INSIDER VIEW: When will Saks’ vendors run out of patience?

Every luxury watch brand and retailer that I speak to obsesses over the type of details that would fly over my head.

When there’s a store re-fit, the aesthetics are agonized over ad nauseum, to ensure maximum impact in terms of the aesthetics, the functionality, and the political sensitivities of brand adjacencies.

Brands spend unholy amounts of time and money on catering to customers who they know to be knowledgeable and discerning. Just one misstep in product development or how a new launch is communicated can have a significant impact on brand equity, which is why the biggest watch brands in the world have such tight structures and processes in place to ensure that nothing is left to chance.

It is against this backdrop that it feels increasingly problematic for premium watch brands to continue to work with department store Saks.

As reported in Watch Insider just last week, Saks Global, which owns Saks Fifth Avenue as well as Neiman Marcus, is on the verge of filing for bankruptcy protection. It missed a $100 million interest payment to creditors last month.

Stock levels have been noticeably diminished in recent weeks; the frequency of online orders being unfulfilled has shot up (as reported by the BBC); and, crucially, many suppliers are having to put up with very slow payments, or no payments at all, from the retail giant.

Last February, the company’s former chief executive told Saks’ vendors that overdue payments would be made in 12 instalments. But the situation hasn’t improved.

At what point do luxury watch brands like Piaget, Gucci, or TAG Heuer come to the conclusion that the juice is no longer worth the squeeze? If the shopping experience with Saks is increasingly disappointing and volatile (for the reasons stated above), it can’t be ruled out that it may have a negative impact on the customer’s feelings towards the brands they’ve been shopping for, consciously or subconsciously.

This is not to mention the more nebulous argument of negative association more generally, as Saks takes up more and more newspaper column inches for the wrong reasons.

The counter-argument is, of course, that luxury brands won’t feel comfortable with the idea of severing ties with a retailer that has the history and reputation of Saks, with its iconic prime location on Fifth Avenue especially.

But it feels like the situation is coming to a head. No-one wants to be the first to act, but no-one should want to be the last either. The biggest suppliers to Saks should be weighing up the pros and cons of their business relationship with increasing seriousness.