avenue hadn’t always been the fashion-driver, the windows-innovator, the elegance-personification of the ‘80s and ‘90s. In the disco dazzle of the 1970s, Saks had been relegated to the remainders bin, a stuffy, out-of-it retail “dowager.” But the cultural landscape began to change in the late ‘70s. The dazzle had gone out of disco, and the baby boomers, then in their 30s and 40s, wanted to trade in their big collars and bell-bottoms for Izod and Calvin Klein.

“Off the man!” and “Don’t trust anyone over 30!” had lost their currencies. The boomers were now over 30 – they were now “the man” – and earning the man’s income on junk bonds and mergers and acquisitions. And they were determined to live like it.

Aronson saw an opportunity to gain the loyalty of this acquisitive generation, waving its Amex cards and looking for fashion branding that would equal its new lifestyle of pasta machines, sushi rollers, espresso makers, expensive art, Mercedes-Benz and BMW and all things European – especially British, Italian and French.

He was not alone in this. In the ‘80s – along with Bloomingdale’s and Barneys – Saks was a must stop on the fashion tour for a Saturday afternoon in Manhattan.

According to an Aronson obituary in The New York Times, “This transformation involved a complete remodeling of Saks’ flagship store … including the installation of escalators; an expansion of its national store count to 40 from 27; and a major marketing and public relations effort highlighting European fashion designers as well as American ones.

“These initiatives led to a 50 percent increase in revenue and an almost doubling of operating profits during Mr. Aronson’s four-year tenure.”

Today, that might seem a bit incrementalist. Escalators? But, compared to today, that era’s social and cultural changes were incremental. A cordless phone and a VCR might have been 1980s game-changers, but not quite in the category of artificial intelligence, drones, robots, Google Assistant and self-driving cars. (Of course, the jury is out on how these innovations will play in the 2040s. The mind literally boggles.)

The point is not the specific steps that Aronson took. It was the willingness to rearrange the room in the shifting decade. In any era, under any circumstances, a 50 percent increase in revenue and doubling of profits would be a significant retail accomplishment. Even today. Even by a merchant.