Saks Off 5th Remakes Its Loyalty Program
Saks Off 5th has remade its loyalty program in a bid to capture a wider audience, encourage repeat shopping and simplify the process of compiling and using points for purchases.
The new program, called Off 5th Rewards, launched Wednesday. It’s tender-neutral, designed with a tier structure that executives say is easy to understand, and replaces the “More” loyalty program that was phased out.
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“Off 5th Rewards was designed directly as a result of customer feedback,” Sara Griffin, senior vice president of marketing for Saks Off 5th, said in an interview.
“We conducted in-depth market research over the last year or so to understand our core customer and how they want to shop with us,” Griffin said. “It’s an opportunity to appeal to a younger, more fashion-minded customer who really wants access to luxury. Seventy percent of our core customers are part of one or more loyalty programs.”
Griffin said shoppers spend three times as much when they are part of a loyalty program.
“Customers said it had to be a tender-neutral program. They wanted it to be easy to achieve status in the program, so we designed Rewards so most of them will get to the second tier within two purchases.”
Off 5th’s research also reaffirmed what retailers already know, that shoppers want free shipping, free returns and early access to sales. “We sell such brands as Off White, Missoni and Golden Goose, where the inventory is limited so getting early access to those sales is really valuable,” Griffin said. Generally, merchandise at Off 5th is sold at 40 to 60 percent off regular prices, every day, though it depends on the brand.
“The More program worked in the past. Off 5th Rewards is much more responsive.”
Being tender-neutral means customers don’t have to sign up and use a Saks credit card, which can be used for shopping at Saks Fifth Avenue and Saks Off 5th. Some other off-pricers that have loyalty programs require using the store card. “Nearly 90 percent of Saks Off 5th customers shared with us that they would be interested in participating in a tender-neutral program,” said Griffin.
Asked in the inflationary climate whether loyalty programs are even more important, Griffin responded, “Off-price has a proven ability to succeed in good and bad times. In the last recession off-price thrived. During inflationary times, the value we can provide customers is unparalleled.”
Many consumers choose to ignore participating in loyalty programs because they find them confusing or tedious.
“Simplicity is certainly an issue we heard about in our customer research,” said Griffin. “The program has to be easy to understand and compelling. We tried to make the tier structure easy to understand, so the customer understands what they are getting out of the program.”
Through the tender-neutral Off 5th Rewards program, customers earn points for every dollar spent at saksoff5th.com, on the Saks Off 5th mobile app or at 100 Saks Off 5th stores, with points earned per dollar increasing with tier status. Once a customer accrues 500 points, they receive a $5 reward, redeemable in-store or online. They also get free shipping and access to member-only sales and events. The launch of the loyalty program is being supported through in-store and online marketing, including email, organic and paid social, display and site advertising.
The loyalty program has three status tiers based on annual spending:
Star ($0 to $299) — Members receive two points for every $1 spent, a birthday reward and access to bonus promotions.
Icon ($300 to $1,499) — Members receive three points for every $1 spent, a birthday reward, free standard shipping and access to bonus promotions, members-only sales and events.
Official ($1,500+) — Members earn four points for every $1 spent, a free birthday reward, free expedited shipping, access to bonus promotions, members-only sales and events and a gift.
In other marketing moves, Off 5th rebranded last March when it introduced the tag line, “Where Fashion Takes Off,” and began to emphasize inclusiveness, diversity and cultivating self-expression. “We have really increased our marketing spend to increase brand awareness,” Griffin said at the time, without disclosing the marketing spend in dollars.
In June 2021, Saks Off 5th split its e-commerce and store businesses into separate companies and Insight Partners invested $200 million into Off 5th, valuing it at roughly $1 billion. The investment supports increased marketing and enhancing digital capabilities, including improving fulfillment and logistics, support infrastructure and expanding the assortment.
The re-engineering of Off 5th mirrored the separation of the Saks Fifth Avenue brand into separate dot-com and brick-and-mortar businesses in March 2021. With that reengineering, Insight Partners invested $500 million into Saks Fifth Avenue, valuing it at $2 billion. Saks and Off 5th, along with Hudson’s Bay, are part of the Hudson’s Bay Co.’s portfolio of retail brands.
As reported in March, Off 5th conducted extensive market research, reaching 5,000 fashion and luxury shoppers, both current and prospective Off 5th customers. “The goal was to understand the mind-set of how they shop for luxury and how they live,” Griffin said.
“This core customer engages with brands, described shopping as a hobby, and fashion as a means of self-expression. They don’t want to wear a single designer. They want to mix and match pieces, with true luxury brands like Longchamp, to mainstream brands such as Adidas.”
This year, Off 5th sees adding about 300 brands to its assortment, and in the past two years added about 500, adding volume to the business, and such labels as Longchamp and Adidas as well as Brunello Cucinelli, Giuseppe Zanotti, Mansur Gavriel, Levi’s, Bally, Brooks Brothers, Skechers, Allen Edmonds, Eddie Bauer, Hush Puppies, Dr. Scholl’s and Tommy John.
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